JIS News

Technical Consultant to the Ministry of Finance and the Public Service, Dr. Wayne Henry, has observed that with the changing economic paradigm and the severe challenges to traditional industries such as sugar, banana and bauxite/alumina, there is now a critical and urgent need for replacement industries in Jamaica.
Addressing the installation ceremony of the new administration of the Rotary Club of Christiana in Manchester on Saturday, July 18, Dr. Henry explained that the challenges present exciting avenues for transformation of the Jamaican economy.
“The agricultural sector and the food processing industry, for instance, provide numerous untapped opportunities in the areas of food security and import substitution, the exploitation of niche markets as well as in the critical area of bio-fuel applications in our search for energy alternatives,” he said.
Dr. Henry also cited the need for continued human capital development in the areas of education and training; the development of the proposed international financial centre; expansion and full utilisation of the country’s transshipment facilities and the further development of the sports and entertainment industries.
With respect to agriculture, Dr. Henry noted that there is now an urgent need to give momentum to the development of local capacity, enhance agricultural investment and facilitate greater and easier access to credit and financing.
“All these initiatives must be reinforced by greater and a more focussed effort to tap into niche markets as we cannot compete based on the economies of scale. Importantly, also, we must develop and exploit linkages especially with respect to the hotel and tourism market. The significant Jamaican Diaspora also presents an important market potential with tremendous cross-over possibilities,” Dr. Henry said.
Reflecting on the current economic crisis, Dr. Henry observed that the challenges of low economic growth and high public debt, which have beset the Jamaican economy, predated the present global economic crisis.
“Annual real GDP (Gross Domestic Product) growth has averaged only one per cent since 1991; public debt increased substantially after the banking crisis in the mid-1990s by some 40 per cent of GDP and currently stands at approximately 110 per cent of GDP. Additionally, Jamaica has a relatively narrow export base, is very dependent on energy imports and relies heavily on remittances and external market financing. Public investment has been constrained by the need to service a large debt stock and the country remains vulnerable to natural disaster risks,” Dr. Henry said.
With respect to the impact of the global economic crisis on the Jamaican economy, Dr. Henry explained that although the crisis, which first manifested itself in the mid-2007, had minimal impact on the Jamaican economy in its early stages, by mid-2008, the negative spillover effects of the decline in global economic activity were manifested.
He noted that real GDP is estimated to have declined by approximately 1.4 per cent for 2008/09. “Economic conditions deteriorated sharply, with tourism receipts declining by an estimated 15 per cent in the first quarter of 2009; remittances declined by 15 per cent; bauxite/alumina production and exports fell some 50 percent, as plants have closed due to global over supply; the unemployment rate rose to 11.1 per cent as at January 2009, up from 10.2 per cent in January 2008, and 9.5 percent in April 2007.
The current account deficit, he said, “is estimated to have widened to a record 20.6 per cent of GDP in 2008/09, due initially to the sharp increase in food and fuel import prices, and then reflecting a sharp reduction in overall trade, with exports and imports estimated to have declined by 50.6 per cent and 45.3 per cent respectively, year over year”.
Dr. Henry said that to compound matters, the fiscal deficit widened to 6.8 per cent of GDP for 2008/09, from 4.1 per cent of GDP the year before. Budget revenues fell by 2 per cent of GDP, while budgetary spending, spurred by a real increase of 10 per cent in the wage bill, rose by 0.7 per cent of GDP.
Among the main development challenges for Jamaica posited by Dr. Henry, are the need to improve fiscal and debt sustainability, with an emphasis on reducing the “oppressive debt burden”; improve competitiveness of Jamaica’s businesses, reduce crime and violence, improve governance and reduce corruption and promote rural development, while offering social protection to the most vulnerable in the society.

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