The Jamaica Chamber of Commerce (JCC) has reported a 17.6 per cent uptick in optimism for the first quarter of 2016 led by the economic policies advocated by the Government during the recent general election.

Concurrently, business confidence index surged to 144.6 for the period under review, up from 123.0 in the fourth quarter and 131.9 in the 2015 first quarter. It marked a 15-year high in optimism for Jamaican businesses.

In a report conducted by Market Research Services headed by pollster Don Anderson, the JCC noted that while the first quarter gains were widespread across firms, the largest gain was in how firms judged prospects for the Jamaican economy — surging 57 per cent from last quarter to result in the 15-year peak.

New peaks were also recorded in profit expectations as well as investment intentions.

“The exceptional reaction of businesses to the new economic policies is every politician’s dream since it means that all oars will be pulling in the same direction toward economic growth. Just as importantly, governments now understands that the wise implementation of economic policies enables consistent economic progress over time among all stakeholders,” the JCC reported.

“Perhaps the most promising aspect of the new policies is that the Jamaican economy will be driven by its own oarsmen and not left to the winds of the global economy. Promises without performance, however, will quickly turn dreams into nightmares, for the government as well as for firms,” it continued.

Expectations that firms will see an improved economy surged to 62 per cent for the quarter under review, according to the JCC, almost doubling the previous quarter’s 32 per cent. As a result, 70 per cent of businesses anticipate improved financial situation for their businesses.

“One year ago, in the first quarter of 2015, firms were even more optimistic, with 74 per cent anticipating improved finances due to expected gains associated with the IMF agreement. While this positive assessment was eroded during the balance of 2015, it has now risen to its second highest level,” the JCC reported.

Likewise, the willingness of firms to invest in new plant and equipment surged to its highest level in the history of the surveys.

Among all firms in the first quarter, 61 per cent reported it was a good time to expand their productive capacity to take advantage of future opportunities, led by the belief that the new policies of the government are more likely to promote GDP growth in the year ahead.

PAINFULLY SLOW LEARNING FOR CONSUMERS

Meanwhile, consumer confidence surged for the second consecutive quarter, rising 20 per cent in the fourth quarter and another 19 per cent for the first quarter of 2016. The JCC noted that the current level of consumer confidence was the third highest in the past 15 years, all of which were recorded following elections.

The Consumer Confidence Index was 147.9 in the first quarter of 2016, up from 124.4 in the fourth quarter and 114.3 one year ago.

“It must also be mentioned that after the prior election peaks, confidence fell, including the complete reversal of the 2012 gain in the following quarter. I suppose that it could be argued that consumers have begun to learn about the impossibility of a quick economic fix, since 2007 was the highest, followed by the 2012 peak and finally the 2016 peak,” Anderson stated.

“Such painfully slow learning, however, is small comfort. Indeed, the data suggests the optimism engendered by the recent election is still beyond realistic near-term expectations for the economy. The government needs to better manage expectations to avoid the corrosive impact of failed expectations, and consumers must learn to discount the appeal of no-cost quick fixes,” he continued.