The rolling tides of economic woes have slammed the shores of Jamaica. The island nation’s unemployment rate has risen above 12% while its debt-to-GDP ratio is at a staggering 130% - not far behind Greece. Discussion has started with the International Monetary Fund for a significant amount of debt relief.
This will not be the first time the international financial institution has come to Jamaica’s aid for in 2010, the country received $1.27 billion. Prime Minister Portia Simpson-Miller of the People’s National Party, who stepped into office early January 2012, has yet to implement many of her social and economic policies (one of which includes finalizing negotiations for financial aid with the IMF). Other hot topics of Jamaica’s political discussion are tax and pension reform and reducing wages for government workers.
The economy has been relying heavily on its mining and tourism industries for a significant period. But the strip-mining of Bauxite, the aluminum ore, has been decreasing because of both a significant decrease in demand and a rise in cost of production. Even the once-renowned agricultural industry has declined due to increased competition and unfavorable weather patterns. However, the tourism sector has been resilient against the global economic crisis. In fact, Jamaica saw a record-breaking number 1.75 million tourists this past year. But this increase does not come without concessions. Hotels and resorts have been heavily discounting prices in recent years to increase visitors, not only in Jamaica but all over the world.
The government has been trying to grow its manufacturing and technology industries, but with the rising cost of production. Only with increased competition and productivity can they fight the recession that has gripped the world. Yet, creating jobs in a healthy private sector in a country with a strong centrally controlled economy is a challenge. Hopefully, the new government will be more effective in building a healthy relationship with not only the private sector, but also investors. Foreign capital inventors are crucial to rebuilding the struggling economy, regardless of the IMF deal.