'Economic strategy failing to generate growth'

Opposition Leader Mark Golding is bemoaning the "painfully slow" rate of growth of the Jamaican economy over the last seven years, and is insisting that the Government's economic strategy is failing to generate meaningful growth.

Golding, who was making his contribution to the 2023/2024 Budget Debate in Parliament on Tuesday, said that one such strategy which has failed was the Government's plan to achieve five per cent growth in four years (5 in 4), deeming it "a mere illusion".

He said that when the Government took over in 2016, "it got a good wicket to bat on — certainly good enough to give it the confidence to say that it could achieve five per cent annual growth of the economy by the end of four years. That five-in-four promise, of course, turned into a pipe dream," he said.

Golding noted that at that time, before the new Administration took over the reins, debt to gross domestic product (GDP) was down to approximately 115 per cent; there was a fiscal surplus of 0.6 per cent of GDP; the current account deficit was only two per cent of GDP; inflation was 3.7 per cent; and unemployment was below 10 per cent.

He lamented, however, that meaningful GDP growth has proved elusive, noting that the average rate of real GDP growth for the four fiscal years from 2016/17 through to 2019/20 was negligible, just one per cent per annum.

"In fact, in the fourth year of the five-in-four period there was negative growth of 0.1 per cent for the calendar year. That four-year period of very low growth performance was before the pandemic hit — which collapsed GDP, due to that shock, by 11 per cent — and that is from where we have now recovered, we are told by the minister of finance, to where we were before COVID hit," he said

The Opposition leader further argued that now that the economy has recovered to the 2019 levels of output, Jamaica once again faces the challenge, going forward, of achieving meaningful levels of economic growth.

"The outlook is not pretty… despite all the reforms and sacrifices to improve the fiscal management of the country over the past 10 years, the Government's own Fiscal Policy Paper, which was tabled with the budget for the coming year, projects an annual average growth rate of a mere 1.175 per cent per year for the next four years, even after recovering from the pandemic. In fact, it shows growth slowing down over the next four years, from 1.6 per cent in the coming year to just 1.0 per cent in the last two years of the four-year period ending in March 2027," he said.

Golding said this slow growth rate will impair the ability to make much-needed investments in the nation's people, to make Jamaica's human capital more productive so that higher rates of economic growth can be achieved.

"It is because we have taken the wrong direction. It's like a catch-22 situation. Low growth means less money for investment in uplifting our people. But unless we invest in uplifting our people we will never achieve meaningful and sustained levels of economic growth, which I would say means anything from of 3-5 per cent and up," he said.

BY ALECIA SMITH Senior staff reporter smitha@jamaicaobserver.com

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