Jamaica’s Rapid Economic Growth: A Miracle or a Borrowed Time?

Jamaica has recently experienced rapid and potentially sustainable economic growth, which some see as a miracle, while others attribute it to effective policymaking in a supportive political environment despite many challenges. However, an alternative perspective could argue that Jamaica’s economic recovery came at the expense of preparedness for the effects of climate change. With climate change continually posing new dangers to Jamaica’s core sectors of agriculture and tourism, the country’s economic future may become more problematic.

Throughout the 1970s, successive Jamaican governments ran chronic budget deficits due to external events beyond their control such as being an oil importer. The 1973 oil price shock raised import costs and led to a recession and devaluation, forcing increased borrowing to purchase critical imports. The situation worsened when U.S. interest rates increased in the early 1980s. By 1986, Jamaica’s debt service payments to exports ratio had risen to 35 percent, up from 16 percent in 1977. Debt servicing accounted for over 40 percent of government spending by 1985. To address rising debt levels, Jamaica sought bailout loans from the International Monetary Fund and World Bank in the 1980s with harsh austerity measures attached as conditions. Austerity had a significant impact on the economy with average growth dropping from 2.3 percent in the 1980s to