'Wheel and Come Again': What Will Be Jamaica's Comeback Story?Sunday, July 12, 2020
The Statistical Institute of Jamaica's recent announcement that the local economy has declined by over 2 per cent in the first quarter of the year came as no real surprise to anyone. The economy naturally was affected by the spread of the novel coronavirus and the measures taken by the Government to stem its spread. But, to be fair, even before the current pandemic, the economy's growth rate had been slowing since last year. The question that remains now is: How will Jamaica come back?
On the plus side, the country entered the pandemic with significantly lower debt than it did when it faced the global financial crisis over a decade ago, and had accumulated more robust cash resources than it had then, too, so that could assist with our debt repayment. So that takes care of that.
The brunt of the decline, however, was reflected in the hotel and restaurant sector. Again, no big surprise. The virus is really an invisible enemy that weaponised people to ensure its diffusion. The Jamaican Government, therefore, had to join the rest of the world's economies in enforcing lockdowns and physical distancing protocols to spare Jamaicans from each other, and close to country's borders to keep us safe from the encroachment of the outside world.
With certain restrictive measures now being eased, and our borders reopening, various economic sectors are set to begin the slow road to recovery. But, can the economy afford this investment of time? Tourism, we all know, plays such a key role in the livelihood of so many people — approximately 40 per cent of the workforce — and with what is looking like a second wave of the global pandemic set to unfold, how can the international movement of people, and hence tourism, not be affected?
This is precisely why the diversification of the economy has never been more important. Nobody knows when exactly the sector will be, for want of a better term, “back to normal”. In fact, is there even a normal to go back to? For better or worse, this pandemic has changed international tourism. At the very least, until a viable vaccine is produced in another year's time or so. Until then, does the economy of a small island developing state like Jamaica — so dependent on the tourism dollar — have the ability to weather this economic storm? Is this the opportunity for Jamaica to evolve even further beyond tourism?
For an economy that isn't well diversified, the simple answer is that it will be a difficult road ahead, and Jamaicans must be concerned about how this will impact their finances, the very fabric of their way of life, especially when job security has gone through the window, and there is nothing to suggest that more declines will not be part of the economic outlook for the foreseeable future. Fact is, the coronavirus will be with us for the long term. The Government has already moved to secure international assistance from the IMF to offset the damage done by the pandemic. Its CARE programme, too, has provided social and economic support for displaced and unemployed workers. But these measures are only temporary, and not at all sustainable. And though Jamaicans are a never-say-die people, how much wiggle room is there to “tun hand and mek fashion?” Are their investments safe? Will their personal finances be eroded by any uprooting of their daily lives brought on by this economic downturn? These concerns are valid, but the truth is that this is an unprecedented time, so there will invariably be a lot of waiting and seeing.
One thing not in question, however, is that, now, more than ever, we have to look towards building resilience. Whatever the temporary measures put in place to help us cushion the shock in the short term must be superseded by the realisation that a fundamental shift in the finance ecosystem is vital. If nothing else, this global health crisis has taught us that tourism and foreign remittances cannot be the building blocks upon which a sound economy is built. Remember, too, that this is hurricane season, a season some experts are predicting will be active. Some would say, given the randomness of the year so far, it's not outside the scope of possibility that we could perhaps witness even more displacement as a result of adverse weather systems. Too many eggs in one tourism basket makes us too vulnerable.This isn't fear-mongering; it's straight facts.
The economy needs broader structural transformation to make it less vulnerable to unfavourable external forces. Fact is, tourism is a shrinking sector. And with the economic fallout occurring in Jamaican immigrant-friendly regions like the US and the UK, foreign remittances can no longer be counted on to prop up the economy. It's time for hard decisions to be made, like seriously looking into the feasibility of shifting to a greener, more knowledge-based economy, one that sees natural capital for the essential economic asset it is, and which in tandem with environmental and climate responsibility and social development, can aid the sustainable recovery the country so desperately needs.
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