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Improving signs for the economy

By Dashan Hendricks

Business Editor

 

The announcement by Jamaica's Finance Minister Audley Shaw that the economy is estimated to have expanded by 2.3 per cent in the July to September quarter of 2016 is good news. To put that growth into context, this is the fastest growth for a single quarter in Jamaica since 2002. It has caused the Planning Institute of Jamaica (PIOJ) to revise its forecast for growth for fiscal year 2016/17 up from 1.4 per cent to a new target of 1.8 per cent to two per cent.

While the estimates for growth are yet to be finalised, (the final figures for growth in the review quarter is scheduled to be released on December 31, 2016 by the Statistical Institute of Jamaica, Statin) Jamaica getting that amount of growth, though still small, will be the best growth figures in the island for almost a decade. You would have to go back to 2007 to see better growth figures.

This growth has come with more jobs being created as well. The April 2016 jobs report which was published in July, shows the economy added 40,000 jobs in a 12 month period. Unemployment did tick up from 13.2 per cent to 13.4 per cent, but that was because more people decided to enter the job market.

Combine other economic data such as a shrinking current account deficit, which has declined from double digits just three years ago, to two per cent; inflation in the 12 months to September 2016 measured at 1.9 per cent; people are more confident in economic prospects and it all plays for the perfect combination of factors for Jamaica's economy to benefit. In other words, Jamaica has not had it this good in a long time.

True, much of this stability and foundation for growth was set in the hard choices made almost four years ago by the then Portia Simpson-Miller administration to bite the bullet and once and for all, put measures in place for Jamaica's long term future. The choices were hard - multiple tax packages to pay down the debt, fiscal consolidation to ensure the debt is not pushed out of bounds, engaging in long talked-about reforms, and so on - but the fruits are now being reaped.

The current Andrew Holness administration has pledged to maintain the gains, but where necessary to accelerate it, especially in areas where the impact on the common man is more significant. That includes accelerating job creation. While 40,000 new jobs were created in the 12 months to April 2016, there are still almost 200,000 people searching for a job and cannot find one. Add to that, there are also 200,000 people from age 25 to 65 years who have decided not to enter the labour force.

What policy makers do with these set of data, in making progress to move the economy forward, will determine if the promise to have the economy growing at five per cent by 2020 will be realised. The aim should be to ensure that this will not be jobless growth. Things may be good, but they are far from perfect. The dollar is still sliding despite acknowledgement that it is at or near its true value. The process of starting and maintaining a business, though improving, remain cumbersome. Infrastructure to aid business development and logistics remain substandard for an economy wanting to achieve strong growth. The signs for the economy are improving, but much still remains to be done for Jamaica to get where it wants to go. The work has just started and will never be done.


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