Professor Richard Curtin head of the survey research centre at the University of Michigan.
-File photo
Dennise Williams, Staff Reporter
IN THE last quarter of 2004, businesses surveyed right after Hurricane Ivan reported a slightly negative economic outlook, while consumers surveyed in late November and early December had a very favourable outlook on the economy.
"Firms have been hurt by Hurricane Ivan in the last quarter but the sector will come back strong," Professor Richard Curtin stated at the Terra Nova Hotel on January 11. "However, despite stronger confidence levels by the consumers, they are still uncertain about the economy going forward," he said.
Professor Curtin, head of the survey research centre at the University of Michigan, was speaking on the occasion of the release of the 2004 Fourth Quarter Business and Consumer Confi-dence Indices. The Jamaica Conference Board sponsors the quarterly survey with the assistance of Don Anderson and Associates.
The current confidence report covers the September to December period.
Although business confidence slipped during the period surveyed because of the 'Ivan effect' on the economy, there was growth in the productivity on the island.
GROSS DOMESTIC PRODUCT
"My forecast is that the fourth quarter gross domestic product (GDP) will increase by 0.5 to 1.0 per cent growth year over year," Professor Curtin states. "In fact, there has already been a 2.6 per cent growth in GDP in the first nine months of the year. This means that 2004 will turn out to be a fairly good year. And 2005 will be even better."
Indeed, Professor Curtin sees several factors working in tandem to bring prosperity, with interest rates and oil prices down, inflation being contained, a memorandum of understanding with the unions in effect and the local currency stable.
"With the improvement in the Jamaican economy and the accommodative stance of your major export partners, the GDP growth in 2005 will be ahead of 2004, taking Hurricane Ivan into account," he said.
Looking at consumer confidence, the watchword there is cautious optimism.
"Despite consumer's expectation of better times ahead, they are still uncertain," he said. While consumers "think the economic rebound is here" they still view current job prospects as 'flat'.
"Some 40 per cent of Jamaicans expected to have higher income going forward," Professor Curtin said. "This view shows significant confidence in the economy."
The survey shows, however, that consumers think that good jobs are hard to find but personal incomes are going up.
And while this may seem paradoxical, the survey has found that remittances sent to Jamaica have become the bridge that balances the divergent consumer views.
Currently, 33 per cent of Jamaican households receive funds from abroad, and 33 per cent of them receive funds monthly. Not surprisingly, the economy is very dependent upon the spending power of consumers with remittances. In fact, the survey revealed "in terms of spending on vacations, home and motor vehicles, spending plans are two times higher in homes that receive remittances than on homes that do not." What is surprising to the researchers is the fact that consumers whether receiving remittances or not have slowed down their spending plans.
"In the last quarter of 2004 all consumers interviewed lowered their spending expectations," he said. "The consumer sector is in as good a shape as you could expect at this time. But consumers aren't convinced the economy will improve quickly.
Outlook on 2005
BUSINESS:
Business confidence slips but outlook for 2005 is positive
Current profits swamped due to losses during the hurricane
Investment climate remains strong
41% of business say it is a good time to reinvest in their business
Profits and finances stressed due to the cost of the recent hurricane
CONSUMER:
Surge in consumer confidence with residents in the tourist area least optimistic and residents outside of Kingston the most optimistic. Kingston residents were moderately optimistic.
Economy improves but good jobs hard to find.
Four in ten Jamaicans expect growth in their incomes
The levels of remittance sent to Jamaica continue to grow
Spending plans stagnate.
