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Byles cautious, but sees ... Signs of green shoots

Published:Wednesday | August 20, 2014 | 12:00 AM
Co-chairman of the Economic Programme Oversight Committee, Richard Byles. - File

 McPherse Thompson,  Assistant Business Editor

Co-chairman of the Economic Programme Oversight Committee (EPOC) Richard Byles said there were signs of green shoots under Jamaica's economic reform programme agreed with the International Monetary Fund (IMF).

Byles guardedly made the suggestion against the background of data released by the Statistical Institute of Jamaica (STATIN) recently, which showed that the unemployment rate for April 2014 was 13.6 per cent compared with 16.3 per cent during the corresponding period last year.

"This is quite fundamental because in the final analysis, what we are really trying to do in this economic management is to provide jobs so that people and (their) families can live and can better their lives," he told a media briefing at Sagicor Life Jamaica in New Kingston last week.

Having revealed that Jamaica surpassed all the quantitative performance criteria under the IMF-supported programme for the June 2014 quarter, the EPOC co-chairman indicated that improvement in economic statistics such as revenues, the primary surplus, Net International Reserves and gross domestic product growth "is trickling down to the point where we are seeing some improvement in employment."

He added: "So I would say that if, to the extent that these numbers stick, meaning that they stay, then we are seeing a little, if I could call it green shoots popping up, in respect of progress with this economic policy."


Byles suggested that "we need to watch very closely that this unemployment rate stays down and indeed drips down a little bit more."

Of note, he said, was that the area that showed the most improvement in terms of employment was the hotels and restaurants services, up by 9,100 persons.

"Byles, who is also president and chief executive officer of Sagicor Group Jamaica, which is involved in management and ownership of resort properties on the island's north coast, said, "We had a pretty good tourist season last year, and certainly from my experience with our hotels and speaking to other hoteliers, too, the summer has been pretty strong. People are quite happy with what they have seen so far, and the bookings going forward look pretty good. We always have that soft period of September, October going into a piece of November, but the Christmas looks very good too."

He added that "there is some synchronisation between the growth of employment in the tourism restaurant business and what the hoteliers are experiencing in terms of occupancies".

During fiscal year 2013-14, Pay-As-You-Earn (PAYE) tax lagged the Government's target, but during the June quarter of 2014-15 it has performed ahead of target.

"And of course there is some coordination, too, with the improved PAYE tax collection," Byle said. "So to the extent that more people are employed, especially in the formal sector where they pay taxes, then you will see that bump up in the PAYE tax take," he added.

The EPOC co-chairman also referred to information from STATIN, which shows that the inflation rate for June was 0.1 per cent, which brings the rate for the first six months of the current calendar year to 2.5 per cent.

Inflation within target

"This is pretty low and I must say well within the range, now, that the Bank of Jamaica had set of 7-9 per cent (for fiscal year 2014-15)."

Byles noted that inflation in the United States for the first six months of this year was 1.3 per cent, which means the gap between the rates in Jamaica and that country has narrowed to 1.2 per cent.

He reiterated that to stay competitive Jamaica needs to close the gap, but noted that progress has been made over last year when the differential was closer to three per cent.

"That is a positive development for the exchange rate. It means that the rate [of depreciation] has even more reason to slow and for the exchange rate to become more stable," Byle said.

Of concern, however, was that the effect of the drought may spike food prices and could adversely affect inflation.

"The other thing to watch is the JPS (Jamaica Public Service) rate increase because that too could have a fairly significant impact on inflation going forward," Byles said.