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- GDP (PPP):
- $25.4 billion
- 1.1% growth
- 0.5% 5-year compound annual growth
- $8,976 per capita
- Inflation (CPI):
- FDI Inflow:
Jamaica’s economic freedom score is 69.1, making its economy the 40th freest in the 2018 Index. Its overall score has decreased by 0.4 point, with lower scores in judicial effectiveness, trade freedom, and the tax burden indicator not fully offset by improvements in property rights, monetary freedom, and government integrity. Jamaica is ranked 5th among 32 countries in the Americas region, and its overall score is above the regional and world averages.
Jamaica’s economy has grown on average by less than 1 percent a year for the past three decades. Growth has been impeded by a bloated public sector, high crime and corruption, red tape, weak rule of law, and a high debt-to-GDP ratio. The government’s main policy objectives are public-sector reforms, including wage restraint, the merger of public-sector agencies, and a workforce reduction plan, that risk igniting social and political opposition.
Jamaica was seized from Spain in 1655 by English planters, who established a plantation economy based on slave labor. The island gained independence from the U.K. in 1962. Deteriorating economic conditions in the 1970s led to recurrent violence as rival gangs affiliated with the major political parties evolved into powerful organized crime networks, involved in international drug smuggling and money laundering, that remain problems. Prime Minister Andrew Holness’s center-left Jamaica Labour Party narrowly won election in February 2016. Once a major sugar producer, Jamaica is now a net sugar importer, and services account for more than 70 percent of GDP. The economy is diverse, but industries lack investment and modernization. Remittances, tourism, and bauxite generate most foreign exchange.
Approximately 55 percent of the land in Jamaica is registered, but a large percentage of those properties lack current titles. Squatters make up nearly 20 percent of the population. The inefficient legal system weakens the security of property rights and the rule of law. Long-standing ties between elected representatives and organized criminals allow some gangs to operate with impunity.
Jamaica’s top individual and corporate income tax rates are 25 percent. Other taxes include property transfer and general consumption taxes. The overall tax burden equals 27.3 percent of total domestic income. Over the past three years, government spending has amounted to 27.6 percent of total output (GDP), and budget deficits have averaged 0.6 percent of GDP. Public debt is equivalent to 115.2 percent of GDP.
Jamaica made starting a business more difficult in 2016 by removing the ability to complete next-day company incorporation, but it also made paying taxes easier and less costly. Most Jamaicans are employed in services, often in the retail and tourism sectors, followed by construction, transport, and communications. Some subsidies for drugs, respiratory devices, and diabetic supplies were increased in 2017.
Trade is significant for Jamaica’s economy; the combined value of exports and imports equals 78 percent of GDP. The average applied tariff rate is 9.6 percent. Nontariff barriers impede some trade. In general, government policies do not significantly interfere with foreign investment. The financial system is growing, and the private sector has access to a wide range of credit instruments. Three large commercial banks dominate the relatively sound banking sector.