Duncan: Productivity key to breaking Ja’s low-growth cycle

Government Senator Keith Duncan has signalled that the only way for Jamaica to make a meaningful breakthrough to break the low-growth cycle dogging the economy for several years is to increase productivity.

Speaking during Friday’s State of the Nation Debate in the Upper House, Duncan said significant groundwork has already been completed, as reflected in the country’s current macroeconomic indicators. However, he stressed that further efforts are needed to meet key targets under Vision 2030.

Regarding the country’s debt-to-GDP ratio, Duncan said the target under Vision 2030 is 60 per cent. He noted that the Government has reduced the ratio to 64.3 per cent, down from 115.9 per cent in 2015.

Duncan also noted that GDP per capita is targeted to reach US$12,500 by 2030, compared with the current figure of US$8,620. He said the indicator was moving in the right direction, having increased from US$5,486 in 2016.

GDP per capita is an economic metric that divides a country’s total GDP – the value of all final goods and services produced within its borders – by its total population.

The net international reserves (NIR) has already surpassed its 2030 target as Jamaica was now covering seven months of imports compared with the three months goal by the next four years.

He also highlighted the current low unemployment level as another achievement, pointing to 3.4 per cent, at present, compared with the four per cent target for 2030.

With the poverty rate now at 7.8 per cent, Duncan said this was in keeping with the 2030 target of less than 10 per cent.

Turning to the country’s low growth levels, Duncan said Jamaica was still working toward achieving that “illusive five per cent” growth target.

The Dr Andrew Holness-led administration in 2016 had announced a “five in four” growth target. The plan to grow the economy by five per cent annually over four years was not achieved.

However, Duncan said the country will work towards achieving the 2030 five per cent growth target.

“To increase productivity as a country and to increase our level of growth and value-added economic activity as a country, we need to focus on the areas of infrastructure, reducing crime which cost five per cent of GDP annually, and focus on human capital development,” he said.

He said there should be continued focus on economic diversification, agro processing, logistics, manufacturing and targeted human capital.

While the Government was “doing a fairly good job at infrastructure”, Duncan said there is still the need to ramp it up.

Urging the Government to build out the country’s skillsets, Duncan said at the same time it was necessary to import specialised skills where there is a gap locally and then transfer knowledge to the Jamaican workforce.

Commenting on the Government’s plans to suspend the fiscal rules, Duncan said he was in support of the move. He said with the US$6.7 billion to spend on reconstruction projects, the fiscal rules should be suspended to facilitate increased spending on a plethora of projects identified by the National Reconstruction and Resilience Authority.

“These projects and these investments will deliver tangible economic returns, increased productivity, increase the resilience of our economy, increase growth levels, [and] increase economic activity and tax revenues,” he said.

“We make these investments and there is JAMROCC that will provide oversight in ensuring that the project portfolio is delivering the economic and social returns to us as a country, such that we can lift ourselves out of that perennial one to two per cent growth dynamic,” he added.

edmond.campbell@gleanerjm.com