Editorial | Don’t miss Guyana, Suriname boom
Perchance no one in Jamaica has paid attention, the Caribbean Community (CARICOM), concerns over political divisions notwithstanding, may be on the cusp of the long-elusive economic breakthrough. The issue is whether Jamaica is ready to grasp the opportunities if, and when, they occur.
Put differently, are Jamaican enterprises, including those in manufacturing, sufficiently engaged to be aware of the prospects? It is not our sense that they are. That should change, and rapidly. A revived debate about the future of manufacturing in the island, into which Nigel Clarke and Audley Shaw, the ministers, respectively, for finance and industry, have intervened, underline this urgency.
This newspaper agrees with Richard Pandohie, as well as Metry Seaga, his predecessor as president of the Jamaica Manufacturers and Exporters Association (JMEA), that substantially more needs to be done to develop a world-class manufacturing sector, including greater investment in education, particularly in science and technology, to lift the country’s low labour productivity.
Lagging investment in innovation also has to be addressed. That, though, is a matter primarily for firms, which spend relatively little on research and development. Indeed, while little data is available on the matter, the best estimate is that Caribbean countries combined invest less than half of one per cent of gross domestic product in R&D, and Jamaica still lags behind the pack.
These shortfalls, however, don’t mean that nothing is happening in manufacturing. Despite being stagnant for decades, the sector, which accounts for 8.7 per cent of GDP, as has been noted by Messrs Clarke and Shaw, is showing new signs of life, or “a renaissance”, as the ministers put it. On the back of the economic reforms of the last seven years, manufacturing, on average, grew at more than two per cent a year, since 2015.
But as Mr Seaga remarked, even with these gains, Jamaica can’t expect long term, manufacturing-driven, robust economic growth, “based on (a population of) two million people”.
“We have to build our economy based on the rest of the world,” he said. This newspaper agrees. Which is where CARICOM, and its potential economic breakthrough, is relevant.
Even with a combined 16 million people, more than two-thirds of whom live in Haiti, CARICOM’s population is small. So, Jamaica’s, and other CARICOM countries’ firms, have to be capable of competing in the global market. What CARICOM does allow, though, is the opportunity for regional businesses to use the community’s single market arrangements to practise for the rest of the world. Circumstances, unfortunately, for most of the life of CARICOM, have limited that prospect.
Except for Trinidad and Tobago, with its oil and gas, which afforded it cheap energy and allowed for the emergence of its relatively strong manufacturing sector, most regional economies, inhibited by bad domestic policies, were, for decades, in funk. Not least of those were Jamaica and Guyana, as well as Suriname, a relative late entrant to the community.
The situation is changing. Having addressed its fiscal indiscipline and reduced its debt, leading to macroeconomic stability, Jamaica’s economy has returned to, even if slow, economic growth.
Guyana, once the region’s basket case, has been growing steadily, at around four per cent, for the better part of a decade. Recent big oil and gas finds off its coast are turning the country into a significant oil producer, with a projected output of 120,000 barrels a day this year. Oil production is expected to reach 750,000 bpd in five years, several multiples of Trinidad and Tobago’s current production.
More important, the IMF projects Guyana’s economy to grow by 86 per cent this year; by five per cent in 2021; 20.6 per cent in the following year; and 26.3 per cent in 2023. In five years, Guyana, with a population of less than 30 per cent of Jamaica’s, will have an economy equal in size to this country’s. There have also been significant oil finds offshore Suriname, Guyana’s cross-border neighbour. So, Suriname, too, is expected to enjoy robust growth.
These developments appear to have excited no one in Jamaica, including neither the JMEA nor the investment and export promotion agency, JAMPRO. We would have expected that in the five years since the strong signs of Guyana’s potential oil boom, Jamaica’s industry groups, and firms, would have been in that country making plays for its markets, leveraging their advantage of CARICOM membership. It isn’t too late.
Our firms, in manufacturing and services, should be trumping Guyana and Suriname. And for that matter, all members of CARICOM, oil boom or not.