• GDP grows 1.4% — the first positive reading after three consecutive years of contraction
• Bruce Golding resigns as Prime Minister on 23 October; Andrew Holness, aged 39, is sworn in
• Portia Simpson Miller leads the PNP to a landslide victory on 29 December, winning 42 seats to the JLP’s 21
• Public debt falls marginally to 139.5% of GDP as fiscal adjustment continues under IMF programme
• Tourism receipts reach US$2,013 million from 1.95 million visitors — modest growth on the 2010 milestone
• Inflation moderates to 7.5% as the economy stabilises following the shocks of 2008–2010

The Return: Jamaica in 2011

After three consecutive years of economic contraction, Jamaica’s GDP grew in 2011 — modestly, carefully, as if the island did not quite trust the recovery to last. In the political sphere, the year ended with the kind of electoral reversal that Jamaican democracy periodically produces: an incumbent government, exhausted by crisis management and weakened by the events of May 2010, swept from office by a margin that left no room for misreading. Portia Simpson Miller returned to Gordon House. The question was not whether the political weather had changed, but whether the underlying economic climate had.

GDP Returns to Growth: 1.4 Per Cent

Jamaica’s GDP grew by 1.4 per cent in 2011 — the first positive reading since 2007, and the return to growth after the deepest contraction the island had experienced since the FINSAC crisis of the 1990s. The expansion was modest and uneven. The tourism sector performed well, contributing meaningfully to services growth. The construction sector showed recovery, partly driven by post-Tivoli reconstruction activity in West Kingston and by renewed private sector confidence following the Jamaica Debt Exchange. Agricultural output was mixed, affected by weather patterns that disrupted the crop cycle in some parishes while leaving others largely undisturbed.

The return to positive growth was real but fragile. The 1.4 per cent figure concealed significant structural weaknesses that had not been addressed by three years of painful adjustment. The bauxite and alumina industry, which had been a cornerstone of Jamaica’s foreign exchange earnings for decades, remained well below pre-crisis output levels as global aluminium markets recovered slowly and unevenly. The manufacturing sector, under pressure from both input costs and external competition, continued to shed employment. The services sector, led by tourism and financial services, was carrying more than its historical share of the recovery weight.

Unemployment fell marginally from the 2010 peak, but remained elevated at approximately 12.7 per cent — a figure that understated the true extent of labour market stress given the prevalence of underemployment and informal sector work. Youth unemployment, particularly among young men in urban communities, remained at levels that were both economically damaging and socially dangerous. The connection between labour market exclusion and criminal violence — documented in every major social analysis of post-independence Jamaica — was not addressed by the moderate GDP growth of 2011. It was, if anything, becoming more urgent as the demographic weight of young Jamaicans without formal employment prospects continued to grow.

A return to 1.4 per cent growth after three years of contraction is not a recovery — it is the beginning of the conditions in which recovery might, eventually, become possible.

October 23: Andrew Holness Takes Office

On 23 October 2011, Bruce Golding announced his resignation as Prime Minister and leader of the Jamaica Labour Party — a departure that, once the events of May 2010 had unfolded as they did, had the quality of an inevitability that had taken eighteen months to complete. Golding had come to office in 2007 with a reputation as one of Jamaica’s most intellectually serious politicians, a reformer who would modernise the JLP and govern differently from his predecessors. The Tivoli crisis had not ended that reputation, but it had permanently complicated it. The commission of enquiry into the incursion was still proceeding; its findings, when they came, would not be kind.

His successor, Andrew Holness, was sworn in on 23 October 2011 at the age of 39 — the youngest person ever to hold the office of Prime Minister in Jamaica. Holness had served as Minister of Education and had built a reputation as a technically capable minister with a genuine commitment to the improvement of the island’s schooling. He brought to the Prime Ministership a different register from Golding: less philosophical, more managerial, more focused on the granular details of implementation. Whether those qualities would be sufficient to revive the JLP’s electoral fortunes was a question the December election would answer with brutal clarity.

Holness’s brief tenure as Prime Minister before the election was dominated by the necessity of calling that election. Under the Jamaican constitution, the government’s five-year term would expire in 2012, but the political arithmetic — an opposition well ahead in the polls, a JLP internally divided by the trauma of the Tivoli crisis and the circumstances of Golding’s departure — made delay unattractive. Holness called the election for 29 December 2011. It was not a decision that required great courage; it was a decision that acknowledged the inevitability of what was about to happen.

December 29: The Landslide

The general election of 29 December 2011 produced one of the most decisive results in Jamaican electoral history. The People’s National Party, under Portia Simpson Miller, won 42 seats in the House of Representatives to the Jamaica Labour Party’s 21 — a majority of 21, and a reversal of the 2007 result that reflected not simply the normal pendulum of Jamaican electoral politics but a more thoroughgoing rejection of the JLP’s years in government. The Tivoli crisis, the slow economic recovery, and the internal tensions that had marked the JLP’s final months in office all contributed to a result that left the party with fewer seats than it had held at any point since the 1970s.

