The Economy

As with several other Caribbean countries, Jamaica's economy has been characterized in recent years by low growth. With a current GDP per capita of US$1,554, the economy grew at only 1.4% in 1993 and 1.4% in 1994. This compares to an average real growth of 3.8% during the years 1987-1993, and came in part from the contraction of the bauxite/alumina industry and stagnation in the manufacturing sector. Revised estimates for 1994 point to a GDP increase of about 0.8%, with projections for modest growth in the short term as the nation continues on its course for macroeconomics stability. Within the medium term, Government has set a goal of approximately 3% annual growth, which would lift Jamaica into the group of lower-middle-income countries, and provide the foundation necessary to fight poverty.

The composition of Jamaica's economic product has been slowly shifting, as the service sector has increased from 62.2% of real GDP (exclusive of imputed service charges) in 1986 to a 72.4% contribution in 1994. In 1994, overall the services sector exhibited a 0.6% growth at constant prices. Agriculture, mining, transportation, finance and insurance were the sectors which grew in 1994. It is expected that small farming in the labour intensive agricultural section will remain. The service sector is the fastest growing segment of world trade, and Jamaica is thinking strategically about where its current and potential advantages are in this market, but in 1994 the service sector declined by 1.5% while the productive sector grew by 1.0% in the same year. Tourism is already an important source of earnings from abroad with good opportunities for expansion in the future, although 1994 saw a 2.5% decline in visitor arrivals when compared to 1993. However, Jamaica is already starting to diversify into the growing markets for nontraditional service exports such as offshore data processing, telemarketing, bio-technology, insurance and specialty tourism. Of particular importance to this JANEAP is Jamaica's potential for capturing a portion of the fast growing environmental tourism market. To fully exploit this opportunity the nation's natural treasures such as the Blue and John Crow Mountains, the South Coast Wetlands (including the Black River Morass), its dry limestone forests and the coral reefs and related marine ecosystems would first require adequate protection and the development of appropriate management systems.

Despite recent problems in the mining, manufacturing and construction sectors, these areas still contributed about 41.6% to Jamaica's GDP in 1992 and 38% in 1994. The 3.6% decline in contribution was attributed to a 2.1% decline in mining a 0.7% in manufacturing and 0.8% in construction. Although there was a decline, the contribution of the three sectors to the GDP remained an important component of Jamaica's economy. Given the rural makeup of much of Jamaica, and the high levels of unemployment and poverty, it is expected that the labor intensive agricultural sector will remain an important source of employment and potential export growth into the future. Specialty agricultural products, such as Blue Mountain Coffee, flowers and tropical fruits may provide impetus for Jamaica's future development. In this light, and also given the importance of the environment to the tourism industry, the need for strategic planning for protection of Jamaica's natural resources into the future becomes even more critical.

The most fundamental aspect of Jamaica's fiscal economy is the large proportion of debt repayment in the fiscal budget. With a foreign debt of about $US3.6 billion, the government will make more than $US500 million in external debt service payments during this fiscal year. The repayment of domestic debt is even larger, and combined debt repayment accounts for almost 50% of the public sector budget, constraining the government's ability to make all the investments in the environment which are necessary. However, the Government of Jamaica has made proper environmental planning and protection a national priority, and will seek multiple avenues to ensure sustainable development, including (1) using economic tools and incentives to encourage efficient use of natural resources; (2) working with the private sector and NGOs in environmental management and protection; and (3) looking to external sources of financing and investment for meeting critical needs on the road to sustainable development; (4) looking to population control as a means of reducing the pressure on the natural resources base, some of which is non-renewable.

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