The PSOJ is right

The PSOJ is right

Friday, August 14, 2020

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No one should be surprised by news that the novel coronavirus is pushing much of the world into record economic slumps.

Anyone who doubts that, or even tries to downplay it, is living in la-la land.

A second-quarter tally of some the world's major economies shows that Germany — Europe's top economy — saw its GDP fall by 10.1 per cent. That, combined with a two per cent decline in the first quarter, means that Germany's economy met the definition of a recession.

France — the eurozone's number two economy — recorded a 13.8 per cent plunge after a drop of 5.9 per cent in the previous three months.

In Italy, GDP fell by 12.4 per cent after a 5.4 per cent drop in the first quarter.

Spain's economy contracted by 18.5 per cent after a 5.2 per cent drop in the first quarter, while the eurozone's overall GDP plunged 12.1 per cent in the three months to June, after a 3.6 per cent decline in the first quarter.

The United Kingdom suffered the worst recession in Europe in the first two quarters of the year — 20.4 per cent in the second quarter and 2.2 per cent in the first.

The United States, regarded as the world's top economy and one of Jamaica's largest trading partners, suffered a 9.5 per cent slump in the second quarter following a 1.3 per cent drop in the first, according to figures published by the Organisation for Economic Co-operation and Development.

Japan — the world's third largest economy — is yet to publish its second quarter figures; however, the country had announced in mid-May that it was already in recession when first quarter GDP slid by 0.6 per cent after a 1.9 per cent drop in the final quarter of 2019.

The only exception is China — the world's second-largest economy — which has reported a second quarter rebound of 11.5 per cent after a 10 per cent decline in the first quarter.

Financial analysts, however, have forecast that growth for China this year will be much below what that country has become accustomed to for decades.

Locally, the Planning Institute of Jamaica (PIOJ), in its review statistics released in May, had said that for the April-June quarter the economy could contract within the range of 12 per cent to 14 per cent. The previous quarter saw a GDP decline of 1.7 per cent.

The PIOJ has projected a return to growth performance for the January to March quarter of 2021. That, of course, is dependent on how badly the economy will be further affected by COVID-19.

However, as we have stated in the space repeatedly, we cannot afford to become hostage to the virus. That is why we support the position advanced by the Private Sector Organisation of the Jamaica (PSOJ) that the Government should avoid a lockdwon of the economy despite more positive cases of COVID-19 being reported.

Mr Keith Duncan, the PSOJ president, is correct in his suggestion that, rather than lock down the economy, the Government should continue its surgical approach of stringent monitoring and quarantining communities where the threat of spread is detected.

We all know what to do to survive with this virus which, based on scientific research, will be here for a long time. Mankind has learnt to live with other viruses. This one is no different.

What we must do is ensure that the engine of the economy is humming while we develop the industries and skills that are now needed worldwide.

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