Business, consumer confidence break election curse
There was a sustained level of optimism and confidence in the Jamaican economy across both businesses and consumers in 2016, breaking the trend of dramatic declines in the post-election periods throughout the 15 years that the surveys have been conducted.
Data from the pre and post election periods in 2002, 2007 and 2011 show that the confidence indices peaked in the periods before the polls, but fall off substantially in the first or second quarter thereafter, according to managing director of Market Research Services, Don Anderson.
But that trend was broken in 2016, an election year.
"In fact, it represents the highest level of confidence in the 15 years since the survey began," Anderson said on Tuesday at the release of the fourth quarter 2016 indices.
It suggests that the country on a whole, across businesses and consumers, "are now beginning to feel very confident about the policies that are being pursued and there is great expectation that growth will in fact materialise," he said.
"If this is sustained throughout 2017 this will represent a major breakthrough in the general perception of the economy and will be concrete evidence that Jamaicans are very optimistic about the long term change for better and more sustainable growth."
According to the survey report, the business confidence index stood at 142 in the fourth quarter of 2016, between the previous quarter's 139.2 and the peak of 146.6 in the first quarter.
With the consumer confidence index at 151.6 in the third and fourth quarters, it also remained more favourable throughout 2016 than in any other year since the survey began in 2001, Anderson said.
The report said that optimism is a necessary condition for business expansion and when accompanied by renewed economic stability firms become even more willing to engage in a sustained programme of new investments.
"While there have been bursts of optimism in the past few decades, those surveys before have never before recorded as long nor as high a sustained period of economic optimism," it said.
Among the firms surveyed, 65 per cent reported that it was a good time to expand their productive capacity.
"Betting their money to make additional investments represents the best indicator of their belief in the new economic policies," the report said, noting that the next required element is for firms to increase their hiring to expand domestic production and increased exports.
The current business conditions index rose to the highest level recorded in the past 15 years, the most telling commitment being the continued strength in firms' finances which has pushed their plans to invest in new plant and equipment to all-time record levels.
Among firms, 70 per cent expected profits to improve, just below the second quarter's all-time peak of 74 per cent.
The portion of firms that expected an improved economy rose to 53 per cent from 49 per cent in the third quarter survey and was well above the 32 per cent in the corresponding period the previous year.
The report said the rise in consumer confidence represented a significant change from a year ago as the average level in 2016 was 33 per cent higher than the 114.2 recorded in 2015.
Importantly, it said, the increase in economic optimism was shared by all demographic groups and across all regions of the country. And Jamaicans have judged the quality of their lives as at its most favourable level in the past 15 years.
"Nonetheless, the optimistic outlook for the economy and society cannot long persist without the experience of some solid gains," the report said.
"While the Government cannot instantly create economic miracles, they can act to reduce the high costs of crime and violence to society and to the economy."