Signs of growth

The Planning Institute of Jamaica recently announced that in the three months April – July of this year the Jamaican economy added net two thousand five hundred jobs.  In addition during the last quarter the economy contracted less than what was expected.  There is no doubt that there has been a stabilisation in the economy in terms of job layoffs.  In fact looking forward we anticipate more jobs to be restored in the bauxite sector as the demand and price for the product increase globally.  The tourism sector continues to hold steady although rooms are still being discounted heavily.  Air travel is on the increase and persons are returning to their normal travel patterns.  However of concern is the increase in taxes on tickets to the Caribbean that may reduce the influx of visitors from the Euro zone.  The financial sector has weathered the storm and profits are up at almost all companies.  As a result these companies may think about hiring some persons especially as they are understaffed in some areas.

However, there are still many problems facing the economy which will hinder our return to growth.  Jobs are being added very slowly and at a pace which is unable to deal with new persons entering the job market in addition to those who have lost their jobs.  Job creation is still the most critical factor preventing the economy from expanding.  In addition it is also making the promise of a balanced budget seem to be nothing more than a dream.

Another factor hindering growth in the economy is the high interest rates.  Despite some recent reductions in rates the cost of borrowing is still too high to encourage persons to borrow.  It is difficult to see an economy return to growth if investors have no access to cheap funds.  Added to this problem is the fact that government has still not dealt with all of the red tape involved in doing business in this country.  There are too many complaints from too many sectors about the difficulties of operating a business in this country.  The reform of the public sector can’t come soon enough but if it fails to deal with efficiency issues then it would have been a waste of time.

One other sector that is slowing the rate of economic growth is the construction sector.  There continues to be reduced activity in this sector and it is uncertain when the situation will improve.  It is difficult to see this situation changing when the current price of housing is out of the reach of the average Jamaican.  In addition rentals continue to be at an extremely high price and people are struggling to make their payments.

The journey continues but there is still a long way to go.  We have seen how vulnerable we are to a single tropical storm; well we are just as vulnerable to a single economic storm.