Jamaica

Politics:

• Analysis

  Jamaica politics: Quick View - Disunity persists within the opposition JLP

  Event

  Everald Warmington, an opposition member of parliament (MP) for the Jamaica Labour Party (JLP), recently filed a court injunction to block the reinstatement of three of four deputy party leaders, a move that was interpreted as an attempt to weaken the JLP leader, Andrew Holness. Although the injunction was subsequently withdrawn, it was a sign of the ongoing serious divisions within the party.

  Analysis

  Elected as the consensus candidate during leadership elections last year, Mr Holness has been perceived as weak. The injunction, which Mr Warmington withdrew the day before the JLP's 69th annual conference on November 18th, reflects the party's historic inability to keep internal disputes private. The injunction represents a significant setback for Mr Holness, who must restore party morale, which was badly damaged by the JLP's defeat in the December 2011 general election (when it won only 21 seats, compared with 42 for the People's National Party)-making the JLP administration (which held office in 2007-11) the first one-term government in Jamaica's history-and by the party's failure to win a single parish council in local elections that followed three months later.

  Mr Holness must now retake the initiative and pull his party together, just as senior party figures are admitting to widespread constitutional breaches beyond the recent deputy leadership nominations. JLP constituency organisations have not been holding regular meetings and reporting to the leadership at a time when the party needs to prepare for the next electoral cycle. Mr Holness has warned JLP members about their behaviour and has threatened action against Mr Warmington, who has frequently embarrassed the party with his public statements.

  Mr Holness is under pressure to restore public trust in his party, particularly among disenchanted middle-class voters, after the former JLP prime minister, Bruce Golding, was forced to resign in October 2011 over a scandal surrounding the extradition to the US of a JLP-aligned drug-trafficker, Christopher "Dudus" Coke. Funding will also be a challenge for Mr Holness. The JLP was forced to scale back its conference following record spending during the 2011 election campaign and significant legal costs after it defended challenges to the constitutional eligibility of several JLP MPs. However, Mr Holness will get some relief from the fact that there is no viable challenger to him at present within the party.

  The JLP- whose previous spell in opposition lasted 18 years-has further damaged its public image and future electoral chances with its latest display of disunity. This also served temporarily to distract public attention from the PNP government's much-criticised inability to conclude a new loan agreement with the IMF, negotiations on which started as far back as January.

  November 21, 2012

• Background

  Jamaica: Constitution and institutions

  A UK-style parliamentary system

  Under the constitution promulgated on independence in August 1962, the head of state is the British monarch, represented by a governor-general appointed on the advice of the prime minister. The legislature is bicameral, with an elected House of Representatives and a nominated Senate. The highest executive power is vested in the cabinet, members of which are chosen by the prime minister from both chambers of parliament. The attorney-general is a member of the lower house and acts as the cabinet's legal adviser.

  The powers and procedures of parliament correspond closely to those of the British system. The Senate comprises 21 members appointed by the governor-general: 13 on the advice of the prime minister and eight on the advice of the opposition leader. If there is no opposition, eight independent senators are appointed after consultation with the prime minister. The House of Representatives has 60 members elected by universal adult suffrage for a period not exceeding five years.

  The judicial system is based on English common law and practice. The judiciary consists of a Supreme Court, a Court of Appeal, magistrates' courts and other lower courts. The Judicial Committee of the UK's Privy Council is the final court of appeal. Along with many of its partners in the Caribbean Community (Caricom), Jamaica is expected eventually to switch its final appeal court to the Caribbean Court of Justice (CCJ), which was established in 2005. The CCJ is to adjudicate on disputes within the Caricom single market, and will be the final court of appeal for several member states. In 2004 the government tabled a bill to amend the constitution to replace the Privy Council with the CCJ as Jamaica's final court of appeal. However, a Privy Council ruling in 2005 produced a constitutional impediment to the recognition of the CCJ as Jamaica's final court of appeal, and a referendum may now be needed before such a change can be implemented.