Portia Simpson Miller — who had led the PNP in opposition since losing the 2007 election by the narrowest of margins — returned to the office of Prime Minister with a majority that gave her government room to govern that the previous two administrations had not enjoyed. Her political persona — accessible, populist, rooted in the communities of West Kingston and the experiences of ordinary Jamaicans in ways that her more technocratic colleagues were not — had survived four years in opposition without significant erosion. If anything, the contrast with the difficulties of the Golding years had sharpened it.

The new government inherited an economy that was technically growing but deeply constrained. The IMF programme continued. The debt remained at 139.5 per cent of GDP. The fiscal adjustment that had been underway since the 2009 Stand-By Arrangement was far from complete. The National Debt Exchange — a second round of domestic debt restructuring that the fiscal arithmetic required — was already being discussed among economists and policymakers, though its announcement and execution would wait for 2013. Simpson Miller’s government came to office knowing that the difficult work of the Golding years had not, in fact, left the island in a position where the difficulty was over.

An electoral majority of 21 seats gives a government the arithmetic to govern. Whether it gives the wisdom to govern well is a question that no election result can answer.

Debt at 139.5 Per Cent: The Long Descent Begins

Jamaica’s public debt fell from 141.4 per cent of GDP in 2010 to 139.5 per cent in 2011 — a reduction of less than two percentage points in a year in which the economy had returned to positive growth. The modesty of the reduction illustrated the arithmetic reality of Jamaica’s fiscal position: even with GDP growth, even with the interest cost relief provided by the Jamaica Debt Exchange, even with the maintained primary surpluses, the absolute stock of debt was large enough that reducing the ratio required sustained growth over many years rather than a single year’s fiscal discipline.

The IMF Stand-By Arrangement, approved in November 2009, was still providing the framework for fiscal adjustment. Jamaica’s successive quarterly reviews had been broadly satisfactory — the government had met most of its programme targets, a record that the IMF acknowledged even as it noted areas where structural reform was lagging. The fiscal discipline that had been imposed by the crisis years had not been abandoned as growth returned, which was itself an achievement in an environment where political pressure for relief was constant and the electoral cycle was approaching.

The debt level continued to crowd out public investment in the infrastructure that Jamaica’s housing sector depended on. The NHT could mobilise its own capital for mortgage lending and scheme development, but the roads, water mains, drainage systems and electricity connections that gave those schemes their value required government investment that the fiscal constraint made extremely difficult to provide at the scale required. The housing backlog — estimated at tens of thousands of units, with the demand weighted toward the lower end of the income distribution — was not closing. The fiscal crisis of the preceding years had made it worse, not better.

Inflation at 7.5 Per Cent: A Steadier Price

Inflation fell to 7.5 per cent in 2011, continuing the downward trend that had begun with the commodity price collapse of late 2008. The stabilisation of global oil prices at levels well below the 2008 peak reduced the fuel cost component of Jamaican inflation. Food prices, which had been the most volatile element of the inflation experience in 2008–2009, also moderated. The exchange rate, which had stabilised near J$86–87 to the US dollar, was not generating the imported inflation pressure of the depreciation year of 2009.

For Jamaican households, 7.5 per cent inflation was still meaningful erosion of purchasing power — particularly for those on fixed incomes, those in the informal economy whose earnings were not indexed to any measure of cost of living, and those in the lowest income quintiles for whom food, transport and utilities represented the largest share of expenditure. The moderation from 12.6 per cent in 2010 was genuine relief, but it did not restore the purchasing power that the crisis years had destroyed. Many Jamaican families were living on budgets permanently compressed by the accumulated inflation of 2008–2010, and 7.5 per cent, while lower, was adding to that compression rather than reversing it.

Tourism Holds Above US$2 Billion

Jamaica’s tourism sector maintained the milestone crossed in 2010, recording receipts of US$2,013 million from 1.95 million visitors in 2011. The growth over the previous year was modest but consistent with the sector’s multi-year trajectory of measured expansion. The events of May 2010 had not produced the sustained reputational damage to Jamaica’s tourist appeal that some observers had feared: visitors from North America and Europe continued to arrive in large numbers, attracted by the all-inclusive product’s price certainty and by Jamaica’s enduring cultural appeal.

The tourism industry in 2011 was also beginning to articulate, more clearly than before, the case for linkages between the resort economy and domestic suppliers — agriculture, craft, cultural production — that could multiply the sector’s economic impact beyond the jobs and foreign exchange generated directly by visitor spending. The argument was not new; the practical difficulties of building those supply chains in a context of unreliable infrastructure, inconsistent quality standards and the logistical challenges of supplying hotels at scale had defeated previous efforts. But the conversation was alive, and some individual initiatives — farm-to-table programmes with specific hotels, craft market partnerships, community tourism ventures — showed what was possible even without systemic policy support.

