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CONTEXT AND TRENDS "The economy has still been struggling in the past two years, but there have been signs of it coming back to life and improving," one partner says. Growth in sectors such as tourism and energy are noted by attorneys this year....

CONTEXT AND TRENDS

"The economy has still been struggling in the past two years, but there have been signs of it coming back to life and improving," one partner says. Growth in sectors such as tourism and energy are noted by attorneys this year. "The leisure industry has been doing fairly well with an increase of tourist arrivals," one notes, adding that Canadian tourists account for a big part of that growth. Another states that "hotels are interested in coming into Jamaica. There is also a lot of interest in getting involved in the energy sector".

Bank lending is also on the rise and generating work: "We have seen an increase in lending during the last year," says one partner. As interest rates fell considerably, the borrowing environment in the country has become quite favourable and market participants are actively seeking to take advantage of the cheap money. National commercial banks have been pushing on mortgages while more established mortgage players have responded to that by lowering their loan rates. "More financial services providers have been entering the mortgage market – I haven't seen that in many years," one partner remarks. Another adds: "Consumer lending seems to be fairly good as well."

In the national election held in December 2011, the People's National Party won and returned to power after four years in opposition. The new government is in discussion with the IMF on a possible fund-supported economic programme for the country. "The new government is trying to get the economy going," one attorney says.

Despite the new government's efforts and the encouraging signals, challenges remain. "If the IMF's conditions are excessive, it will lead to resistance in Jamaica," one partner expresses his concern. Besides, people's hesitation in pursuing transactions in this time of uncertainty has led to a slow-down in activity. "Projects are still on hold because of the discussion," one partner notes. "It is imperative for an agreement with the IMF to be reached so that the economy will move again." However, another partner shares a more positive view: "People are still proceeding ahead even with uncertainty."

Other challenges for the country include low economic growth, high unemployment rate, soaring national debt and the need to reform the national tax, pension and public services systems. According to IMF’s forecast, the country has the lowest expected growth among the Caribbean countries in 2012.