December 24, 2011 | 8:14 pm | Print
By the Caribbean Journal staff
Jamaica’s economy is projected to slow to 1 percent in 2012, down from a 1.3 percent rate in 2011, according to a report released this week by the United Nations’ Economic Commission for Latin America and the Caribbean.
Some decline is likely because of the expiration of the $1.27 billion International Monetary Fund stand-by agreement in May 2012, the report said, owing to what it called “uncertainty regarding economic policy.”
Jamaican growth fell 3 percent in 2009, and dropped 1.3 percent in 2010, according to the report, entitled Preliminary Overview of the Economies of Latin America and the Caribbean 2011.
ECLAC also said that given the election date this Thursday, the private sector may adopt a wait-and-see attitude in early 2012.
The commission said that demand in major export markets, remittances and foreign direct investment have rallied only slightly, meaning “no significant improvement” in the country’s negative current account balance in the coming year.
This is part of a series looking at ECLAC’s projections for countries in the region in 2012.
The country’s budget deficit, projected to be 6.5 percent of GDP for 2010/2011, was 6.1 percent, slightly smaller than expected, and is projected to stand at 4.6 percent for fiscal year 2011/2012.
Expenditures increased by 3.7 percent relative to budget and revenue by 4.7 percent.
Most quantitative targets under the IMF agreement were met through September 2010, the report said, but it is not clear whether the government passed the additional tests in March 2011.
ECLAC said several unplanned expenditures, including wage increases, may have reduced the government’s capacity to meet the IMF targets.
The report said Jamaica’s debt problem “will persist for some time, given slow economic growth and limited expenditure reduction.”
The mining sector led the country in 2011, with 19.2 percent growth.
Arrivals from the US and Europe, Jamaica’s two largest markets, declined by 1.5 percent and 3.7 percent respectively from January to May of this year.