  February 29, 2008

• Structure

  Jamaica: Political structure

  Official name

  Jamaica

  Form of government

  Representative democracy

  Head of state

  Queen Elizabeth II, represented by the governor-general, who is appointed on the recommendation of the Jamaican prime minister

  The executive

  Prime minister, chosen from the majority party in the House of Representatives; heads a cabinet of not fewer than 11 members

  National legislature

  Bicameral: 63-member House of Representatives (the lower house) directly elected for a five-year term; 21-member Senate (the upper house), appointed for the same concurrent term by the governor-general, with 13 seats allocated on the advice of the prime minister and eight on the advice of the leader of the opposition

  Legal system

  UK-style judicial system leading to the Supreme Court at the apex; the Judicial Committee of the Privy Council in the UK is currently the final court of appeal

  National elections

  December 2011; the next national election can be held at any time up to December 2016

  National government

  The PNP holds 42 seats in the lower house; the JLP holds 21 seats

  Main political organisations

  Government: People's National Party (PNP)

  Opposition: Jamaica Labour Party (JLP); National Democratic Movement (NDM); United People's Party (UPP)

  Main members of cabinet

  Prime minister, defence, development,information: Portia Simpson Miller

  Key ministers

  Agriculture & fisheries: Roger Clarke

  Attorney-general: Patrick Atkinson

  Education: Ronald Thwaites

  Finance, planning & public service: Peter Phillips

  Foreign affairs & foreign trade: Arnold Nicholson

  Health: Fenton Ferguson

  Industry, investment & commerce: Sharon Ffolkes-Abrahams

  Justice: Mark Golding

  Labour & social security: Derrick Kellier

  Mining, energy & ICT: Phillip Paulwell

  National security: Peter Bunting

  Tourism & entertainment: Damian Crawford

  Transport, works & housing: Omar Davies

  Water, land, environment & climate change: Robert Pickersgill

  Youth & culture: Lisa Hanna

  Central bank governor

  Brian Wynter

  December 05, 2012

• Outlook

  Jamaica: Key developments

  Outlook for 2013-17

  • The centre-left People's National Party (PNP) government, led by Portia Simpson Miller, will enjoy strong popular backing and a large parliamentary majority (42 of 63 seats). This will support governability and political stability.
  • The Economist Intelligence Unit expects a new IMF loan agreement to be put into effect in 2013, despite delays and nearly a year of negotiations. It will require public-sector spending and job cuts, and tax and pension reforms.
  • Feeble domestic demand and weak external conditions will limit Jamaica's GDP growth. After estimated contraction of 1% (revised from 0% earlier) in 2012, GDP will grow slowly, by 0.6% in 2013 and an average of 1.4% in 2014-17.
  • The fiscal deficit will remain substantial. Structural weaknesses will be aggravated by slow revenue growth, and the difficulty of reining in spending and cutting state payrolls will keep the risk of slippage against targets high.
  • Inflation will be influenced mostly by external factors. After reaching an estimated 8.3% at end-2012, it will ease slightly in 2013 to 7% on lower oil prices but pick up from 2014 as oil prices rise again.
  • The current-account deficit as a share of GDP will ease but will remain large, at an average of 7% in 2013-17, owing to Jamaica's strong import dependence and very modest economic growth during the forecast period.

  Review

  • Negotiations with the IMF on a new loan programme were still not finalised in November, making it unlikely that an agreement will be concluded and approved by the end of the year.
  • Jamaica was hit badly by Hurricane Sandy on October 24th. Preliminary calculations estimate damage of at least US$55m, but the final figure is likely to be higher. Losses in the agricultural sector were around US$17m.
  • Preliminary estimates show that GDP contracted by 0.6% in the third quarter, the result of a 2.4% decline in the goods-producing sector. Services growth was flat.
  • Remittance inflows from Jamaicans living abroad reached a record high of US$1.2bn in the first seven months of 2012, 3.3% higher than in the same year-earlier period. However, they fell back by 2.6% year on year in August.
  • The exchange rate breached J$90:US$1 in October, reflecting investor nervousness about the stagnant economy and delays in agreeing a new loan accord with the IMF. The average sell rate was J$90.9:US$1 on November 20th.

  December 05, 2012

Economy:

• Background

  Jamaica: Economic background

  Main economic indicators, 2007
  (Economist Intelligence Unit estimates)
  Real GDP growth (%)	1.2
  Consumer price inflation (av; %)	9.5
  Current-account balance (US$ m)	-1,400
  Exchange rate (av; J$:US$)	69.01
  Population (m)	2.7
  External debt (year-end; US$ m)	9,619.0
  Source: Economist Intelligence Unit, CountryData.

