FACTORS OF PRODUCTION:- Human Resources- Capital- Land

PRODUCTION OUTPUT - GDP VALUES

EXPORT / LOCAL CONSUMPTION

Export sector earnings (US$2.2B)Local Consumption (US$5.7B)

IMPORT CONTENT LOCAL CONTENT

FOREIGN EXCHANGE DEFICIT

US$3.5 Billion

DEBT

Currency Depreciation

InflationHigher interest rates

Fiscal and Trade Deficit Complements

each other - trade off

JADEX EFFECT Source: Charting Jamaica’s Economic & Social Development, Chung, 2009

•JADEX •Right direction; necessary but insufficient•As pointed out in Fitch in upgrade:

•“Notwithstanding the IMF programme, Jamaica’s credit profile remains weak.”•“In order to sustain the fiscal effort, the government will have to implement politically difficult measures such as rationalizing public sector employment and maintaining a public sector wage freeze.”

•Continued low interest rates will depend on significant fiscal correction – quickly, which will initially have negative social consequences but will contribute to long term sustainability

•Sustainable and improved economic growth and development depends more on social factors – economics is a social science (see next chart)

•Would have preferred a more gradual approach than one imposed by IMF (explain)

Source: Charting Jamaica’s Economic & Social Development, Chung, 2009

Source: Charting Jamaica’s Economic & Social Development, Chung, 2009

SECTOR (Q4 2009) RATE COMENT

TOTAL REAL GDP (2.5%) Goods Producing (7.6%)

- Mining & Quarrying (56.8%) Alumina prod – (65%); Crude Bauxite – (1.1%)

- Construction (3.5%) Large employer of unskilled labour – lower income class

- Manufacture (4.6%)

- Agriculture 20.5% Other crops – 29.3%; Traditional crops – 155%; MOA doing a good job with expanding production. Growth opportunity remains in agro-processing

Services (0.7%)

- Trans, Storage, Comm (4.2%)

- Wholesale, Retail (0.8%)

- Electricity & Water 3.1% Opposite relationship with goods producing mean either (1) rates have increased; or (2) more inefficient/consumption use. Goods should be increasing at faster rate

2009/10 2010/11 2011/12 2012/13 2013/14

ECONOMIC PROGRAMME PROJECTIONS:Infl ation 11.20% 7.10% 6.70% 6.30%GDP Real Growth 0.60% 1.90% 1.90% 2.00%Fisca l ba lance -7.50% -4.90% -2.50% -0.50%Publ ic debt/GDP projections 140% 140% 135.60% 126.10% 114.90%

Imputed Numbers:Revenue 290,358.1 330,500.0 366,400.0 402,800.0 441,300.0

Programmes 67,962.8 ? ? ? ?Wages and Sa l 125,754.2 125,754.2 125,754.2 125,754.2 125,754.2 Interest 159,007.4 132,693.3 141,760.7 144,616.6 144,290.3 Capi ta l 35,543.3 ? ? ? ?

Fisca l ba l (97,909.6) (95,182.4) (68,590.9) (38,389.9) (8,407.4)

GDP 1,138,204.6 1,269,098.2 1,399,815.3 1,535,597.4 1,681,479.1 Fi sca l defi ci t ($) 95,182.4- 68,590.9- 38,389.9- 8,407.4-

Debt 1,593,486.5 1,776,737.5 1,898,149.5 1,936,388.3 1,932,019.5

2009/10 2010/11 2011/12 2012/13 2013/14Tax projection 266,600 303,000 336,000 369,500 404,800 - as % of GDP 23.4% 23.9% 24.0% 24.1% 24.1%

GDP (in US$M) 12,055 13,051 13,708 14,391 15,159 Ex rate 94.42 97.24 102.12 106.71 110.92 17.5%Noinal GDP Growth 3.30% 11.50% 10.30% 9.70% 9.50% 4.4% 4 yr avgAvg Tbill rate 17.50% 13.10% 10.60% 10.50% 11.00%

CURRENT ACCOUNT -1129 -1142 -905 -846 -760

Trade Balance -3529 -3525 -3691 -3753 -3828- Exports 1427 1585 1726 1863 1994- Imports 4686 5090 5417 5616 5821Exports/Imports 30.5% 31.1% 31.9% 33.2% 34.3%

Fuel 1687 1894 2107 2217 2332- as % of GDP 14.0% 14.5% 15.4% 15.4% 15.4%

Tourism 1956 2052 2145 2243 2346- inc % 4.9% 4.5% 4.6% 4.6%Remitt ances 1861 1965 2232 2330 2484

5.6% 13.6% 4.4% 6.6%

Direct investments 391 308 685 444 452

no tax increases (rates) projected

use of fuel projected to be more ineffi cient

depends on social factors

depends on global economy- reasonable except spike in 2010/11

what accounts for spike in 2011/12?

2009/10 2010/11 2011/12 2012/13 2013/14

Current Account -1,129 -1,142 -905 -846 -760 Trade Balance -3,529 -3,525 -3,691 -3,753 -3,828 Exports 1,427 1,565 1,726 1,863 1,994 Imports 4,686 5,090 5,417 5,616 5,821 Fuel 1,687 1,994 2,107 2,217 2,332 Exceptional imports Other Services 681 811 809 864 916 Travel 1,712 1,802 1,888 1,977 2,072 Private transfers (remitt ) 1,861 1,965 2,232 2,330 2,484

Exports/Imports 30.5% 30.7% 31.9% 33.2% 34.3%Fuel/GDP 14.0% 14.5% 15.4% 15.4% 15.4%Fuel/Imports 36.0% 39.2% 38.9% 39.5% 40.1%

Inc change in current acct -13 237 59 86Inc change in trade bal 4 -166 -62 -75Inc change in exports 138 161 137 131Inc change in imports 404 327 199 205Inc change in fuel 307 113 110 115Inc change in other imports 97 214 89 90

Inc change in travel 90 86 89 95Inc change in remittances 104 267 98 154

QUESTIONS/DISCUSSION