Country Risk Rating

A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high. - Source: Coface

Business Climate Rating

The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.


  • Natural resources (bauxite, sugar, bananas, coffee) and tourism
  • Financial support from multilateral institutions
  • Substantial remittances from the diaspora
  • Stable democratic framework


  • Poorly diversified economy
  • Vulnerable to external shocks (climate, US economic cycle, commodities)
  • Very high public debt and debt service inhibiting growth
  • High rates of crime and poverty

Current Trends

Gradual growth recovery

Jamaica's economic growth contracted sharply because of the COVID-19 crisis and flooding caused by tropical storms in 2020. In 2021, growth is expected to resume slowly and gradually. The fall in activity in 2020 was mainly due to the decline in tourism, which accounts for 31.1% of GDP and 32.8% of employment. Travel restrictions introduced because of the health crisis and the closure of the island's borders severely impacted tourism revenues (56.7% of total exports). Tourism is expected to recover slowly in 2021, despite the gradual lifting of restrictions since June, as the virus is still present and challenges could persist. The agricultural sector (6.6% of GDP) was also impacted in 2020, primarily by the decline in demand from the hotel and restaurant sector. Farmers found themselves with stocks of unsold fresh produce, leading to significant financial difficulties. The government responded by allocating USD 6.8 million to help farmers cope. This may not be enough, as the year-end crops were damaged by flooding. In 2021, this sector should resume its development and return to its pre-crisis level. The mining sector (4.1% of GDP with bauxite and its derivative, alumina), which was hit by tropical storms at the end of the year and the shutdown of the Jisco Alpart refinery, should benefit from the pickup in demand and prices. However, renovation work on the Jisco Alpart refinery, which was postponed due to COVID-19, will extend the facility’s closure to 2021.

Household consumption (76% of GDP) fell sharply in 2020 due to the decline in activity and rising unemployment (12% in 2020 against 7% in 2019). The government introduced mild measures to support the economy and consumption. Expatriate remittances, however, increased, due to savings set aside before the crisis and government aid in host countries, particularly the United States, where the majority of expatriates work. In 2021, household consumption is expected to recover modestly. After contracting in 2020, private investment in tourism, which was substantial before the crisis, should support the recovery in 2021. Although some projects have been delayed, the government's massive support for this sector underpins the confidence of investors, who may invest more in 2021. In addition, the government is seeking to use public-private partnerships to invest in infrastructure projects such as the upgrade of the Sangster airport in Montego Bay or motorway construction.

Improvement in the current account and public deficits

The public balance, which has shown regular surpluses due to the austerity policy, went into deficit in 2020. To cope with the crisis, the government had to considerably relax its fiscal policy and increase spending in the context of declining revenues. In 2021, the public balance is expected to return close to balance as austerity is reinstated. The government is grappling with a colossal public debt burden, which has been exacerbated by the crisis. This is reflected in debt service (approximately 14% of GDP, including 6% for interest in 2019), which continues to eat up public resources.

The current account deficit also widened in 2020, hurt by the deterioration of the trade deficit as tourism dried up. In order to finance the deficit and meet the urgent financial needs created by the crisis, the IMF provided USD 520 million in assistance. This year, the deficit is expected to shrink slightly with the partial return of tourists, without returning to its pre-crisis level due to the resumption of imports and the modest rise in oil prices. Moreover, the increase in exports will be marked by a moderate recovery among partners including the United States and the Eurozone.

Holness remains in power

Although a record percentage of voters stayed away (63%) due to the health crisis, Prime Minister Andrew Holness and his Jamaica Labour Party (JLP) won a second term in the September 2020 parliamentary elections. They were re-elected with an overwhelming majority, securing 17 more seats than in 2016. Holness will continue to enjoy popular support because of his effective handling of the crisis. This should allow him to pursue the fiscal consolidation process undertaken under IMF supervision since 2013, after easing up slightly in 2020 because of the crisis. However, the challenges facing the government remain. On the one hand, the government will need to step up its efforts to fight crime, which remains the country’s number-one problem. On the other hand, public perception of corruption and non-transparency seems to be growing, especially after a scandal over the misuse of public funds, which involved a former minister.

On the geopolitical front, the government should focus on relations with the United States, the country’s main trading partner and source of remittances from expatriate workers. It is also expected to focus its efforts on regional cooperation, particularly to fight crime and drug trafficking.



Coface (02/2021)