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Remember the “five in four” promise? The one in which Jamaica aims to achieve five percent economic growth targets within four years starting in 2016? This pronouncement came from the Chairman of the Economic Growth Council, Michael Lee-Chin. Jamaica’s official growth targets are actually more conservative. Evidently, the widely circulated “five in four” target was nothing more than the wishful pronouncement of the Growth Council Chairman.
The Official Economic Growth Targets
The real target is in the region of 1.8 percent in a fiscal year. One can hardly blame the government for being cautious. Jamaica has never achieved GDP growth in the five percent range. It seems hardly likely that after around thirty years of anaemic growth, the Jamaican economy can suddenly burst into a growth spurt.
Initially, the five in four “target” was expressed as though the five percent was an annual target. Other reports suggest that the five percent target was a cumulative one where growth will take place over the four years to finally add up (at the fourth year) to a five percent growth. Even if this was true, the official targets do not fit with that cumulative expectation.
So, here are the targets that the Jamaica government is striving for:
- 3 percent growth during 2016/17
- Two percent growth projected for 2017/18
- 5 percent to be achieved in 2018/19
The above targets are expressed in the GOJ’s Fiscal Policy Paper. Not five percent per year to 2019/20. Not cumulative so that by 2019/20 (this current fiscal year, mark you) the target is 5.0 percent.
So, the question to ask is where is Jamaica’s actual growth now?
Actual Economic Growth Performance
The answer is noted in the GOJ’s Fiscal Policy Paper of February 2019.
According to the Fiscal Policy Paper, during the fiscal year, 2017/18 Jamaica experienced a real GDP growth rate of 0.9%. Compare that with the projection of 1.3% growth for that year. In other words, in terms of Gross Domestic Product (GDP), the Jamaican economy grew – barely.
Interestingly, the Goods Producing Industry was the lead driver of the real GDP growth that took place. Mining & Quarrying, Agriculture, Forestry & Fishing and Construction also contributed to the growth experienced.
The projected GDP growth for 2018/19 fiscal year is 1.8 percent. The actual growth rate did not meet that target either. The same Fiscal Policy Paper projects a 1.5 percent GDP growth rate for the fiscal year 2019/20.
By the government’s own calculation, the medium-term growth projection is between the range of 1.5 – 2.6 percent. The medium-term means a period of three to five years. So, Jamaicans can take their minds off the Economic Growth Council Chair’s optimistic “five in four” promise.
Another Economic Growth Factor – Debt-to-GDP
Fortunately, the GOJ has another measure for economic performance that it likes to turn to. That is the debt-to-GDP Ratio. As most Jamaicans who keep abreast of the news would know, the country is coming from a Debt-to-GDP Ratio of 145 percent. Undoubtedly, Jamaica has experienced tremendous success in erasing much of its debt obligations through fiscal prudence since 2016.
The current Debt-to-GDP projections are for 2018/19 to achieve a ratio of 96.4 percent. This projection compares well with the actual performance in the 2017/18 of a Debt-to-GDP Ratio of 101.0 percent. Readers might recall that during the 2016 General Elections one of the promises was to bring Debt-to-GDP to 100 percent.
Positive Debt-to-GDP Outlook
The outlook for 2019/20 is for the Debt-to-GDP to be in the 90.9 percent region. By all indications, Jamaica is likely to achieve this target.
Naturally, continued fiscal prudence, that of controlling the appetite for debt, coupled with aggressive economic growth are the hallmarks for the GOJ’s economic reforms. After five reviews by the International Monetary Fund, Jamaica has emerged with flying colours as the IMF continues to rate Jamaica’s performance positively.