Putting Jamaica's sluggish economy in context

Monday, February 18, 2019

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Dear Editor,

Observer letter writer Garth Allen raised some valid points in his piece 'Is it empty talk on growth from Clarke?' He referred to recent statements made by Minister of Finance Nigel Clarke, who boasted about long periods of economic growth, improved credit ratings, and improved debt-to-GDP ratios. Prime minister also made reference recently to improved performance and painted a bright and prosperous picture, despite the declining value of the Jamaican dollar, which is of concern.

Both the prime minister and Minister Clarke must inspire hope, regardless, in order to avoid panic and nervousness among consumers and investors.

Fact is, Jamaica's economic growth over the past 30 years has been negligible, GDP varies on average between one per cent and two per cent — that is, when it is not negative.

The Jamaican economy is ranked as one of the slowest growing in the world. Marginal growth won't have any effect on consumers if inflation is soaring over three per cent.

Despite the Economic Growth Council having some brilliant minds, it has been a challenge to achieve the bandied about “5 in 4” (five per cent growth in GDP in four years).

There was an article about Michael Lee-Chin in the Jamaica Observer recently where we heard about members not showing up for scheduled meetings. This must be frustrating considering the council has less than 24 months to achieve their stated target.

Many factors impede growth. Firstly, we have an insatiable appetite for foreign goods and services, which add pressure on the demand for US dollars, resulting in devaluation of the Jamaican dollar, and force local prices up. The country has massive debt, much of our earnings is used to service debt, even when there is marginal success. Some 60 per cent to 70 per cent of Jamaica's earnings is derived from the service industry, including tourism and remittances. Although tourism has grown with record visitor arrivals in recent years, much of the profits leave Jamaica due to foreign ownership. Good fiscal management and how government manages its resources, and how it controls corruption are all critical for growth and driving consumer and investor confidence.

P Chin


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