The Government of Jamaica (GoJ) considers foreign direct investment (FDI) a key driver for economic growth and in recent years it has reformed its economy to improve the investment climate. Despite the negative effects of the COVID-19 pandemic, the war in Ukraine, and the ongoing tightening of global financial conditions, Jamaica’s sound policy framework and policies prioritizing macroeconomic stability helped the economy recover strongly in 2022. The expansion brought the unemployment rate to historic lows, causing some challenges for employers.
The Jamaican economy grew by 5.2 percent in 2022, clawing back the lost output associated with the COVID-19 shock a year ahead of projections. This recovery was particularly impressive, as following previous shocks the Jamaican economy plunged into deeper recession. While the entire economy registered growth, tourism continued to lead the resurgence in output. The economic expansion had a positive impact on revenues, allowing the government to maintain its fiscal consolidation program, including a reduction in the debt to GDP ratio to below pre-pandemic levels. The country has now shed almost 60 percentage points from its debt to GDP ratio in less than a decade and is on track to reach its target of 60 percent of GDP by 2028. The fiscal space created by debt reduction allowed the government to execute public sector wage reforms. Inflation ended 2022 at near to 10 percent but began trending lower in 2023.
The International Monetary Fund (IMF) Article IV Consultation released on February 10 lauded Jamaica’s fiscal performance, noted international reserves remain at healthy levels, and the financial system is well capitalized and liquid. The IMF’s Executive Board approved $1.7 billion in credit to Jamaica to protect against global economic, pandemic, and climate risks – a testament to the country’s sound economic policies. Fitch Ratings upgraded the country’s sovereign debt outlook to positive in March 2023, attributing the revision to the significant progress in debt reduction, its institutional framework, and favorable financing conditions.
Despite the economic progress, Jamaica’s high crime rate, corruption, and comparatively high taxes have stymied investment prospects. The country’s Transparency International corruption perception ranking improved marginally from 70 (2021) to 69 (2022) out of 180 countries. Despite laws that prescribe criminal penalties for corrupt acts by officials, there were still reports of corruption at some ministries and agencies. Measures implemented to address crime continued into 2022, including the continuation of Zones of Special Operations in several high crime areas of the island however, it did not significantly impact the overall murder rate. Jamaica continues to have one of the highest homicide rates in the world. The Embassy has an active Overseas Security Advisory Council consisting of U.S. companies in the hospitality, aviation, and other key sectors.
In 2021, the U.S. direct investment position in Jamaica was $39 million, while Jamaica had $60 million in investment in the United States. Based on 2021 World Investment Report, Jamaica received total FDI of $321 million, up 21 percent and had outward FDI of $56 million. Spain and Mexico were the major drivers of FDI in 2021. Tourism, mining, and energy have been the major areas of investment inflows into the island. The host government has also promoted business process outsourcing (BPO), but investment in the BPO industry has been constrained by labor availability. The private sector anxiously awaits pending renewable energy tenders. Investments in improved air, sea, and land transportation have reduced time and costs for transporting goods and have created opportunities in logistics services. However, port security deficiencies and customs delays continue to present challenges.
|TI Corruption Perceptions Index||2022||69 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||2022||27.7 of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2021||USD 176||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2021||USD 5190||https://data.worldbank.org/indicator/NY.GNP.PCAP.CD|