Tue | Sep 22, 2020

Editorial | Reach for low-hanging fruits in economic recovery

Published:Sunday | September 13, 2020 | 12:07 AM

Last week’s statement by the Planning Institute of Jamaica (PIOJ) on the scale of the economic fallout in the June quarter, caused by the COVID-19 pandemic, ought to be a reminder of the need for, and a nudge towards, efforts at broadening the base of the island’s economy, including producing for domestic consumption. The enlargement and modernisation of the agricultural sector should be part of this process.

According to the PIOJ’s executive director, Wayne Henry, his agency estimated that between April and June, the first quarter of the current fiscal year, real gross domestic product (GDP) contracted by 18 per cent, compared to the corresponding period in 2019. The decline, notably, was deeper, by four percentage points – or over 28 per cent – than the PIOJ’s worst expectations in May, when it projected a fall-off of between 12 and 14 per cent. The prognosis is now for a contraction of between eight and 10 per cent over the fiscal year, to March 2021.

There was some slowdown in the economy before the onset of the coronavirus in Jamaica, whose first confirmed case of COVID-19 was on March 10. Indeed, between January and March, output declined by 2.3 per cent. While measures to curb the spread of the virus contributed to that fall-off, the big impact was 37 per cent in mining.

Now, though, as Dr Henry observed, the primary driver of the collapse was the “measures to manage the COVID-19 pandemic, commencing in mid-March”. These included, like most countries, the closure of the island’s borders. The combined effect of the domestic and international action was a hammer blow to Jamaica’s crucial tourism industry. While tourism’s contribution to the GDP hovers at just under 10 per cent, its indirect contribution, by most estimates, is closer to 35 per cent.

Between April and June, Dr Henry reported, the hotels and restaurants industry tumbled an estimated 87.5 per cent, “reflecting a sharp decline in visitor arrivals and the number of persons utilising restaurant services”. Visitor expenditure for the period crashed by 98 per cent, to a mere US$16.2 million, when compared to the corresponding period in 2019. Tens of thousands of people have lost their jobs in tourism and related sectors.

PURSUE RATIONAL POLICIES

Obviously, Jamaica couldn’t sustain an indefinite lockdown of its economy. The Government, therefore, has to pursue rational policies that balance the protection of the health of citizens and their economic well-being. The robust enforcement of protective measures, such as the wearing of masks in public places and adherence to rules governing physical distancing and sanitisation, is important.

However, even with the advent of a vaccine against the coronavirus – whenever that happens – there is no certainty of when, and how, tourism will rebound. Those factors are outside Jamaica’s control. They will be influenced by the policies of foreign governments and people’s confidence to engage in international travel. So, there is no certitude about the broad recovery expected next year – or at least the scale of the rebound, if it happens.

Jamaica, therefore, needs additional sturdy legs upon which the economy can stand. In this regard, we agree with, and support, the suggestion by Prime Minister Andrew Holness that a digital future beckons Jamaica, in areas such as coding, animation and logistics. Some of which are already taking place on the island.

However, given the urgency of the economic crisis and the time lag for building out technologies and having a critical mass of skilled persons to support the emerging industries, Jamaica might want, also, to reach for low-hanging fruits, especially where it already has some expertise and can readily ramp up production. Agriculture is one of these.

Prior to the COVID-19-induced slump in demand, Jamaica’s food import had pushed past the US$1-billion mark. Parts of those imports were to meet the requirements of the tourism sector.

Prime Minister Andrew Holness in configuring his Government must, therefore, consider agriculture to be a key economic ministry. The minister he assigns to that portfolio, and the authority and prestige he affords that person, should reflect this fact.

HALT BUILDING ON AGRICULTURE LAND

Most experts estimate that over 20 per cent of the food bill could be substituted with domestic production. Yet, large swathes of potentially productive lands remain idle, and others portions, including Bernard Lodge, St Catherine, which the Government’s National Environment and Planning Agency characterises as having the island’s “most fertile ... A1 soil”, are being encroached upon for cities and other real estate development. At the same time, Singapore, the city state roughly the size of the parish of St Thomas, with a population substantially larger than Jamaica’s, is not only looking to meet 30 per cent of its food needs by 2020, but scouting the world for new sources of food imports. That, to us, spells opportunity. A halt on the building on agricultural lands is urgent.

But the future isn’t only in digital services or food. Indeed, we believe in export-led growth, whether the exported product is physical, digital or other services. But we appreciate, too, that import substitution, that is, efficiently producing for the domestic market – including the Caribbean Community’s – can be, as the COVID-19 world is demonstrating, nearly as good.

The point is, there is no single track to recovery and growth.