I’m not going to characterize economic outcomes during the pandemic as if they’re unexpectedly awful: the bottom has fallen out of the world economy and we’re part of that. Our pain has different sources and remedies and that’s what’s important to understand. Simply put, we’re highly dependent on other countries, especially the USA.
Data for the 2nd calendar quarter and 1st fiscal quarter, April-June, and now available: they show the economy contracted by 18% compared to the same period in 2019:
The Planning Institute of Jamaica (PIOJ) today reported that the economy contracted by 18 per cent for the April-June quarter when compared with the corresponding quarter of last year
No sector has escaped. In services, hotels and restaurants have been brutalized—declining 88%—while in production sectors, mining and quarrying declined 25%. The sharp decline in tourism explained the former as the sector limps along at about 10-20% capacity. Alpart closing affecting mining badly, and limitations on movement badly affected ‘other services’ and ‘transport etc’.
Tourism has borne the local economic brunt of the pandemic but played its part in suppressing the health impact. Sector spokesmen stress how tourism has tried hard to respect health protocols. But, they fear being made scapegoats to justify another closure of our borders.
Some perverse positive trends: remittances are up: The BOJ governor commented in a published statement, “Incredibly, while the global forecast is for remittances to decrease by 20 per cent in 2020, remittances to Jamaica have increased since May, evidenced by a 15.7 per cent increase in May and a 41.6 per cent increase in June, after a very small decline in the first quarter.”
Despite the tired howls that the sky is falling almost every time the exchange depreciates, the FX market is showing the resilience and behaviour it should with a flexible exchange rate. The J$:US$ rate touched 151 over a week ago and was trading at about 143 last Friday. Again, BOJ governer Byles: “It must also be noted that the newly reformed FX market continues to operate in the way that an FX market is supposed to work. The exchange rate is supposed to act like an elastic band that contracts and expands automatically, to transparently reflect the state of the market and the overall economy.”
There’s no shortage of FX: “An even clearer picture was painted on Tuesday, September 1, 2020, when the Bank of Jamaica intervened in the market, offering US$20 million via a B-FXITT (Foreign Exchange Intevention and Trading Tool) flash sale. For the first time since the start of 2020, the market did not ask for more than what was being offered. The market did not even ask for half of it. BOJ received bids for only US$7.8 million, or 39 per cent, of what was offered. This is an emphatic and unequivocal indication that the FX market is presently adequately funded and in no need of extra funds.”
However, the sharp contraction of the quarter reported ought to be much more than the next quarter, as the economy opened up again from mid-June, albeit with many operations and workers not at full tilt. The surge in positive cases that has led to the official change of status to ‘community transmission’ may bring with it greater irregularity of activities, as firms and organizations deal with identified cases and some shut down temporarily to clean and sanitize. Tougher enforcement of health protocols may also push some businesses past their tolerances and business will fall, eg for public transport due to enforced lower ridership.
So, we might have touched the bottom of the downturn, but that will not be clear till next quarter. Either way, the road to recovery will be long, whether it’s not until early 2021/22 or later.
Africa is a massive continent and its countries have incredible variations.
I’m really pleased that my first visit to Africa wasn’t as an IMF staff member; it pays to see things from a different perspective. Having said that, I’d gone to the continent first as a staff member of the Bank of England, as a footballer, mainly, during an international 40th anniversary celebration of Reserve Bank of Malawi (RBM) in the mid-1980s. Its highlight was playing the top two teams in the country, Silver Strikers (sponsored by the RBM, which had started as a social club for central bank staff) in the ‘Silver stadium‘ in Lilongwe, with a crowd of about 20,000 and live radio broadcast. Nothing like hearing your name over the loudspeaker: “Dennis Jones…on the ball…” 🙂 We also played the many-times national champions, Bata (now ‘Big’) Bullets in Blantyre, the other main city.
What was incredible about these matches was our opponents included several national team players, some of whom had trained in Brazil. They were shocked that our team had players in or over their late-20s; for them, retirement by 24 was normal. It was also an exhausting experience to play football at altitude, both dealing with a ball that flew so fast and far, and sucking on thin air. Lilongwe is on a plateau, 1,050 metres (3,440 ft) above sea level. Blantyre lies at an elevation 1,039 metres (3,409 feet).
Three things were extraordinary about Malawi, still under the iron-fist autocratic rule of President Hastings Kamuzu Banda. First, was the conservative dress code, notably, the policy that women were expected to dress “modestly”, that is no bare shoulders, and legs covered to below the knee, Second, was the creation (in 1981) of Kamuzu Academy, a private boarding school that was founded by, and named after, Banda, and described by its proponents as “The Eton of Africa”. Third, was Chibuku shake-shake, a beer made from sorghum grain, about which I’ve written before.
But, Fund work sent me to the continent many times.
My first mission was to Kampala, Uganda, doing technical assistance on international reserves, for the Statistics Department, about which I’ve already shared some stories. But, it was where I discovered the ‘double’ massage: two masseuses working the body at once 😳I’d wanted an hour but only a 1/2 hour slot was available, so…Undoubtedly, the best massage ever 👍🏾🤔
I also played squash for the first time on a court with no roof, at the residence of the World Bank country manager. In those days, I travelled with my squash racket like people travel with a tennis racket.
