I met a businesswoman last night who mentioned that, although quite young, she was near retirement, after nearly 20 years in retail in Jamaica. “I want to leave and go to the USA; anywhere. The risks and problems are too much.” That’s a common sentiment not only amongst business people.
But, some of her frustrations are now official. Local companies are down in the dumps over Jamaica’s economic prospects. A survey of business confidence in the third quarter, published yesterday by the Jamaica Conference Board, puts into numbers what many already feel in their core: economic conditions are tough, rough, and maybe people are ready to say “Enough!” The numbers show the lowest level of confidence since 2009, largely because of worse prospects for jobs and incomes. Business sentiment has only been worse in two other surveys since they began in 2001.
Reading the press report, though, that dismal litany is far from the whole story, which shows some interesting glimmers. According to the Gleaner commentary [my highlights]:
- People had not lost hope. “…respondents were not blaming the bad picture on what government has done, but rather what government has not done. However, the survey reports they were informed and expected improvement in the economy. What seemed to be missing was “The austerity plan must be balanced by some incentives to bolster consumer demand to end the economy’s tailspin,”
- Firms were taken aback by what they were having to tolerate and the speed of the change. “…firms expect the benefits from the new government policies to be worth the costs, the benefits accumulate slowly over time but the costs are immediate, the report said. “The data suggest that the firms did not correctly anticipate how front-loaded the costs would be,” added the report.
I commented to a regional journalist yesterday, who asked if I thought that Jamaica would stay ‘on course’ that I believed that many well-informed and intelligent people in Jamaica did not understand fully what the IMF adjustment programme really meant in terms of speed of adjustment. The survey vindicates that, to some degree. I also thought that the government and Bank of Jamaica had not done a good enough job of preparing people for that. It’s a shock and the jolt seems harsher because of ignorance.
The survey also pointed out something that seems obvious, but bears repeating: “to overcome the declines in government spending, the private sector must become the primary engine of economic growth”. There’s no backing away from that, and government stepping back in to give an economic boost is not the current best option.
People are justifiably worried. Look at what is on the dinner plate: the pace of price increases; the fast rate of exchange rate depreciation; lack of jobs for a significant portion of the population, especially young people; limited prospects of a jump-start to economic activity. But, in terms of what is expected, not much of that is a surprise if you look at what the IMF programme scenarios show. But, do people understand that? I pointed out to someone yesterday that the prediction is for inflation to rise by 10.5% in the current fiscal year, and if the exchange rate is supposed to fall in real terms, then it needs to lose value by at least the rate of inflation. That gives an idea of where the exchange is heading. That may be a hard picture for political leaders and the central bank to convey, but it would be helpful to keep pushing the point.
Talk of the importance of the logistics hub merely points out that the economy has little means of generating jobs itself. Governments wont help there, so private firms need to step up to the plate.
I understand that the lady, for her own reasons, can’t take it anymore. But, another closed shop is not what is going to make the situation better.