IMF Predicts Strong Rebound For Jamaica’s Economy

• The IMF has indicated that the availability of pre-COVID-19 buffers built up by the government, coupled with the calibrated policy response through an ambitious reform programme and strengthened oversight of the financial system, ensured the pandemic-related shock was not followed by a fiscal, financial, or balance of payment crisis. 
• The Fund acknowledged that the economy is recovering. Tourism has rebounded to near 70.0% of pre-crisis levels, despite two COVID-19 waves this year, and other sectors have picked up as well. Real GDP in Q2 2021 was 14.2% higher than the same quarter a year earlier. The IMF projects growth of 8.25% in FY2021/22, moderating to 3.5% in FY2022/23.
• However, the risks to the outlook are substantial with COVID-19 being the most significant. A third COVID-19 wave is abating, and vaccination has picked up pace, with one million people now having received at least one dose. But new COVID-19 waves in Jamaica or abroad could lead to a more prolonged disruption of tourism, trade, and capital flows. 
• The uncertain duration of global inflationary pressures poses another risk to the forecast. The sharp rise in world food and energy prices has helped push year-on-year inflation to 8.5% in October, well above the central bank’s target range of 4-6 percent. Natural disasters continue to be an ever-present risk. On the other hand, a faster pace of vaccinations at home and abatement of the pandemic in Jamaica’s main tourism markets are upside risks. 
• As the crisis recedes and the recovery advances Jamaica should restart debt reduction and rebuild buffers. Importantly, the Fund opined that policies should also focus on boosting growth, which has been low in the last decades, enhancing institutions, and tackling the still high levels of poverty and crime.

(Source: IMF & JIS News)