The Jamaican economy is projected to grow by 1.6 percent next year according to the latest Preliminary Overview of the Economic Commission for Latin America and the Caribbean, ECLAC, Report 2019.
ECLAC’s report suggests that while the Jamaican economy is improving challenges remain relating to debt and currency depreciation.
The ECLAC report says the Jamaican economy recorded growth rates of 1.5 per cent in the first quarter of 2019 and 1 per cent in the second.
Projections are for a 1.7 percent growth rate for the year.
However, the report says fiscal challenges continue to be a main concern as the Government of Jamaica seeks to control its public finances.
ECLAC says the principal challenge facing the Jamaican economy is the debt overhang which is still high.
According to ECLAC external debt was the largest component, at 61 percent, while domestic debt was just under 39 per cent.
Another area identified by ECLAC is the depreciation of the Jamaican dollar.
The report says in 2018, the Jamaican dollar experienced at least four cycles of appreciation and depreciation, but has shown an overall year over year decline of 2-point-2 per cent against the US dollar.
This is compared with an appreciation of 2.7 per cent at the end of- 2017.
ECLAC says currency depreciation will remain a downside risk throughout 2020.
However, the Bank of Jamaica expects to manage a moderate depreciation as part of its intervention strategy.
But the report warns that depreciation could accelerate should the government fail to meet its fiscal targets by a significant margin, which could affect business confidence and re-ignite capital flight.