Jamaica’s Decade of Misery Is Almost Overby
As U.S. expands, Jamaica may be able to grow as much as 3%
Caribbean country trying to slash one of world’s biggest debts
Jamaica will finally recover from the global financial crisis this year after a decade of sluggish or negative growth, according to a forecast from the central bank.
A stronger expansion in the U.S., Jamaica’s biggest source of trade and remittances, will help the Caribbean economy expand as much as 3 percent in the next fiscal year, which starts in April, Bank of Jamaica Governor Brian Wynter said. That would be its fastest pace in eleven years, and would take output past its 2007 peak.
The $14 billion economy has struggled in recent years, weighed down by one of the region’s heaviest debt burdens, even as neighbors Panama and the Dominican Republic have enjoyed the best growth rates in the Americas. Investors appear to share the central bank’s view that the worst is over, with Jamaica’s stock market returning 140 percent over the last two years, the most in the world.
“Economic growth has been picking up in phases, slowly, but in a positive direction Jamaica is in a recovery,” Wynter said in a telephone interview from Kingston. “Much depends on the very question of how much US tail winds will give a boost to Jamaica.”
Jamaica still carries one of the highest debt loads in the Western Hemisphere at 122 percent of gross domestic product, even after restructuring in 2010 and 2013. The nation won praise -- and a $1.7 billion standby loan -- from the IMF for its commitment to cut its debt ratio in half by 2025. The yield on the nation’s dollar bonds due in 2025 has fallen 132 basis points to 5.45 percent over the last year.
Wynter said Jamaica is vulnerable to uncertainty created by events such as Trump’s election and Brexit, but has bolstered its defenses by building foreign reserves, allowing the Jamaican dollar to fall from an overvalued level, and reducing its dependence on foreign crude imports by using more renewable energy and natural gas.
“We’re going to keep driving forward with reforms so that investors look at Jamaica and focus on what the opportunities are more than what’s going on with Trump or Brexit, or whatever,” he said.