By Ashford W. Meikle, Staff Reporter
Duncan-Scott and Fitz-Ritson
THREE MAJOR factors interest rates, exchange rates and the inflation rate will be of prominent concern to the finance sector and the Jamaican public in 2005.
For these factors it is a contrasting, push-pull picture. Interest rates are expected to remain stable for the first couple months and face a possible reduction in the year while the exchange rate is likely to come under pressure because of the oil bill since the oil market has been going through some amount of volatility. At the same time, the inflation rate is expected to remain in single digits as the recovery from 'Ivan' stablises.
But the consensus of major players in the finance sector is that Jamaica is not quite out of the woods, based on checks made by Sunday Business.
"I think what we see happening is very good...the take-off that has been promised seems to be coming," shared a director of Jamaica Money Market Brokers,(JMMB) Donna Duncan-Scott. In her signature style of
explaining complex issues in simple terms, Mrs. Duncan-Scott cautioned "The only concern that I have is that sometimes when you start to get positive results, you start to get complacent. As a country we can't get complacent around things like corruption. We really have to get a handle on
corruption as well as accountability."
HOPE
The well-known financier expressed her hope that all Jamaicans will benefit from the increased number of tourists coming into the island. "We need to have a shared vision as
a country. Whereas we are seeing pockets of positive development -- and we are happy for that -- what is missing is a shared vision for where we want to be as a country, the kind of economy we want to have, the kind of jobs we want to have in our country to support a certain quality of life for our people."
Noted financial analyst and educator, Karen Fitz-Ritson, agrees with the JMMB executive, about the positive outlook on the macro economy. Speaking with Sunday Business, she said that last year the country had "several success factors such as the stability of the [Jamaican dollar], the increase in bauxite mining, the increase in visitor arrivals." Like Mrs. Duncan-Scott she is concerned about the real and residual benefits from increased visitors arrivals.
"We must weigh this against the length of stay which truly translates into the foreign exchange that is spent in the country," she argued. In summing up her outlook for the macro economy in 2005, Ms. Fitz-Ritson, reflected: "I embrace 2005 with cautious
optimism. Although a lot of infrastructure is now engineered to give the economy that propulsion to move forward, there are underlying factors we have to be very mindful of and that is our external and internal debt situation."
Vice-president and General Manager of Pan Caribbean Asset Management, Rezworth Burchenson, echoes the sentiments of Ms. Fitz-Ritson on the debt situation. He advised, "We expect investors to pay very close attention to the fiscal deficit numbers for 2005/2006 [during the Finance Minister's budget presentation] plus the outrun after four to six months. A
positive outrun could signal an upgrade in Jamaica's credit rating to positively impact fund raising ability internationally plus
domestic interest rates."
CAUTION
Regarding the finance sector, caution is the watch word. Ms. Fitz-Ritson advises investors to "align themselves to organisation which have a proven track record of performance, have a balanced strategic plan and [adherence] to success. The fundamentals of organisations are important and investors are becoming more sophisticated in this area."
Regarding the performance of listed
companies, she shared that "investors have to be mindful of the fact that some of these
organisations may not replicate the same
performance measures but this does not
preclude the fact that they will not be profitable organisations." According to Ms. Fitz-Ritson, companies expected to do well include Life Of Jamaica, JMMB, Dehring Bunting and Golding, RBTT, Berger Paints, Grace, Desnoes and Geddes, Lascelles and Jamaica Broilers.
EQUITIES MARKET
Her caveat regarding the equities market is also shared by Burchenson. "One thing is certain is that the gains recorded in 2004 will not be recorded in 2005. On average, we expect the market to perform... between 20-25 per cent."
According to Pan Caribbean Financial Services, "The Jamaican economy is expected to continue to show its resilience to external shocks and continue on its growth path with GDP receiving significant push from the reconstruction effort, bauxite, tourism and other infrastructure programmes. The declining area will be the prior leader, financial services. Based on the outlook, investors are advised to pursue safe and well-researched investments.
Mrs. Duncan-Scott's words are instructive: "What is absent is a concentrated action towards the future we are trying to create. It appears that people are not living into a vision of the future."
