Jamaica in much better position to face a recession- BOJ governor

Jamaica in much better position to face a recession- BOJ governor

Byles says country will still be able to stay within its range of 1-2 per cent growth rate

Observer Business Reporter

Friday, August 30, 2019

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Despite ongoing talks within global financial circles about a pending recession, Richard Byles the new governor of the Bank of Jamaica (BOJ) is expressing confidence that in the wake of an inevitable global recession, the country is in a much better place to deal with the likely effects.

Speaking at the BOJ's Quarterly Monetary Policy Report briefing yesterday at the bank's headquarters in Kingston, Byles shared the view that unlike previous periods of recession, the country is more financially stable and able to deal with certain fallouts.

“Our preparation for this started some years ago, if you recall back to 2008 when we had the first recession and compare the condition of Jamaica then to the condition now, you will see a vast difference” he said.

“First of all our debt is lower than it was then, secondly our reserves are higher and those are two crucial aspects of defence that we are more prepared in and importantly, when you look at the current account of the balance of payments, you will see that instead of a yawning gap, the current account to gross domestic product [GDP] of 6-8 per cent is very small and sometimes is even balanced and even in surplus,” he further outlined.

The BOJ governor, further noted that given the worries around a recession looming, he thinks the country will still be able to stay within its range of 1-2 per cent growth rate.

“We don't know how long JISCO (bauxite company in Nain, St Elizabeth) will stay down and once we get over the quarter that corresponds to when they started up, it should level out at somewhere between one to two per cent, maybe closer to the one than two, but also we may have some good news that takes us above the one, but I think one to two per cent remains a pretty realistic target range,” he stated.

Byles like Dr Wayne Henry, director general of the Planning institute of Jamaica (PIOJ) also articulated that despite the ongoing talks of recession, the macroeconomic prospects remains very positive.

“The BOJ's view is that the prospects for the economy remain positive even though head winds are on the horizon. Foreign reserves are at an adequate level and we have a sustainable position in the current account balance of payments. Fiscal performance is strong and the public sector debt continues to decline at a steady pace and market interest rates remain generally low,” the new BOJ governor offered.

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