Jamaica
News - Real Estate - Economy
Source: Caribbean Net News, March 10, 2007
Jamaican economy 'remarkably
strong' during 2006/07, says IMF
The International Monetary Fund (IMF) has said that the Jamaican economy has
performed "remarkably strong" during the 2006/07 fiscal year and was
on target to achieve its best growth performance in more than a decade.
As contained in the conclusion statement of
the Jamaica 2007 article IV Consultation, which was tabled in the House of
Representatives on Tuesday by Minister of Finance and Planning, Dr Omar Davies,
"the economy has made a strong recovery from shocks encountered in 2004-05
and real economic growth of almost three percent is expected in financial year
2006/07 up from two percent the previous year and 0.4 percent the year
before".
"This robust economic performance is being
underpinned by the strength of the agricultural and tourism sectors. Production
has expanded sharply across all agricultural categories and the sector as a
whole is now projected to grow by 11 per cent this year," said the report.
It added that the important tourism sector is
expected to register double digit growth for the fiscal year, notwithstanding
some weakening in January on account of unseasonably warm weather in North
America.
The statement made reference to the fact that the
Bank of Jamaica had successfully managed to lower inflation without constraining
the economic recovery. It added that "annual headline inflation is on track
to fall about 6½ per cent at the end of the fiscal year, compared to a recent
high of over 19 per cent in September 2005 and a target of 9½ per cent for the
year".
The document also mentioned that the external
current account balance was on an improving trend and capital inflows have been
strong through 2006. "The current account deficit should decline to 10¾
percent this fiscal year, from 11½
percent last year. This improvement is the result of strength in exports,
including non traditional products, as well as robust receipts from remittances
and tourism.
The IMF statement also pointed out that the
exchange rate remained broadly stable during 2006 despite cuts in interest
rates, but the currency came under some pressure early in the new year.
"Through most of 2006 capital inflows
enabled the Bank of Jamaica to purchase foreign exchange in the market without
putting excessive pressures on the exchange rate. All in all, the nominal
bilateral rate vis-a-vis the US dollar depreciated by under 4 per cent (year on
year) during 2006," the document said.
The statement also mentioned that Jamaica had met
its budget targets "through the first eight months of the fiscal year, but
a large gap emerged in December".
"Through November, a small revenue
shortfall had been more than offset by lower capital expenditures, resulting in
a smaller than programmed budget deficit. In December, however, monthly revenues
fell short of target, in amounts by 0.7 per cent of annual GDP, mostly on
accounts of wages," it said.
In the meantime, the IMF pointed out that after
the upcoming elections, the then government would have an important opportunity
to "unleash Jamaica's full economic potential".
"It will be an opportune time to
reinvigorate the macro economic strategy with decisive actions to put the debt
ratio more securely on a downward path. Such reinvigoration of the strategy will
help to promote credibility and stability over the medium term and thus
stimulate private sector investment and growth," the statement said.
The IMF also recommended deep reforms to ensure
"that the role of the government in the economy is commensurate with an
environment where the private sector is the engine of growth will be key".
|
