IMF slices growth forecast for Jamaica

Jamaica is forecast to leap over some of its regional peers next year, amid recovery from the coronavirus pandemic, new growth estimates released on Tuesday by the International Monetary Fund show.

But this year, while the country is still expected to expand its economy, the IMF is less bullish on its prospects and chopped its 2021 forecast by more than two percentage points to 1.5 per cent, or less than half the previous forecast. The forecasts relate to the calendar year.

The recovery in Jamaica will in calendar year 2022 see it moving from the middle of the pack of 33 Latin American and Caribbean or LAC economies to the tenth spot. But that will only last for 2022. It moves back to its original position the following year.

Caribbean economies are generally expected to outperform the Latin American grouping, due largely to the outsized growth projected for oil- fuelled Guyana, which, while geographically located in South America, is aligned politically and trade-wise with the Caribbean under the Caricom bloc.

The IMF World Economic Outlook in its five-year forecast for Guyana sees the new oil-producing nation growing at 16 per cent in 2021 and 46 per cent in 2022 but falling to 3.0 per cent in 2026.

Jamaica is expected to expand by 1.5 per cent this year, tracking below the LAC regional average of 4.6 per cent; then spring to 5.7 per cent in 2022, to outperform the regional average of 3.1 per cent; while falling back to 2.2 per cent growth in 2026, almost in line with the projected regional average of 2.4 per cent.

Previous IMF estimates last October projected growth in calendar 2021 for Jamaica of 3.6 per cent but that was revised downwards due to slower than expected tourism recovery.

“Moreover, 2021 projections for the tourism-dependent Caribbean economies have been revised down by 1.5 percentage points to 2.4 per cent,” the report stated.

Jamaica suffered economic contraction of about 10-12 per cent in 2020, its worst on record, but others in the region suffered worse declines due to a heavier dependence on tourism.

Minister of Finance and Planning Dr Nigel Clarke in a recent press briefing on the national budget said Jamaica’s recovery was expected to be in line with its regional neighbours.

“We believe Jamaica’s growth will be consistent with growth that we will be seeing around the region, and around the world. The crisis has affected countries in very different ways. Some of our sister countries in the region are much more highly dependent on tourism than we are, and they would have experienced higher declines this year,” said Clarke, citing as one example the case of Aruba, which contracted by more than 25 per cent.

“So, it is possible based on how quickly tourism recovers, that those economies would register larger numerical gains, just by virtue of that fact,” he said back in March.

The fastest growing countries in the LAC region in 2022 are projected as Guyana, 46 per cent; Aruba, 12 per cent; Antigua & Barbuda, 12 per cent; St Kitts & Nevis, 11 per cent; St Lucia, 11 per cent; Bahamas, 8.5 per cent; Barbados, 7.7 per cent; Belize, 6.4 per cent; Dominica, 5.8 per cent; and Jamaica, 5.7 per cent.

Global growth is projected to hit a record 6.0 per cent in 2021 [See story on Page C8], then moderating to 4.4 per cent in 2022.

steven.jackson@gleanerjm.com