  Download text file (csv format)

  February 29, 2008

• Structure

  Jamaica: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 05, 2012

• Outlook

  Jamaica: Country outlook

  Jamaica: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The centre-left People's National Party (PNP) government, led by Portia Simpson Miller, enjoys a large parliamentary majority (with 42 out of the 63 seats) and strong popular support. Therefore, it faces few obstacles to its ability to govern. The Economist Intelligence Unit expects the government to pursue a broadly market-friendly policy stance, similar to that of its centre-right Jamaica Labour Party (JLP) predecessors. Ms Simpson Miller has identified high unemployment (14.3% in April 2012, the most recent figure) as one of the country's biggest problems. However, we do not expect the administration to boost job creation significantly, owing to severe constraints on the public finances, the need for spending cuts and weak economic growth. The JLP, damaged by a poor showing in the December 2011 general election and in March 2012 local polls, will undergo restructuring, as its seeks to modernise and broaden its appeal. However, internal disunity persists, and until that restructuring is completed, the JLP will pose little threat to the government.

  ELECTION WATCH: General and local elections took place in December 2011 and March 2012, respectively. The next general election is not due until 2016. Prospects for the PNP to remain in power will hinge on its progress in jump-starting economic growth and creating jobs. At this early stage, we expect that it will still be in a better position than the JLP to win that election.

  INTERNATIONAL RELATIONS: Jamaica's foreign policy priorities will focus on regional co-operation to combat drug-trafficking and on strengthening political and economic ties with the US, its main trade partner. Relations with Venezuela will be amicable, underpinned by its PetroCaribe programme, which provides petroleum on concessionary terms. The re-election of Venezuelan president, Hugo Chávez, in October means that the programme will continue, but its future is not assured, as Venezuela's growing economic constraints could make it difficult for it to maintain financial assistance to its neighbours, and because a recurrence of Mr Chávez's cancer could trigger an early transition to a successor. Relations with the UK and the EU will centre on assistance with reducing debt and stimulating growth.

  POLICY TRENDS: The PNP government will maintain broadly market-friendly policies, but the risk of financial-market uncertainty, stoked by the euro zone debt crisis, along with slow US and global growth, will complicate policymaking until external conditions strengthen. The government's Jamaica Emergency Employment Programme will not reduce unemployment by much, owing to feeble economic growth and fragile public finances. The wide fiscal deficit and large current-account deficit underscore the need for a new agreement with the IMF to bolster investor confidence and ensure financing support. The accord would replace a US$1.3bn, 27-month stand-by arrangement, which expired in May with several performance targets unmet.

  ECONOMIC GROWTH: Slow growth in the US, Jamaica's main trading partner, and volatile conditions in Europe will weigh on the economy in 2013, after which external conditions will gradually improve. Domestic demand will remain weak. We have revised our estimate for GDP growth in 2012 from flat to a contraction of 1%, based on a 0.6% contraction in the third quarter and estimates of a worse performance in the fourth, owing in part to the impact of Hurricane Sandy. Growth will resume in 2013, with more stable global conditions and higher demand for Jamaica's key exports, although expansion will be weak, at an annual average of 1.2% in 2013-17, as domestic conditions remain poor. We expect modest growth in private consumption--which accounts for over 80% of GDP--reflecting rising remittances and a very slight fall in unemployment in the latter part of the period. However, overall consumption will be restrained by long-standing problems such as eroding real wages, high unemployment and the heavy public debt burden. After contracting in 2008-12, government consumption will recover slowly, with average growth of 3.2% in 2013-17. Gross fixed investment growth will be held back by constraints on government spending, while the weak economy will deter private investment. Exports of goods and services will grow by an annual average of 4.6% in 2013-17, in line with stronger external demand. Imports will grow at a faster pace (by an annual average of 6.7%), as domestic demand improves and Jamaica remains dependent on imported energy, and so the net impact of trade on real GDP growth in 2013-17 will be negative.

  INFLATION: Despite weak demand-side pressures, annual consumer price inflation rose to 7.2% in October (from 6.7% in September) after prices increased 1% month on month. We expect prices to continue to rise in the remainder of 2012 and into 2013, owing to a weaker currency and also higher domestic food prices owing to the impact of Hurricane Sandy. We estimate inflation of 8.3% at end-2012, although this will decline to 7% in 2013. With global oil prices forecast to start to move up again from 2014, and domestic demand expected to revive, we forecast Jamaica's inflation rate to rise again thereafter. Any spikes in oil and food prices beyond our current forecasts, or further weather-related disruptions, would push up inflation still higher.

