Intoxicated with natural beauty, luscious
mountains, white sand beaches, Jamaica the third largest Caribbean island, is
what we call paradise. Being a small island, our economy shifts with the tides
of the bigger nations such as the Unites States of America and other European
countries. According to Economy Watch (2010) the major contributors of our GDP growth in Jamaica have been bauxite,
tourism and remittances from abroad.1 These sectors are the major
providers of employment and sustainability to the country. These sectors have
high involvement with the global market and therefore if there is a downward
shift in the market then these sectors will feel the crunch and result in
substantial loss of jobs and add to the negative growth of the economy. This essay
will seek to highlight how the global economy has impacted Jamaica since the
global meltdown that occurred in 2008.
Since
the global crisis in 2008 the bauxite industry has taken
the hardest blow, most of the bauxite plant doors had to be shut, as the demand
for bauxite or alumina decreased. There
were major job cuts in the various bauxite companies and as a result the
unemployment rate grew significantly, which caused a ripple effect within the economy.
The communities which boosted high employment rate, whereby people had high
purchasing power quickly saw their standard of living rapidly diminished. Most
if not all of these employees in the bauxite industry were contributing
directly or indirectly to the construction industry,as a result there was boom
in this area. For example, hardware merchants saw sales go up. Items in high
demand were steel, lumber, paints, tiles and so forth .Many operators of supermarkets,
wholesale and retail shops benefitted immensely. The number of persons that were able to attend
private medical facilities grew; consequently pharmaceutical products were in
high demand.1
While alumina was in high demand we saw a great
influx of tourist arrival. Jamaica is rated as one the best tourist destination
around the world. Some of the things that attract tourist are our white sand
beaches, our unique cuisine natural
beauty spot such as Dunn’s River Fall in Ochio Rios Nonsuch Cave in Portland, just to name a few.
More hotel rooms were occupied resulted in higher employment for local citizen.
There was greater demand for local produce and this boosted the farming
industry.
Remittances were a major asset in growing the
economy. People in the countries such America, Canada and Europe sent money to
their relatives and friends regularly. These were used in areas such as
construction, education, medical and other essential areas. There is a heavy
dependency on remittances by certain groups such as the elderly, children, and
students in tertiary institutions. The consistency with which these remittances
coming ensured that people to had a stable life-style, as stated by the Jamaica
Livestock agency (2012).2
During the financial meltdown in about 2008
there was a drastic reduction in the demand for bauxite by costumers. Consequently,
production fell to unprecedented levels which resulted in a massive lay- off of
workers. This occurrance affected people who worked in the construction industry,
hardwares, supermarket and therefore unemployment grew.
The
tourism sector was affected in that there were less tourists travelling to
Jamaica and spending less money on our shores due to economic hardships in
their countries. Some countries like the United States saw car sale fall
resulted in job loss. Except for Germany most of the Europe countries saw their
unemployment rate go up. The more people were unemployed the less they travel
as their purchasing power is weakened.
Third world countries like Jamaica have found
it almost impossible to survive as a result of their strong dependency on
remittances from developed countries. The availability of foreign exchange
affects our net international reserve. The more remittances that comes to the
island the more our NIR increases and hence our ability to purchase essential
commodities for the country as a whole. When the NIR is strong our dollar is
likely to remain stable. However when it is weak we are likely to see a deterioration
in the value of the local currency.
Today, the unemployment rate in Jamaica is 15%, the public debt is 131.7% of GDP, consumer price inflation is 8.6%
and the industrial production growth rate is -13.5%. All these
statistics has indicated there is great room for improvement in the economy of
Jamaica. This downward spiral in the economy of Jamaica has led to less money
being invested in education and infrastructural development. The result has
been an increase in criminal activities such as gang activities, due to the
lack of social reform and the creation of job opportunities for the youth of
Jamaica.
The
future of Jamaica’s economy does look bleak unless politicians in Jamaica
decide to make strategic reforms that will improve the Jamaican society, so
that when a global crisis occurs such as in 2008, the
country can withstand such pressures and do not fall into a deeper crisis
situation where people lose their jobs and where there is less money for nation
building.
Jamaica needs a short term medium term and long
term strategic plan, in order to put the country on a proper economic path. The
country needs to invest more in education, agriculture and manufacturing. More emphasis should be placed on scientific
development which could see growth in agriculture such as the cattle industry,
citrus among others. We need to stop the brain drain; most of our brightest
minds have migrated to metropolitan counties like USA, Canada and England. While
the country spends a lot of money to train these people they are not able to
retain them because of low paying jobs or the unavailability thereof. If the
country were able to retain these people which are our greatest assets, we
would see marked improvement in the development of our country.
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