By Dashan Hendricks
It's not hard to see that things are changing. For some, it’s for better, for others it’s for worse. Yet, for many, no change is seen.
But no one would deny that the economy is changing. Much of that was seen over the last weeks of 2015. For example, the Bank of Jamaica said it had projected to flood the market with a net $12.1bn increase in currency issue. At the end of 2015, the central bank said it had to issue more than $15bn. This is a sure sign that the economic recovery which began in late 2014, is well and truly underway.
Another sign came from a local used car dealer who said he sold close to 100 cars in the last six weeks of 2015. Why is that significant? People purchase more durable goods if they believe their economic prospects are improving. Why buy a car which commits most to dozens of months of installment payments, if you do not know where the money will come from to make the payments?
Then there is the much celebrated increase in stock valuations on the Jamaica Stock Exchange in 2015. To be sure, both the main market and the junior market indices closed the year at record levels. In December alone, just under $2.6bn was traded on the main market. Overall, the JSE (both main and junior markets) started 2015 with a market capitalisation of $323bn. At the end of 2015, the stocks listed were valued closer to $600bn, a better than 80 per cent increase. It means those who held stocks last year were more than $250bn richer at the end of the year, than when they started!
Yet, in the midst of such opulence, we receive reports that hundreds of thousands of Jamaicans are malnourished. Hospital equipment meant to be disposable will have to be reused because the budget cannot accommodate the purchases necessary to make disposables really disposable.
This contrast goes to show that, while things are improving, they are not where they should be. Growth, which is projected for the next fiscal year to reach 2.5%, is still too low to put hundreds of thousands to work. This much is shown with the unemployment rate hovering above 13%. Hundreds of thousands more are so frustrated, they don't even try to find a job, and so are not counted in the official statistics as being unemployed.
Some of these people will be employed through $13bn in extra spending the Jamaican Government is being allowed through diverting that money from paying debt. But the International Monetary Fund has warned that such spending will not have an immediate impact on growth. That is due to the high import content on much of the things we do in Jamaica. It will bring growth, of course, but that will be seen when the areas in which the money is spent start producing more. For example, some of the money will be spent on improving irrigation infrastructure. It is when the farms which benefit start to produce that we will see the growth impact. Much of the irrigation equipment will be imported.
All in all, though, things are brighter. It could have been worse. While our economy is walking through the proverbial woods, it is not yet out of it. The policies taken by the Government in an election year will determine how far we go as a country and as a nation.
Dashan Hendricks is RJR's Group Business Editor