Is the long-awaited economic prosperity underway?

Thursday, April 11, 2019

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One of the biggest mysteries of Jamaica's existence has been the frustratingly stubborn refusal of the economy to produce the growth and prosperity that everyone, over many long years, has insisted Jamaica has the potential to do.

That frustration has only been deepened by observations that once Jamaicans have migrated, they overnight metamorphose into productive, thrifty, hard workers, frequently holding down several jobs and contributing significantly to their adopted country.

Now, unless the Government, the Caribbean Policy Research Institute (CaPRI), and Mr Don Anderson's Market Research Services (MRS) are conspiring to fool us, the signs are suggesting that at long last growth and prosperity are on the horizon.

In this week alone, MRS's Survey of Business Confidence Summary Report, undertaken for the Jamaica Chamber of Commerce, attests that business and consumer confidence for the first quarter of 2019 have attained levels not before seen.

“…It is worth noting that it is the highest in the history of these surveys. This level of confidence in the economy has also resulted in an increase in the index to 157 points — also the highest in the history of the surveys,” pollster Don Anderson said about his findings.

Importantly, firms' willingness to invest in new plant and equipment soared to its highest in the history of the survey, at 159 points; and over 70 per cent of them agreed that the time was right for expansion, while more than half had solid plans to increase the level of capital investment in over the next 12 months.

This news followed in the wake of Dr Damien King's full-throated endorsement of the 2019/20 budget unveiled recently by Finance Minister Dr Nigel Clarke. The CaPRI executive director reiterated that Jamaica's debt had declined from nearly 150 per cent of gross domestic product (GDP) to a projected drop below 100 per cent by the end of the current fiscal year.

The takeaway is that the debt reduction is freeing up fiscal space to facilitate increased Central Government capital spend to the tune of $72 billion programmed for 2019/20, according to Dr King.

For his part, Dr Clarke, in the budget, announced a reduction in transfer taxes from nine to two per cent, giving up over $14 billion in revenue and creating excitement among potential investors, notably among mortgage providers, some of whom are now offering an unprecedented 100 per cent financing on homes.

And Prime Minister Andrew Holness on Tuesday announced that the Jamaican economy grew year-on-year two per cent in the fourth quarter of 2018, based on Statistical Institute of Jamaica figures, making it 16 consecutive quarters of growth.

Though Mr Holness quietly ditched the much-heralded “five in four” (five per cent growth in four years) concept, he remained confident “we will get to four”, adding: “We are on the runway, we are picking up momentum. We will take off and soar as this country is blessed to do.”

It is noteworthy that the Opposition's Mr Mark Golding was comfortable enough with the economic state that he suggested it was time to use some of the extra cash to cut the General Consumption Tax (GCT) and the tax on gasoline to ease up low-income consumers.

That might be a tad too soon, but dare we begin to hope?

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