KINGSTON, Jamaica, Thursday June 29, 2017 – The World Bank says Jamaica is poised to generate increased economic growth of two per cent and more per annum by the 2018/19 fiscal year.
The Bank’s lead economist, Philip Schuler, says this projection is based on the Government’s prudent fiscal stance and the resulting stable inflation rate; improvement in the country’s current account balance; and heightened business confidence, which is expected to generate significant new investments.
He was speaking via video-link from the Bank’s headquarters in Washington DC, during a recent media briefing hosted by the World Bank Jamaica office.
Schuler praised the Government for maintaining the fiscal stance that continues to generate steady improvements in Jamaica’s economy, following protracted periods of volatility.
He noted that apart from “a couple of bad quarters” in 2014, there have been notable growth and improvement in key areas, such as the gross domestic product (GDP) and employment.
The Bank of Jamaica (BOJ) and Planning Institute of Jamaica (PIOJ) report that the GDP out-turn for the March 2017 quarter ranged between zero and one per cent, with the forecast for the 2017/18 fiscal year expected to be between 1.5 and 2.5 per cent.
In relation to employment, the Statistical Institute of Jamaica (STATIN) reported that the total number of employed persons, as at January 2017, increased by 21,900 to 1,185,700. This translated into a 0.6 reduction in the unemployment rate, which fell to 12.7 per cent.
Schuler further pointed to the current account balance, which improved from a deficit of 10 per cent of GDP in 2012/13 to just under one per cent in 2016, the best out-turn in 20 years.
“If you look at the components of that (not only does) it reflect growth in net exports and services (for) both tourism and business process outsourcing, but also a declining trade and merchandising trade deficit and lower oil prices,” he noted.
The World Bank executive also highlighted improvements in the budget which he noted successive Administrations have been able to balance since 2013, consequent on the declining national debt, resulting in a reduction in the deficit, which he forecasts will further improve.
Of note, Schuler said, was that where Government expenditure increased over the five-year period, this was matched with significant revenue inflows.
The Government’s total expenditure for the 2016/17 fiscal year was $503.4 billion, while revenue intake was $458.3 billion.
Schuler also pointed to the dramatic decline in the rate of inflation, noting that while this has increased slightly since the start of 2017, it is expected to remain within the Bank of Jamaica’s forecast range.
This, he added, reflected significant stability in the prices of goods and services, “which is very important for the economy”.
The BOJ reports that the rate of inflation for fiscal year 2016/17 was 4.1 per cent, while out-turn for the March 2017 quarter was 2.3 per cent.
Schuler said these out-turns are “a very clear sign that the economic (and) policy reforms that the Government has been undertaking have led to a lot of stability and improvement in the long-run sustainability of public finances.”
However, he urged the administration to be mindful of the prevailing risks to which the economy remains vulnerable.
These, he said, include a debt level that remains very high, and the country’s vulnerability to natural hazards and climate change, adding that Jamaica is an open economy subject to global shocks arising from policy uncertainty.
The Bank’s Country Manager for Jamaica, Galina Sotirova, also underscored the need for further strengthening of the nation’s and economy’s resilience to natural disasters and other exogenous shocks.