Russia community in Westmoreland, Jamaica. Credit: Mariana Kaipper Ceratti/World Bank
Jamaica, one of the Caribbean’s most iconic destinations, has attracted a growing number of tourists. In 2019, Jamaica received 4.2 million annual tourists, doubling the number of visitors from 20 years ago.
However, after the onset of the COVID-19 pandemic in March 2020, tourism came to a halt as many countries in the Caribbean, including Jamaica, closed borders to air and sea passengers to prevent a spike in infections and deaths.
Tourism is a valuable source of employment, government revenue, and foreign exchange earnings in Jamaica. Since the global pandemic hit, services industries in Jamaica, like hotels and restaurants, which only represent a proportion of the tourism sector, have been hard hit. Data from the Ministry of Tourism indicates that a minimum of 50,000 employees directly employed in the tourism sector have been laid off, and this figure could be even higher when considering indirect impacts and the informal sector.
COVID-19 impacts on poverty
Jamaica’s real GDP is expected to decrease 9% in 2020, with hotels and restaurants contracting more than 30%. These developments could jeopardize recent progress on poverty reduction.
In Jamaica, the percentage of the population living below the official poverty line was 19.3% in 2017 and according to projections based on GDP per capita growth poverty declined between 2017 and 2019 (Figure 1).
But, as elsewhere in the world, the COVID-19 pandemic is likely to reverse these trends in 2020. Many people who may have recently escaped poverty could be forced back below the poverty line by COVID-19 and its economic impacts. World Bank projections based on the latest GDP per capita growth estimates for Jamaica suggest a likely increase in poverty by over 4 percentage points in 2020.
| Figure 1- Actual and projected poverty rates and real GDP per capita |
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Source: Statistical Institute of Jamaica and World Bank staff calculations. Note: World Bank estimates based on GDP per capita growth using the national official poverty line. Dotted lines represent forecasts |
According to the Statistical Institute of Jamaica, the unemployment rate, which was at 7.3 % in January, is expected to enter the double digits for the remainder of the year as COVID-19 forced lay-offs in almost every sector.
As in other countries, the pandemic crisis may have a greater impact on female workers. In Jamaica, 78% of health and social workers - those on the front lines against COVID-19 - and 55% of the workers in the sectors most affected by the COVID-19 crisis (including trade, hotels and restaurants services, and education) are women.
Pushing to return to paradise: actions to encourage recovery
There is hope for a quick recovery, but the pace will mostly depend on the duration of the global lockdown and travel restrictions as well as on how quickly policy actions are taken.
The Jamaican Government has executed a series of interventions for both rapid and medium-term responses to mitigate the impacts of the COVID-19 pandemic. According to the Jamaica Macro Poverty Outlook, this includes tax cuts equal to about 0.6% of GDP, along with targeted spending measures equal to about 0.5% of GDP.
Foremost among these measures is the COVID-19 Allocation of Resources for Employees (CARE) Programme, which provided assistance in the form of cash transfers to support the most vulnerable in the population. Nearly 500,000 Jamaicans received assistance, including persons who lost employment during the pandemic. They include beneficiaries of the Programme of Advance through Health and Education (PATH): businesses in the tourism sector, specific groups of small business operators, students, the elderly, farmers and fisher folk, and the infirmed and homeless. CARE provided J$25 billion to support economic activity, which is the largest social intervention ever in the history of Jamaica.
Other measures included a reduction in the General Consumption Tax, tax credits for micro, small and medium enterprises (MSMEs), and a reduction in regulatory fees for certain agricultural commodities. The government also waived some fees on certain personal protective equipment and sanitation supplies. Commercial banks also joined the effort by offering customers the option to defer principal payments and providing new lines of credit and other services to the sectors most affected.
Under the National Poverty Reduction Programme (NPRP), institutions and agencies have adapted their programs and modes of operation to meet the needs of their beneficiaries. Cash benefits increased and conditions for receiving these benefits have been relaxed. Care packages, psychosocial support, and other services have been provided for persons with disabilities, the elderly, young people, and other vulnerable groups.
Timely and effective policy actions are needed for economic recovery. Locally, there are coordinated research efforts to inform policies, institutional arrangements, and other interventions aimed at sustained poverty reduction. The World Bank is working on key analytics that will help to inform poverty reduction policies. A Poverty and Vulnerability Assessment as well as a Gender Assessment are being prepared by the World Bank in partnership with the Government of Canada. These are expected to identify key barriers to gender equality and the impacts of COVID-19 on poverty, and inform the design of policies to speed up the recovery. In addition to contributing to the knowledge base, the World Bank will financially support the economic recovery. In particular, the World Bank will provide support to Government’s COVID-19 Response and Recovery efforts through a budget support operation. Although many challenges remain, Jamaica has already started implementing measures to support those most affected by the pandemic and return to a path of poverty reduction.
