Jamaica’s achievement of macroeconomic stability has created a stronger foundation for growth but economists and development finance experts say the country now needs to shift its focus towards productivity, investment, and economic transformation.

During discussions at Sterling Asset Management’s investor briefing, panellists highlighted the country’s progress in inflation management, public debt reduction and fiscal credibility, but cautioned that stability alone would not automatically translate into stronger economic growth.

“Stability reduces uncertainty and protects the economy from crisis but does not automatically raise productivity, expand business, create bankable projects, or move workers and capital into higher levels of activity,” said Karisa Ribeiro, COO of the Inter-American Development Bank (IDB) Jamaica and the Caribbean region.

She noted that while Jamaica had achieved a “substantial degree of macroeconomic stability”, with stronger fiscal institutions and improved policy credibility, that stability was only a necessary condition for growth. As Jamaica looks to move from stability towards transformation, the discussion identified infrastructure, connectivity, and the country’s geopolitical position as potential drivers of the next phase of development.

Economist Joseph Cox said the changing geopolitical environment, with greater emphasis on supply chains and proximity to markets, presents an opportunity for nearshoring in the Caribbean. But the region will need to address institutional weaknesses if it is to capitalise on the opportunity.

“Part of the challenge that we have in this country, in this region, is that we have a problem of institutional conversion,” he said.

Cox argued that efforts to attract investment can be undermined by procurement delays, inadequate institutional capacity, and weaknesses in risk frameworks and implementation. He said Jamaica’s proximity to the US market remains one of its strongest advantages, but delays in moving investment projects from policy to execution could weaken that advantage.

“By the time we get around to actually implementing and executing something, the opportunity that actually was created by whatever adverse circumstances or something has gone by,” said Cox.

The discussion also highlighted the amount of capital already available within Jamaica’s financial system, including through banks, pension funds, asset managers and institutional investors. The challenge, however, is developing a pipeline of long-term projects that can put that capital to work.

Ribeiro pointed to the lengthy timelines involved in developing major infrastructure, saying Jamaica needs to think about how capital can be structured to support such projects over the long term. She cited the development of a capital market for water as one area being explored.

She said the IDB is now creating “the capital market for water, which is something interesting if you do that right”.

Cox also questioned the effectiveness of Jamaica’s tax incentive regime, particularly whether incentives are generating additional economic activity. Tax incentives, he argued, should be linked to measurable output and subjected to stronger cost-benefit analysis, particularly where investments may have taken place without them.

The issue of competitiveness also featured prominently in the discussion, with Sterling Asset Management CEO Charles Ross pointing to exchange rate policy as a factor affecting Jamaica’s ability to compete in export markets. He is of the view that maintaining an overvalued currency could weaken the competitiveness of Jamaican exports and limit the country’s ability to benefit from opportunities such as nearshoring.

Ross said Jamaica’s history of exchange rate adjustments had shown temporary improvements in the competitiveness of export services before those gains were eroded by rising domestic costs. He also cited the business process outsourcing (BPO) sector, arguing that rising costs had contributed to Jamaica becoming less competitive than destinations such as the Philippines and the Dominican Republic.

“We’re not focusing really on the core issue, which should be inflation. And, as a result, we really just don’t create the conditions where expansion in the economy can take place,” Ross said.

He argued that Jamaica, as a relatively small and open economy, needs to adopt a more externally focused growth strategy, with pricing mechanisms helping to direct investment towards areas that can increase output.

“We’ve spent most of the last 50 years trying to manage that subsidy on consumption. It hasn’t increased the wealth of the nation. It’s time, I think, that we give up on that and really implement policies that will benefit everybody, especially those who are less fortunate,” he said.

Professor Justin Robinson (second left), pro-vice-chancellor, The University of the West Indies, gesticulates while making a point during the recent Sterling Asset Management investor briefing. Also photographed are (from left) Marian Ross-Ammar, vice-president trading & investment at Sterling Asset Management, who served as moderator; Charles Ross, president & CEO, Sterling Asset Management; economist Joseph Cox; and Karisa Ribeiro, COO, IDB Jamaica and the Caribbean.

Karisa Ribeiro, chief operating officer, Inter-American Development Bank, Jamaica and the Caribbean, argues that stability reduces uncertainty and protects the economy from crisis but does not automatically raise productivity, expand business, create bankable projects, or move workers and capital into higher levels of activity.

Economist Joseph Cox lamenting that by the time we get around to actually implementing and executing something, the opportunity that actually was created by whatever adverse circumstances or something has gone by.

Sterling Asset Management CEO Charles Ross expressing the view that maintaining an overvalued currency could weaken the competitiveness of Jamaican exports and limit the country’s ability to benefit from opportunities such as nearshoring.