  EXCHANGE RATES: Uncertainty over the commencement of a new IMF agreement has increased pressures on the Jamaica dollar. The exchange rate breached the psychological barrier of J$90:US$1 in October, despite heavy intervention by the Bank of Jamaica (BoJ, the central bank). We now estimate a year-end rate of J$91.2:US$1 in 2012 (a nominal depreciation of 5.3% year on year) and forecast a year-end rate of J$93.5:US$1 in 2013. Expected IMF inflows from 2013 will help to support the currency, enabling the monetary authorities to continue to use the heavily managed float to limit nominal depreciation, and thereby to contain imported inflation and potential rises in external debt-servicing costs (external public-sector debt was 43% of total public debt in July 2012). However, downside risks remain. If investor sentiment sours and rapid capital flight resumes, the BoJ will have little scope to defend the currency, owing to the reduced level of reserves and limited monetary policy instruments.

  EXTERNAL SECTOR: We forecast that the current-account deficit will shrink to 6.8% of GDP in 2013, from an estimated 8.8% of GDP in 2012, as exports of alumina and bauxite--Jamaica's main commodity exports--revive, owing both to increases in production and to higher global prices. Domestic demand will stay feeble and oil prices will dip further, curbing import growth. However, the cost of imported fuel will start to rise again from 2014, and this is expected to coincide with growing demand for imported goods as economic conditions improve. This will sustain a large trade deficit and cause the current-account deficit to widen again as a share of GDP from 2015. Support will come from improving services and income balances as tourism earnings pick up in line with healthier external demand. Remittances inflows (which account for the bulk of transfers) will grow as employment conditions abroad improve, particularly in the US. We expect remittances to grow by 7-8% annually over the forecast period. Private capital inflows and foreign direct investment (FDI) will also increase in 2013-17, but there will be a continued reliance on multilateral loans to meet the external financing requirement, given insufficient reserves levels.

  December 01, 2012

• Forecast

  Jamaica: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	-1.0	0.6	0.9	1.2	1.4	2.0
  Gross fixed investment growth	-1.5	3.0	4.5	6.0	5.0	5.0
  Unemployment rate (av)	14.3	14.2	14.0	13.5	13.0	12.0
  Consumer price inflation (av)	6.9	8.4	6.8	7.6	7.8	8.4
  Consumer price inflation (end-period)	8.3	7.0	7.2	7.7	8.2	8.6
  Treasury-bill rate	6.4	6.6	7.0	7.5	8.0	8.6
  Central government balance (% of GDP)c	-6.3	-5.5	-5.2	-4.7	-4.4	-3.8
  Exports of goods fob (US$ bn)	1.6	1.7	1.8	1.9	2.0	2.1
  Imports of goods fob (US$ bn)	5.8	5.9	6.3	6.8	7.5	8.1
  Current-account balance (US$ bn)	-1.3	-1.1	-1.0	-1.2	-1.4	-1.7
  Current-account balance (% of GDP)	-8.8	-6.8	-6.4	-6.7	-7.4	-7.8
  External debt (year-end; US$ bn)	14.5	14.5	14.4	14.2	14.1	13.7
  Exchange rate J$:US$ (av)	88.67	92.00	93.82	94.45	95.16	96.22
  Exchange rate J$:US$ (end-period)	91.19	93.45	94.09	94.70	95.82	96.41
  Exchange rate J$:€ (av)	113.8	116.2	117.5	116.9	119.9	121.1
  Exchange rate J$:€ (end-period)	117.6	117.3	116.2	118.9	120.7	121.2
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Fiscal years beginning in April.

  Download the numbers in Excel

  Download text file (csv format)

  December 05, 2012

View detailed map

Country Briefing

Land area

10,991 sq km

Population

2.67m (2006; official estimate)

Main towns

Population in ‘000 (2001 census)

Kingston (capital): 658

Kingston metropolitan area: 579

Spanish Town: 132

Climate

Tropical all year; more temperate inland

Weather in Kingston (altitude 34 metres)

Hottest months, July and August, 26-32°C (average monthly minimum and maximum); coldest months, January and February, 22-30°C; driest month, February, 15 mm average rainfall; wettest month, October, 180 mm average rainfall

Language

English and local patois

Measures

UK (imperial system), converting to the metric system

Fiscal year

April 1st to March 31st

Currency

One Jamaican dollar (J$)=100 cents; exchange rates in 2011: J$85.8:US$1 (average); J$85.60:US$1 (year-end)

Time

5 hours behind GMT

Public holidays

New Year's Day; Ash Wednesday; Good Friday; Easter Monday; Labour Day (26th May); Emancipation Day (1st August); Independence Day (7th August); National Heroes' Day (16th October); December 25th and 26th

March 07, 2012