Jamaica will grow its economy at a faster rate in 2017 than the wider Latin American and Caribbean region – LAC – as a whole, according to projections in a new World Bank report released on Tuesday.
The local economy should see growth of 2 per cent in 2017 compared to 1.2 per cent for LAC, according to the Global Economic Prospects: Latin America and Caribbean Weak Investment in Uncertain Times report.
Growth projections for Jamaica further increase to 2.3 per cent in 2018 and 2.5 per cent in 2019.
However, Jamaica will underperform Caribbean economies as a bloc, for which growth is projected at an average of 3.1 per cent in 2017.
The report estimates that LAC contracted by 1.4 per cent in 2016, but would return to growth of 1.2 per cent this year and 2.3 per cent in 2018. The report warns, however, that the region remains exposed to developments in the United States.
In 2017, Jamaica is expected to grow at the 16th-fastest rate in the region among the 27 nations in LAC compared by the World Bank. This improves on its 21st rank in 2014.
World growth is expected to reach 2.7 per cent in 2017, up from 2.3 per cent in 2016, which was described as the weakest in years. The World Bank attributes the rise to “rebounds” in growth from Brazil and Russia. The foundation for the global growth pickup is the expectation of mildly raising commodity prices.
“After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” World Bank Group President Jim Yong Kim said in a statement about the report. “Now is the time to take advantage of this momentum and increase investments in infrastructure and people. This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty.”
Investment growth in emerging countries has slowed throughout the world, led by China, with India and South Africa slated for a “lacklustre performance”.
“Thus, not the best time to invest – both public (because of lack of fiscal space) and private,” stated the report.
Slowing investment growth was described as a partial correction from high pre-crisis levels, but also reflects obstacles to growth that emerging and developing economies have faced, including low oil prices (for oil exporters), slowing foreign direct investment (for commodity importers), and more broadly, private debt burdens and political risk, the report said.
“We can help governments offer the private sector more opportunities to invest with confidence that the new capital it produces can plug into the infrastructure of global connectivity,” said World Bank Chief Economist Paul Romer. “Without new streets, the private sector has no incentive to invest in the physical capital of new buildings. Without new work space connected to new living space, the billions of people who want to join the modern economy will lose the chance to invest in the human capital that comes from learning on the job.”