Prime Minister Andrew Holness has revived talks of hitting gross domestic product (GDP) growth of 5 to 6 per cent, albeit missing the mark on a 5-in-4 growth plan his Administration had pitched back in 2016.

Back then, the measures put forward by the Economic Growth Council, formed to steer the growth, included maintaining macroeconomic stability and pursuing debt reduction, improving citizens’ security and public safety, improving access to finance and pursuing bureaucratic reform to improve the business environment.

Holness’ plan to get to 5 or 6 per cent growth this time around mirrors its previous strategy, except that much of the foundation for growth has now been laid and there is a stronger focus on tackling violence in the country.

“Last year was the first time that we were able to issue a Jamaican dollar bond on the international market, this is a clear symbol of confidence. But we are not resting, my Administration remains laser-focused, and we are focused on two things,” Holness told the Jamaica Stock Exchange 19th Regional Investments and Capital Markets Conference last week.

“First, how do we accelerate the level of our economic growth from one to two per cent to five to six per cent? That is the challenge. The other major focus is on inclusive growth. Our vision for economic growth goes far beyond mere statistics, it is about creating opportunities for all,” he said.

In his address to a room filled with policymakers, company executives, local and international industry experts, Holness said he believes Jamaica is already on track with its first objective, having seen one of the longest periods of consecutive quarter-on-quarter growth since measurement started in 1997, lowering debt-to-GDP ratio and stable inflation, all aided by buffers and fiscal safeguards.

But hitting the second objective may require greater focus at this time, Holness said, a task that will see his Government developing a strategy that will create “a virtuous cycle of peace, productivity and prosperity”.

“This is what we call the caring economy…we all must recognise that growth is about people. But part of this caring economy is how do we make the economy facilitate, support, inure peace? This has to be a consideration of the growing economy.

The Government plans to tackle low growth by enacting laws that target violence reduction, amidst its progress in addressing crime in the country. At the quarter ending September 30, 2023, Commissioner of Police Antony Anderson reported that there was a 12 per cent reduction in murders when compared with the corresponding quarter in 2022.

All major crimes were down 13 per cent during the period under review. Murders were down 12 per cent, which translated to 141 fewer people being killed, while shooting incidents were down nine per cent, rape down 18 per cent, and robberies down 17 per cent. The commissioner also noted at the time that interpersonal violence accounted for 21 per cent of total homicides, while gang-related murders accounted for 66 per cent of all killings.

“They are two sides of the same coin, but they require different strategies. You can deal with crime via policing, but you can’t always deal with it in that manner… other strategies must be employed and therefore, we have to turn our economic resources to deal with violence,” he said.

“Violence has a significant drag effect on our economy. Violence has a significant impact on our productivity and therefore, as we build this caring economy, we are going to be directing public resources to deal with this issue of violence,” Holness said.

Economist Dr Damien King, in responding to Holness’ renewed commitment to achieving 5 per cent growth, said that it is “absolutely achievable”.

“The problem with 5 in 4 when it was articulated many years ago is that it didn’t come out of a plan or programme, it was a growth target that was plucked out of thin air. So it could have been anything, it could have been 6 in 3, 4 in 10…so one should not have given it the kind of sanctity that it took up,” King told the
Jamaica Observer on the sidelines of the conference, which lasted two and a half days.

“Here we are now, after 10 years over two administrations of rock-solid policy reforms, improved fiscal management, improved monetary management, investments in infrastructure and that actually provides a basis on which we can expect greater investment, greater long-term planning and a greater likelihood of Jamaica now achieving 5, 6 per cent rates of growth. It is now absolutely a possibility,” he said.

He added that whether Jamaica hit that target consistently, it would still be fair to say that the island has the highest prospects for economic growth across the Caribbean , except for Guyana which has vast oil reserves.

King said while it’s hard to pinpoint a timeline in which the Government will hit those growth targets, the country can expect a long lag between policy improvement and measured economic growth.

“Given that long history of the opposite of the things we articulate, poor investment in infrastructure, fiscal and monetary mismanagement, you can expect that lag. People have to come to believe that the environment is stable, there is the planning lag and then there is the execution lag. So when you consider all of that, it takes a while, but it probably would have happened already if not for the intervention of COVID-19,” he said.

King said that the Bank of Jamaica will play a crucial role in the country hitting growth of 5 to 6 per cent, particularly in taming inflation and monitoring the exchange rate.

“The investments that will create the greatest value-added for the longer-term investments, and for people to make long-term investments, they have to have a sense of economic stability. However, people can’t do long-term planning if they don’t know what the exchange rate is going to be in five years, and the basis of exchange rate stability is inflation,” he said.