Housing: The NHT Under New Political Direction

The change of government in December 2011 brought a change in political direction at the National Housing Trust and across the housing policy framework, though the new government’s first full year of influence on housing policy would not come until 2012. The PNP’s approach to the NHT had historically emphasised the Trust’s role as a redistributive institution — using the surplus generated by higher-income contributors to subsidise mortgage lending to lower-income Jamaicans — more strongly than the JLP’s emphasis on market efficiency and contribution portability. How that philosophical difference would translate into policy under the fiscal constraints of the IMF programme remained to be seen.

The housing market in 2011 reflected the early stages of economic recovery without yet showing the confident expansion that sustained growth would eventually produce. New scheme developments by the NHT were cautious — the Trust was managing a portfolio of mortgages advanced during the crisis years, some of which were under stress, and was building reserves for what was widely expected to be a period of increased housing demand as economic confidence returned. Private developers were similarly cautious: land prices were recovering from the lows of the recession, but financing costs remained high and the pool of creditworthy buyers was limited by the lingering effects of three years of income compression.

The informal housing sector was more active. Remittances, recovering from the sharp decline of 2009, were flowing again into the incremental construction projects that had been interrupted by the crisis: the extra bedroom, the completed upper floor, the new zinc roof replaced with concrete. These projects — invisible in formal housing statistics but pervasive in the actual built environment of Jamaica’s towns and rural communities — represented a form of distributed housing investment that no government programme was well-positioned to replicate at equivalent scale. The remittance economy, for all its fragility, was doing housing work that the state lacked the fiscal capacity to do itself.

The remittance-funded house, built room by room across years as the diaspora sends what it can, is the most common form of new housing in Jamaica — and the least visible in the policy documents that claim to address the housing deficit.

West Kingston: The Aftermath Continues

In West Kingston, the process of rebuilding after the Tivoli incursion was continuing in 2011, but at a pace that reflected the depth of the disruption. The physical damage to housing stock — much of it already fragile before the incursion — had been partially addressed through emergency repairs and temporary accommodation. The longer-term challenges of formalising land tenure, rebuilding community infrastructure and creating the conditions for residents to engage with the formal economy were substantially unresolved.

The West Kingston Commission of Enquiry into the events of May 2010 was still in progress, hearing evidence from security force personnel, community residents, human rights organisations and government officials. Its proceedings were a continuing reminder that the questions raised by the incursion — about the conduct of security forces, about the nature of the political economy that had produced the garrison, about the accountability of those who had managed that political economy for decades — had not been settled by the extradition of Christopher Coke. Accountability, like reconstruction, was a slow process in which easy answers were scarce.

The Legacy Lives On

The political change of December 2011 recalled, in the Garveyite imagination, the fundamental proposition that a people’s ability to use democratic processes to choose their own government was itself a form of wealth — not economic wealth, but the institutional wealth of self-determination. The clean transfer of power from a government that had lost decisively to an opposition that had won convincingly was not a small thing in a world where many states could not manage it. Jamaica had managed it, as it had managed similar transitions before, with a credibility that its economic difficulties had not diminished.

But Garvey’s vision was never satisfied by the exercise of the franchise alone. The deeper question — whether Jamaicans were building the economic foundations of a self-sustaining community, whether the island’s assets were in the hands of its people, whether the institutions of housing, credit and property were delivering the material basis for dignity and self-determination — remained as urgent in 2011 as it had been in his time. The GDP had returned to growth. The debt was very slowly declining. The NHT was processing applications and developing schemes. Tourism was expanding. These were real achievements. They were not, yet, the transformation that the long view of the island’s history demanded.

The new Prime Minister took office with a mandate to continue the fiscal adjustment, maintain the IMF programme, and find, within those constraints, some space for the social investment that three years of contraction had squeezed so severely. Whether that space existed, and whether the PNP’s traditional instincts toward redistribution and public investment could be pursued within the boundaries of a programme built on fiscal discipline, were questions that 2012 would begin to answer — and that, in truth, would take the better part of a decade to resolve.

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Series note: This is Edition 14 of Marcus Garvey & The Making of Modern Jamaica — an ongoing editorial series examining Jamaica’s social, economic and built environment through an annual lens, from the birth of Marcus Garvey in 1887 to the present day. Edition 1 (1887–1998), Edition 2 (1999), Edition 3 (2000), Edition 4 (2001), Edition 5 (2002), Edition 6 (2003), Edition 7 (2004), Edition 8 (2005), Edition 9 (2006), Edition 10 (2007), Edition 11 (2008), Edition 12 (2009) and Edition 13 (2010) are available on Jamaica Homes News.