Recessionary Times

Uncertainty is still the order of business when it comes to the world’s markets with everyone wondering if we are headed back into a recession. Many countries are just starting to recover from the effects of the last recession and another ‘dip’ could be quite painful. Yet despite the concerns some businesses continue to do well and many see now as an opportune time to go into business.

In Jamaica the situation has been particularly grim because of the lack of significant growth over the last two decades. In addition the extraordinary high interest rates helped to suppress the instinct to go into business as one could simply put the money into government paper and receive a high risk free rate of return. Many persons feel that with a possible recession on the horizon now is not the right time to go into business. Investors want to play it safe and accept a small ‘safe’ return rather than to take risks with a business venture but is this the right approach?

The recent turmoil in the international markets has shown that the concept of government paper being risk free is no longer valid. Everyday we read about the fears that investors have that countries will default on their debt obligations. In an effort to save their financial institutions governments absorbed the losses inherent in the system but now find themselves in the position of not being able to generate sufficient tax revenue to cover these losses. Added to this is the fact that the ratings agencies are forcing countries to reduce their deficits sharply by threatening to downgrade their debt. The very persons who encouraged the governments to intervene to save their economies now want a quick fix to the problems.

It would thus seem that in Jamaica we should not even be thinking about business but we would be wrong? The world has missed the point that cost cutting alone will not solve the problem; it must go hand in hand with growth. In the next few articles I want to take the opportunity to look at some areas particular to Jamaica in which there is a need for more business ventures. It is hoped that by talking about some of the pros and cons of these industries that we can encourage others to consider going into business. We can no longer sit back and watch the world pass us by; we need to decide to be a part of the changing environment and that means that we will have to increase our risk appetite.

As we move forward I hope to show that taking on a measured risk with the hope of a reasonable return is better than to sit down waiting on the government to solve our problems. We need to be proactive not reactive when it comes to business.

Tags: economic, environment, recession