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- GDP (PPP):
- $24.1 billion
- 0.5% growth
- 0.0% 5-year compound annual growth
- $8,609 per capita
- Inflation (CPI):
- FDI Inflow:
A number of structural and institutional shortcomings still plague the Jamaican economy and hold back prospects for more dynamic economic development. Continuing fiscal deficits have pushed public debt to about 140 percent of GDP, trapping Jamaica in a cycle of debt service and borrowing.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 67.5 (down 0.2 point)
- Economic Freedom Status: Moderately Free
- Global Ranking: 48th
- Regional Ranking: 8th in the South and Central America/Caribbean Region
- Notable Successes: Open Markets
- Concerns: Rule of Law, Management of Public Finance, and Regulatory Efficiency
- Overall Score Change Since 2012: +2.4
Prime Minister Portia Simpson-Miller’s People’s National Party, in office since 2012, must call elections no later than April 2017. Simpson-Miller has maintained market-friendly policies, but economic growth has stalled. High levels of crime contribute to economic uncertainty. Prospects are gradually improving thanks to lower oil prices and prudent monetary policy, which has slowed inflation. Foreign exchange is heavily dependent on remittances, tourism, and bauxite production. Services account for more than 60 percent of GDP. Official unemployment is high. In 2015, Jamaica began talks with financial institutions on a plan to pay off the debt it owes Venezuela for oil received through the PetroCaribe energy program.
Long-standing relationships between elected representatives and organized crime, through which some criminal gangs operate with impunity in exchange for their votes, are among the root causes of corruption and Jamaica’s high crime rate. About half of the land is registered, and many properties lack current titles. The inefficient legal system weakens the security of property rights and the rule of law.
Jamaica’s top individual and corporate income tax rates are 25 percent. Other taxes include a property transfer tax and a general consumption tax. The overall tax burden equals 24 percent of total domestic income. Government spending amounts to 27.1 percent of total domestic output. The deficit has been reduced to below 3 percent of GDP, but public debt remains larger than annual production.
The business start-up process is straightforward, with no minimum capital required, but obtaining necessary licenses remains costly. Rigid employment regulations are not conducive to job growth. In 2015, after a mid-program review of its four-year extended fund facility for Jamaica, the IMF praised the government for continuing to phase out subsidies to money-losing state-owned enterprises such as Clarendon Alumina Partners.
Jamaica’s average tariff rate is 7.3 percent. Some imports require a license. Foreign and domestic investors are treated equally under the law. State-owned enterprises distort several sectors of the economy. The financial system continues to grow, and the private sector has access to a wide range of credit instruments. Three large commercial banks dominate the banking sector, which remains relatively sound.