Complements each other - trade off JADEX EFFECT Source: Charting Jamaica’s Economic & Social Development, Chung, 2009

JADEX Right direction; necessary but insufficient As pointed out in Fitch in upgrade: “Notwithstanding the IMF programme, Jamaica’s credit profile remains weak.” “In order to sustain the fiscal effort, the government will have to implement politically difficult measures such as rationalizing public sector employment and maintaining a public sector wage freeze.” Continued low interest rates will depend on significant fiscal correction – quickly, which will initially have negative social consequences but will contribute to long term sustainability Sustainable and improved economic growth and development depends more on social factors – economics is a social science (see next chart) Would have preferred a more gradual approach than one imposed by IMF (explain)

Source: Charting Jamaica’s Economic & Social Development, Chung, 2009

SECTOR (Q4 2009)RATECOMENT TOTAL REAL GDP(2.5%) Goods Producing(7.6%) - Mining & Quarrying(56.8%)Alumina prod – (65%); Crude Bauxite – (1.1%) - Construction(3.5%)Large employer of unskilled labour – lower income class - Manufacture(4.6%) - Agriculture20.5%Other crops – 29.3%; Traditional crops – 155%; MOA doing a good job with expanding production. Growth opportunity remains in agro-processing Services(0.7%) - Trans, Storage, Comm(4.2%) - Wholesale, Retail(0.8%) - Electricity & Water3.1%Opposite relationship with goods producing mean either (1) rates have increased; or (2) more inefficient/consumption use. Goods should be increasing at faster rate

QUESTIONS/DISCUSSION