More Storm Clouds on the Horizon
R. Anne Shirley
As we come to the end of 2010 and reflect back at the performance of the Jamaican economy during the year, it will be remembered as one of the most difficult periods that we have weathered in recent times. It is a period in which productive activity in the economy continued to trend downwards and this was compounded by the battering that it took from man-made and natural disasters vis-à-vis the Tivoli incursion in late May, and the recent effects of the passing of Tropical Storm Nicole.
The economy as also impacted by the global crisis, particularly in relation to the slow recovery which is underway with our major trading partners – the USA, Canada and the European Union. The major areas of the economy – remittances, tourism, and the bauxite/alumina sectors were all affected, although credit must be given to the tremendous efforts in the tourism sector which saw Jamaica being able to out-perform its competitors in the region.
Net remittance flows were marginally higher for the first ten months of 2010 as compared with that of 2009 (although they were still marginally below the levels which existed for the similar period in 2008).
The bauxite/alumina sector has begun to show signs of a slow recovery, with the reopening of the WINDALCO Ewarton plants and the prospect for resumption of activity at its Kirkvine plant early in the New Year.
Analysts will point to the positive impacts of the JDX, the aggressive lowering of interest rates on government paper and the appreciation in the exchange rate on the fiscal budget, but these positives are tempered by the accompanying BOJ losses, the negative impact on export and tourism earnings, the clumsy imposition of additional tax measures throughout the year which have not engendered confidence within the business sectors and the massive buildup in arrears in the central government and public bodies. And we have benefited tremendously from the PetroCaribe initiative and the recent Chinese loan and other activities.
Prospects for a strong turnaround of the economy in 2011, however, remain elusive, and notwithstanding the glowing passing grades from the IMF that have accompanied the quarterly tests re our current borrowing arrangements with the Fund, it should be obvious to all that there are some severe storm clouds on the horizon.
It is rather unfortunate that at a time when the nation should be embracing regionalism in terms of the development of effective regional strategies re food security and energy security, that the Bruce Golding-led Administration has sent a signal that Jamaica might want to go it alone rather than have the CCJ as our final appellate court. This does not auger well for our leadership position within the CARICOM grouping, nor does it suggest an unswerving commitment to the notion of a CARICOM Single Market and Economy.
Predictions for 2011
Some of the key issues that will need to be addressed in 2011 include:
* The need to get a committed buy-in from the JPS and the bauxite companies re LNG as the preferred fuel-source going forward.
* Greater attention needs to be focused on the provision of social safety nets for the most vulnerable in the society – particularly amongst the elderly and our young persons as more and more Jamaicans fall below the poverty line.
* Identifying the areas in which major investments in the econonmy will come from.
* Greater use of the Jamaica Stock Exchange as the means of divestment of Government entities.
* Major overhaul/reform of the tax system, including duty waivers and the manner in which taxes are imposed.
We are in for a bumpy ride ahead.