Jamaica: Unemployment and Jamaica Essay

Submitted By hman
Words: 1451
Pages: 6

Jamaica, The Struggling Pirate

Macroeconomic problem: As a relatively small economy and heavily dependent on the service sector, Jamaica’s economy is facing many growth challenges. These problems include: slow or negative GDP growth rate, high unemployment rate and absurdly big debt.

Jamaica, a small island country in the Caribbean, is known to the world as the home of world class sprinters. When talking about Jamaica, people will immediately mention Usain Bolt because he is the fastest runner that ever lived. However, the Jamaican economy is not as fast as their world-record runner. In fact, their GDP growth rate is slow compared to other economies in the region like Cuba and the Dominican Republic. Also they suffered from a negative growth rate for three consecutive years from 2008 to 2010. This indicates that Jamaica has a very stagnant economy that is barely expanding or even worse declining.

Part I: Jamaica has a stagnant GDP Growth Rate GDP or gross domestic product is the value of all goods and services that Jamaica produced over a period of time. GDP can also determines the size of a economy. In this case, the Jamaican economy is worth 15.5 billion U.S. dollars in 2012. That means Jamaica produced 15.5 billion dollars of goods and services in 2012.

This is the GDP growth rate chart of three different economies in the Caribbean: The GDP growth rate is a measure of how fast an economy is growing and whether or not it's a healthy economy. This rate has very close correlation to business, jobs and personal income of a certain economy. The GDP growth rate was calculated by comparing the GDP from one quarter to the last. When an economy is growing, the rate is positive; in contrast, when an economy is shrinking, the rate is negative. For Jamaica, their GDP growth rate was negative for twelve quarters from 2008 to 2010 due to the global economic crisis. However, they can't really blame it all on the global economic crisis when their neighboring countries, Cuba and the Dominican Republic, experienced positive growth rate during the same period of time. This could due to the fact that Jamaica has a relatively small economy so they have no negotiation power in trade talks. That leads them to be an inferior trade partner and a global economy crisis will hurt them badly. By looking the graph above, Jamaica's economy has never outgrown their neighbor's economy in the past ten years. This shows the potential growth of Jamaica's economy is very small. Since the Caribbean countries have pretty much the same economic sector, (agriculture, industry and services) Jamaica does not have an edge over their neighbor in trade talks and being a small economy does not help their cause either. This could be a sign that the Jamaican economy will shrink once their neighbors get more competitive.

These two charts show how Jamaica and the Dominican Republic have the exact same economic sector.

Part II: Jamaica is the fourth most indebted country in the world

Public debt or national debt is all the money that a government ows.
A debt-to-GDP ratio is the percentage of debt over the GDP. A debt-to-GDP ratio can act as a indicator to show how healthy the economy is. For example, a low debt-to-GDP means that economy has a profit ,from producing goods and services, high enough to pay its debt. A high debt-to-GDP means that economy does not produce goods and services enough to pay back its debt. In this case, Jamaica's debt is more than 100% of the profits it can produce. Jamaica does not make enough goods and services to pay back their debt. In fact, they generate less than half of what they owe. This number is really high and unless they make significant growth in their economy, it will take them centuries to pay back all of their debts. At the end of 2011, Jamaica has 14.6 billion dollars in public debt. There are roughly 2.8 million Jamaicans, that means every Jamaican