Finance minister eyes positive rebound in 2021 outlook

Finance minister eyes positive rebound in 2021 outlook

...says there is every reason to be optimistic

Business reporter

Friday, January 22, 2021

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As the novel coronavirus pandemic continues to negatively affect the economy, Finance Minister Dr Nigel Clarke has expressed optimism for a positive economic recovery, starting as early as this year.

The minister, who was speaking at a Mayberry Investors forum on Wednesday last (January 20), said that his projections were in keeping with those of critical institutions such as the Planning Institute of Jamaica (PIOJ) and the Bank of Jamaica (BOJ), among others.

The BOJ previously projected a partial rebound in economic growth of approximately three per cent, in the aftermath of COVID-19, which it said was expected to commence in fiscal year 2021/22, with the possibility of an out-turn as high as eight per cent if there is strong recovery in tourism.

“The nature of the current economic decline is not a result of any structured deficiencies in Jamaica or elsewhere that we have imported, it is a result of the fact that we are not able to go about our business without social distancing and so the fact that we are all stationary has helped to suppress economic activity. As long as we can roll out our vaccine programme in April of 2021, I'm confident that the projections from all of these entities will be met [and] I'm confident about that,” Dr Clarke said.

“Yes, our position may be that we are 10 per cent down on 2019 — but for 2021, the direction is unmistakably positive, “he added.

The finance minister said that beginning from as early as the first quarter of this fiscal year (April-June quarter), he expects an upward movement for economic activity. He said that while the direction to positively move the country forward may not lead to its pre-COVID-19 position, which he said has been predicted to take some two-four years before recovery, he remains confident. Remaining tight-lipped as to whether new taxes would be imposed for the upcoming fiscal year, Dr Clarke also expressed confidence that revenue streams would trend upward this year. Just this week, the Government tabled supplementary estimates in Parliament to cut spending this fiscal year by some $3.5 billion. The revised budget proposes a reduction in expenditure from $853.8 billion to $850.3 billion.

He outlined the continued growth in remittances, improvements in the trade balance of goods, controlled inflation and fiscal targets remaining on track as being among some of the most positive signs, stating that, “we have finished round 2020 standing tall and now ready for round 2021.”

“What we are going to need to do is to [keep the economy] moving and within a period of two-four years, we are very likely to retain the levels of 2019. We may get a positive surprise,” he added, citing the maintenance of macroeconomic policies and the building and strengthening of institutions as being key for future growth.

Dr Clarke said that the maintained ratings from international agencies have also been a good indicator that the country was centred along the right trajectory. Despite the Statistical Institute of Jamaica's (STATIN) recently released figures for the October 2020 Labour Force Survey reflecting a continued decline in employment and a 10.7 per cent or 3.5 per cent increase in the unemployment rate, Dr Clarke believes that the country has so far done a good job in navigating the challenges of the pandemic.

He further said that while some priorities have had to be shifted to address fallouts from the pandemic, the Government remains committed in ensuring that delayed divestment programmes will be revisited in the shortest time possible. He cited the divestment of interest in the Jamaica Public Service (JPS) and the Jamaica Mortgage Bank atop those.

“We have every reason to be optimistic as in the midst of the greatest crisis seen, Jamaica has showed deep resilience and has absorbed the crisis and maintained our stability and we are ready to rebound in 2021,” the minister said.

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