Jamaica's economic recovery in progress

"The economic recovery in Jamaica is now under way," Brian Wynter, governor of the Bank of Jamaica (BOJ), told members of the Shipping Association of Jamaica (SAJ) last week.

Wynter was addressing members of the SAJ at the association's Lunch and Learn seminar held last Thursday at the SAJ's Fourth Avenue offices. The BOJ governor was speaking on the topic, 'Prospects for Economic Growth in Jamaica'.

In a very witty, humourous, and relaxed presentation to an audience of mainly young shipping industry staff, the governor gave an update on aspects of the country's agreement with the International Monetary Fund (IMF). He noted that Jamaica had successfully met all prior actions, quantitative targets, and structural benchmarks for the programme.

He used several analogies with real-life situations to break down for his audience some very complex economic terms, connecting well with his listeners.

Jamaica's economy, he said, began to recover with an expansion of 0.5 per cent in gross domestic product for the September 2013 quarter. "The bank has estimated stronger growth for each of the following quarters (December and March) in the range of 1.0 per cent to 2.0 per cent, largely reflecting increased output in agriculture, forestry and fishing, mining and quarrying, construction, and hotels and restaurants," Wynter said.

Favourable weather conditions

The central bank head said the buoyancy in agriculture, forestry and fishing reflected favourable weather conditions, supported by the impact of the recently developed agro-parks. The growth in mining and quarrying, he added, reflected greater capacity utilisation, while growth in the construction sector reflected road building and repairs and a number of hotel expansions. Increased airlift from Europe and the world demand conditions are the factors that had a positive impact on the tourism industry.

"The Government has been meeting or exceeding its quarterly fiscal targets. This level of fiscal restraint has, among other things, eliminated the need for incremental domestic financing and has helped to keep interest rates relatively low," the governor said.

He added that the BOJ had been rebuilding the net international reserves (NIR) and anticipated that, by the end of March, the NIR would exceed US$1.1 billion, ahead of the target under the extended fund facility.

The governor outlined several key factors that will keep Jamaica on this path, of growth. These include legislation, which will support stronger growth going forward. Further reforms are also planned, including:

More reforms to the tax system, including limiting exemptions and lowering tax rates;

Boosting competitiveness through increased training and certification of the labour force; and

Making the approval process for construction and development more efficient by introducing a new system.

The construction of the 360MW power plant, and initiatives to increase energy diversification, as well as the plans for shipping and port activities are other factors that should increase the country's growth potential.

Logistics hub

Making reference to the Government's plan to make Jamaica a logistics hub, the governor said the shipping sector is at the core of this initiative and is, therefore, critical to its success. "I anticipate that the sector will position itself to take the fullest advantage of the opportunities which are being created," the governor said.

"I see, overall, increasingly bright prospects for 2014 and beyond based on a momentum that is evident and growing as well as the progress being made in implementing plans for expansion in key areas. I see a significant push by Government to provide the infrastructure and environment to enable greater private sector investment," Wynter opined.

He added that the combination of a stronger global economy and improved fundamentals in the domestic economy added to investor confidence would lead to greater levels of investment and job creation, thereby enhancing economic welfare in 2014.

Acknowledging that there were challenges, the governor said that they were being tackled and that mechanisms to enable consensus building and participation in meeting the challenges had been introduced and were showing their worth.

"In this context, it is important for investors to move from a wait-and-see attitude - waiting for all of the stars to line up perfectly - to an orientation that will seize the initiative and take advantage of the opportunities that now lie before them," he said.