Madagascar was my next place to visit for Fund work, negotiating a Poverty Reduction and Growth program; my responsibilities were for the balance of payments and external debt (I was working in the Fund’s Policy Development and Review Department (PDR), which developed and oversaw the application of Fund policies, including reviewing mission briefings and staff documents at HQ, and on missions being a mix of ‘internal audit’, ‘policy integrity’, expertise on all things general policy, and working on the external accounts). It’s an odd situation to be part of mission teams, but not working to the dictates of the country department, but being ‘above’ them in many ways, representing the institution. My love (not) of doing debt sustainability analyses began there 😦
It’s where I had to work in French for the first time and in a country with long family names, the longest recorded being Andrianampoinimerinatompokoindrindra, you can imagine note-taking wasn’t a breeze. Its capital, Antananarivo, is referred to as ‘Tana. My notes were filled with ‘FM A said’ etc, ie finance minister [name]. It’s another elevated capital, and sits at 1,280 menters (4,199 ft) above sea level in the centre of the island. When I worked there, Marc Ravalomanana, a Malagasy entrepreneur and politician was president of Madagascar, having won election in 2002.
Mauritania always sticks in my mind because of Saharan sand in Nouakchott and because desert life is so different from anything else. For example, at the weekend, residents of Nouakchott prefer to head into the desert instead of to the beach. Pitching a tent and cooking lamb (méchoui) under the open sky, and in relative solitude.
Its ethnic mix is mainly Moors, originating from the north, and black Africans. originating from the south.
My missions there were negotiating a Poverty Reduction and Growth program, and I was again Mr. Balance of Payments and Debt. It’s where I was on 9/11/2001. I was recently kicking the French by now, and its use as one of my working languages was now well-established.
It was where I first saw a parallel exchange rate market working, live and large, in the streets and shops with rates calculated rapidly on calculators and money exchanged in huge volumes.
It’s where I experienced my first sandstorms and happened to be out running with my colleague to and from the airport one morning, and we had to navigate by sound and our voices. It‘s where I first saw women openly vilified for running and chastised for their wearing athletic gear, even long pants and long sleeves.
Maaouya Ould Sid’Ahmed Taya was president during my mission (having held office since 1984).
Guinea will feature more in its own right, because of my living there for nearly 4 years as the IMF’s resident representative. Sierra Leone will also feature apart as I had dual responsibilities as resident representative there, though non-resident. Travel between these neighbouring countries was not easy, and complicated because vehicles drive on the right in Guinea and on the left in Sierra Leone, and crossing the borders was always fun for the first 10 minutes.
Angola’s capital Luanda, has long had the reputation of being the most expensive city in the world. Coming out of the chaos of civil war in the mid-1970s and discovering oil, shortages and expatriates with high incomes made for a spiralling of costs, most notably for rental accommodation. Oil wealth does odd things to property values. I knew no Portuguese, and fortunately could work in English. I was on only one mission to Luanda (again, for PDR), not long after the end of my res rep assignment in late-2006. The odd thing about it was the authorities did not want a mission at that time and were not at all interested in borrowing from the Fund, but, we went through our hoops and loops. Though Fund thoughts were on a post-oil future, oil revenues were still gushing. So, it goes, sometimes, when economics and politics are at loggerheads.
South Africa was a transit point for the mission to Angola and also some regional meetings. I stayed in Johannesburg and had the chance to visit Cape Town, see Table Top Mountain and penguins at the Cape of Good Hope. I also got to see what a plane load of off-duty oil sector workers looks like on a long-distance flight from there to London. If you cannot take the liquor bought in duty-free onto the flight, what else to do but drink it before getting on the plane. To say the sight and sound of jolly, drunken British oil riggers for over 8 hours is not my idea of fun is an understatement!
Libya holds a special place as we visited soon after the embargo on US travel was lifted (February 2004). I met ‘Brother Leader’, Colonel Ghadaffi, who spoke to a conference of African central bank governors. Rhian was just 6 months old and she (one of the first Americans to visit) and Therese came along for the junket.
We had to fly from Conakry to London to Tripoli. On arrival, we were met at the plane door by Libyan officials and whisked through security to a VIP lounge. We waited there while other people arrived, some I recognized as governors. When the ‘group’ was complete, we were ushered out to a fleet of black Mercedes outside the airport arrivals. We got into the back of our car and greeted our driver. I don’t speak Arabic, so I used English and French. Then, off we sped, and I mean sped. Motorcycle outriders cleared our route as we hurtled along at 140 km an hour into Tripoli 😳‘This is new’ was the expression on our faces; Rhian was blissfully ignorant. We pulled up at a glitzy 5-star hotel that was the conference venue,checked in and went to our palatial room. Not bad!
Libya is strictly Muslim, and though Guinea is predominantly Muslim, Islam is practised there with a lighter touch, eg its main domestic business is beer making 🤔😳🍺 It took some getting used to having fake gin and tonic. More than any of the other Muslim countries, I’ve visited, with maybe the exception of Mauritania, Libya is incredibly chauvinistic, and my wife couldn’t stop marvelling at men alone sitting at tables of coffee shops, and women, alone, seen in markets and stores.
But, as trips went, the visit was on a different plane for splendor and history and political enigma. My baby daughter became a star and featured in lots of pictures being passed around by central bank governors 🙂 I suspect she recalls nothing about visiting the old Roman city of Leptis Magna.
Morocco was never a work location, but a favourite stopover en route to/from Mauritania, because a Tunisian colleague and I loved the food and feel of Casablanca. No Bogart-like experiences with Lauren Bacall. I discovered the literally moorish delights of pastillia. ￼
To offset that, I have fond memories of being steamed and massaged in a hammam.
Sénégal was also not a work location but Dakar was a transit point for Guinea and South Africa. We took a vacation there from Guinea, made better because the Fund rep there was a good friend and a Guinean, Ousmane Doré, who later was Guinea’s finance and planning minister (2007), and whose residence became our ‘hotel’.
In Sénégal, we visited Goree Island (Île de Gorée) the site from where slaves were shipped across the Atlantic during the 15th-19th centuries —a hard emotional visit as tourists. 😩