Business

Despite having a relatively large and diverse economy Jamaica has been subjected to somewhat sluggish growth, high unemployment. In addition, the island was hit hard by Hurricane Ivan in late 2004 and has taken some time to recover from this. The economy is heavily dependent on services, which now account for more than 60% of GDP. Most of its foreign exchange comes from tourism, remittances and bauxite/alumina exports.

The economy faces significant long-term problems: high but declining interest rates, increased foreign competition, exchange rate instability, a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a high debt burden - the result of government bailouts to ailing sectors of the economy, most notably the financial sector in the mid-to-late 1990s.

By implementing a strong fiscal strategy from 2004, Jamaica has reduced its public debt to 133.3% of GDP. Inflation also had declined to 5.8% at the end of 2006. This achievement supports the substantial efforts have gone into bringing foreign investors to Jamaica by means of tax, customs and other incentives, developing its equity markets, and encouraging joint ventures and privatisation, notably of hotels.

The country established free-trade zones at Kingston, Spanish Town and Montego Bay. These enclaves permit duty-free importation, the earning of tax-free profits and put no restriction on the free repatriation of export earnings. The free-trade zones have attracted investors from the US, China and Taiwan.