The US Downgrade’s Impact on Jamaica

The downgrade of the United States’ credit rating by Standard and Poor’s earlier this month could have an impact on the Jamaican economy as part of increased global uncertainty, according to Bank of Jamaica Governor Brian Wynter.

The BOJ has “considered an extreme scenario of hte possible near-term impact on the Jamaican economy, if the downgrade of the US federal govenrment bond rating, and the factors which led to it, were to result in markedly slower growth for the US economy in the short term, leading in turn to a slowdown in the global economy,” he said.

Despite the potentially gloomy forecast, Jamaica’s economy could still record growth in the range of one to two percent in the fiscal year 2011-2012.

If this slower growth were to occur, he said, it would hit hardest the country’s mining industry, which reportedly saw an outstanding second quarter, according to the Planning Institute of Jamaica.

“The mining industry, for example, could see the largest fallout from reduced international demand for aluminium,” he said. “In addition, in light of reduced global income, particulary in the USA, Jamiaca’s largest source market for visitors, value-added in the hotel and restaurant sector could also expand at a signifcantly slower rate [this year].”

A potential silver lining to the downgrade’s impact could come in the form of an improvement in Jamaica’s account deficit.

–Jamaica Information Service