Government must invest in strategic areas of the economy, says economist
Economist and professor at The University of the West Indies, Densil Williams, has said the Government needs to be making investments in strategic areas over the long term for the elusive growth demands to be met.
He said there will be no growth in the short term unless certain dynamics are corrected; chief among them is the need for a more robust educational system which would then set the country up for better economic performance in the latter half of the decade.
“The problem exists partly because only 30 per cent of the employees in the workforce have any form of certification. So we have to improve on that in a significant way to get it above 60 per cent. That’s where the Government comes in.
“And then the private sector will have to also get their own productivity index going by retooling and applying new technologies. Without doing this, you will not realise any long-term growth,” Williams said.
He said the administration’s five (per cent growth) in four years was aspirational, but that it was not matched with the reality.
Williams noted that in order for the country to have grown that massively, a number of things had to be done and were not done, “which then resulted in this outcome”.
Issues pertaining to the downturn in the mining and quarrying sectors will have a debilitating impact on the overall performance of the economy, and similarly in agriculture and tourism, Williams said.
“So with mining falling off with the JISCO plant in St Elizabeth, then you can only expect that growth would take a hit because whatever growth agriculture and tourism have cannot offset, on its own, the loss in mining and then of course there is the manufacturing sector as well.”
President of the Jamaica Manufacturers and Exporters’ Association, Richard Pandohie, said while Jamaica has been the poster country for the tremendous job done to achieve economic stability, the big challenge now is to move from stability to growth.
The mood of the sector is cautiously optimistic, not as buoyant as the last couple of years. A lot of the pullback is related to the out-of-control crime level which is impacting our productivity, and also domestic consumption which is critical for many of the manufacturers.
He said it is economic growth that will be required to improve standards of living, create quality employment and reduce poverty.
“Our economy is vulnerable, and to achieve sustainable, resilient growth will be challenging and will require all hands on deck. The service sector is doing well, but the goods-producing sector needs support to step up.”
Pandohie stated that crime, coupled with social disorder, is probably the biggest drag on the economy, estimated to cost the country in excess of four per cent GDP growth annually (IDB 2014 study).
“I am saying our best hope to get the economic growth resides with investing into and protecting our most important resource, our people,” he said.
In terms of manufacturing, Pandhoie described 2019 as a mixed bag for the manufacturing sector, stating that on the positive side, the industry experienced growth, while interest rates continue to be competitive.
But with all the improvements, the sustainability and impact has not flowed down to the SMEs in the productive sector.
“Moves are now being made to fix that through instruments like the enhanced CDF by the Development Bank of Jamaica. Several announcements were made in the last Budget to reduce some of the obstacles faced by the SMEs. The dollar is competitive on a point-to-point basis, but the volatility during the year made planning very difficult,” Pandohie said.