Jamaica bucks the trend
IMF forecasts stronger growth for the island as it downgrades global recovery
The International Monetary Fund (IMF) has revised its forecast for Jamaica’s economic recovery, now saying it expects growth to reach 4.6 per cent this year.
The figure, which was released in the World Economic Outlook yesterday, is up from the 1.5 per cent expansion the IMF forecast in April and confirmed the recovery from last year’s 10 per cent contraction is well underway. The monetary fund, however, projects growth will be slower than first anticipated next year. The April forecast had growth for 2022 at 5.7 per cent, but the October update said it will now be less than half that previous projection at 2.7 per cent.
The revised projections for Jamaica come as the IMF downgraded its outlook for the global economy. “Compared to our July forecast, the global growth projection for 2021 has been revised down marginally to 5.9 per cent and is unchanged for 2022 at 4.9 per cent. However, this modest headline revision masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions. Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labour market recovery to significantly lag the output recovery in most countries,” IMF chief economist Gita Gopinath told reporters yesterday.
Gopinath added that “the global recovery continues but momentum has weakened, hobbled by the pandemic.” For the United Sates, the world’s largest economy, the IMF predicts growth of six per cent for 2021, below its July forecast of seven per cent. The downward revision reflects a slowdown in economic activity resulting from a rise in COVID-19 cases and delayed production caused by supply shortages and a resulting acceleration of inflation.
The IMF predicts that for the world’s advanced economies as a whole, growth will amount to 5.2 per cent this year, compared with a meager predicted gain of three per cent for low-income developing countries. “The dangerous divergence in economic prospects across countries,” the IMF said, “remains a major concern.” The monetary fund expects the total output from advanced economies to recoup the losses they suffered during the pandemic by 2022 and to exceed their pre-pandemic growth path by 2024.
But in emerging and developing countries outside of China, the IMF warns, output will remain an estimated 5.5 per cent below the output growth path that the IMF had been forecasting before the pandemic struck in March of last year. That downgrade poses a serious threat to living standards in those countries, the monetary fund said.
Here in the Caribbean, Guyana with a projected 20.4 per cent expansion is expected to lead the way in terms of growth percentage, fuelled mostly by its new oil and gas industry. Haiti (-0.7 per cent), St Kitts-nevis (-1.0 per cent), St Vincent and the Grenadines (-6.1 per cent), Trinidad and Tobago (-1.0 per cent) and Venezuela (-5.0 per cent) are projected to record economic declines.