WASHINGTON – The International Monetary Fund (IMF) on Tuesday predicted that Jamaica would register economic growth of 4.3 per cent this year, down from the projected growth of 4.7 per cent last year.
The Washington-based financial institution said that while the Jamaican economy was rebounding, risks remained significant with the coronavirus (COVID-19) pandemic being the main one.
“Renewed COVID-19 waves in Jamaica or abroad could lead to a more prolonged disruption of tourism, trade, and capital flows. Another risk is posed by the uncertain duration of global inflationary pressures, which have boosted inflation to well above the Central Bank’s target range of 4-6 per cent. Natural disasters continue to be an ever-present risk,” the IMF said following the conclusion of the executive board’s 2021 Article IV consultation1 with Jamaica.
It said that in the decade preceding the pandemic, Jamaica made good progress to restore macroeconomic and financial stability.
Aided by Fund financial support, the fiscal deficit was brought down from 11 per cent of gross domestic product (GDP) in 2009 to a surplus; public debt fell from 142 per cent of GDP to 94 per cent in 2019; and inflation and the current account deficit declined.
The IMF noted that while an early lockdown in 2020 helped contain the number of COVID-19 cases, the impact on the economy was severe, with real GDP shrinking by 10 per cent.
“To mitigate the impact of the pandemic on public health and the economy, the authorities suspended the fiscal rule for a year and swiftly implemented public health measures and a fiscal package to support jobs and protect the most vulnerable segments of the population. The downturn and the fiscal package resulted in a fiscal deficit of 3.1 per cent of GDP in Financial year 2020/21.”
In their assessment, the IMF executive directors “welcomed the authorities’ swift and comprehensive policy response to the pandemic, which helped limit its health and economic impact”.
They noted that as the economy was recovering, uncertainty and risks remain elevated and that the ear-term policy priority was to protect lives and livelihoods, while preserving macroeconomic stability.
Over the medium term, the IMF directors stressed the need to rebuild buffers, safeguard debt sustainability, and prioritise structural reforms that reduce poverty and boost potential and inclusive growth. (CMC)