Jamaican Fiscal Policy

Economic stabilization policies are macroeconomic policies that governments and central banks implement as a measure to maintain stable economic growth and less unpredictability. This is usually done by monitoring the business cycle and making adjustments either by fiscal policies or monetary policies in an attempt to create stability and reduce possible impacts of a downturn in the economy. In any economy there are patterns, business cycles; economic fluctuations. There are patterns of growth where the economy expands to a peak followed by a period of economic contraction. An economy can bounce from the bottom and into a new peak or expansion. Governments make decisions on its spending and taxation through Fiscal Policies. Fiscal Policies

The Jamaican economy has been recording periods of growth within the last few years. In its latest report tabled in 2017, the Director General of the Planning Institute of Jamaica stated that "the Jamaican economy recorded growth of 1.3 per cent for the October–December quarter of 2016". This represents eight consecutive quarters of economic growth and reflected higher value added from both the Goods Producing and Services Industries. The Goods-Producing Industry grew by 3.0 per cent, while the Services Industry was up by 0.8 per cent. For the calendar year, real GDP is projected to have grown by 1.4 per cent, and represented the 4th consecutive year of stronger economic growth. Agriculture, Forestry & Fishing; Hotels and Restaurants; and Electricity & Water industries which grew by 16.0 per cent, 2.7 per cent and 2.3 per cent, respectively were the contributing factors to this increased performance. In this same report produced by the Statistical Institute of Jamaica, the Director General also revealed the positive indicators of the Labour market. He reported that the labour force by thirty four thousand over October 2015 and that unemployment rate at October 2016 was 12.9 per cent compared with 13.5 per cent at October

This was attributed to the relatively low oil prices and other policies. Interestingly during this period under review (up to August 2016), unemployment and the poverty rate (20% of the population) was recorded as high which at that time was also reported as hampered by the weak activity in recent years. As mentioned above, the latest statistics produced by STATIN showed that unemployment decreased over a one year period October 2015 and October 2016 moving from 13.5% to 12.9%.

Over the 10 year period the Headline CPI inflation fluctuated and in June 2016 with low oil prices and a limited food price inflation it was 2.5 percent. The current account deficit also fluctuated and in FY2015/16 it fell to about US$ 259 million (1.8 percent of GDP). Strong tourism revenue and remittance receipts and a smaller trade deficit contributed to this. The BOJ’s report show that the FX market sales have declined in the earlier months of 2016months and the net FX purchases including the surrender requirement was about US$388 million in 2016 (up to the end of July). The J$/US$ exchange rate has depreciated by 5 percent in 2016, while the real effective exchange rate depreciated by 7 percent (Jamaica, Economic and Social Survey Jamaica 2015,