PIOJ Optimistic of Earlier than Projected Economic Recovery

Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wesley Hughes, is optimistic of a possible earlier than anticipated recovery of the Jamaican economy from the current recession.
He has also said that an increased level of confidence in the economy could accrue to Jamaica from a well-structured agreement with the International Monetary Fund (IMF). He added, however, that the short-term outlook for the domestic economy remains quite challenging based on the continued impact of the global economic recession.
“This impact will emanate from three broad areas: weakened external demand and its impact on export industries; continued slowdown in construction activities (some of which are fuelled by capital projects and remittance inflows); and continued decline in remittances and consumer confidence (which) will weaken the demand for wholesale and retail goods,” the Director General said at the PIOJ’s quarterly press briefing, held at its Oxford Road offices in New Kingston, on Monday (August 17).
Dr. Hughes contended that the main risks to the economy include the blowback from the downgrade in Jamaica’s credit ratings, and adverse weather conditions.
“The Jamaican economy will continue to be challenged for the remainder of the year. However, it should be noted that the trends are pretty much in line with the published forecasts at the beginning of the year. The decline has not been faster than projections conveyed to the Government of Jamaica,” Dr. Hughes said.
Meanwhile, the Director General stated that, although the worst appears to be over, the global economic recession continues, with some industrialised countries registering weak Gross Domestic Product (GDP) growth during the April to June quarter of 2009.
“Nevertheless, there continues to be contractions in consumer income and confidence. Although some firms registered increased profits, these were largely due to drastic cuts in variable costs, particularly labour costs, in the face of weak demand. As a result, income and wages per worker fell during the period as unemployment and jobless claims continue to increase in both the United States and the United Kingdom,” Dr. Hughes said.
He also informed that global commodity prices remained subdued compared with the pre-crisis levels which prevailed in the corresponding quarter of 2008. He said however, that oil prices recently exhibited some upward movement with a high degree of volatility.
Additionally, Dr. Hughes advised that economic performance in Asia appears to be strengthening at a quicker pace than in North America and Europe. Japan, Singapore and Hong Kong are all reported to be emerging from the recession with modest GDP growth.
“Despite these positive developments in the world economy, we still expect Jamaica’s recovery to lag significantly behind what is happening in the industrialised economies,” Dr. Hughes stated.