Dennise Williams, Staff Reporter
Security is a major concern and expense for Jamaican businesses. Even the security companies need to be cautious, as shown by this bullet-riddled Marksman van on Marcus Garvey Drive, St. Andrew, attacked by gunmen in May. - JUNIOR DOWIE/STAFF PHOTOGRAPHER
CRIME, ESPECIALLY in the Corporate Area, discouraged six out of ten businesses from expanding further, according to second-quarter 2005 business and consumer confidence indices.
While businesses are generally positive about the growth in the economy and are pleased to see lending rates trending down, the spectre of crime continues to cost the country, the report indicated.
On the other hand, consumers buoyed by strong remittance flows into the country, have expressed slight reservation in regards to purchasing.
The Jamaica Chamber of Commerce's conference board released the second-quarter 2005 business and consumer confidence indices yesterday at the Terra Nova All-Suite Hotel. Dr. Richard Curtin, head of Survey Research Centre at the University of Michigan presented the survey results.
ECONOMIC OPTIMISM
Looking at the details of business sentiment, Dr. Curtin said, "Business confidence was higher in the first two quarters of 2005 than at any other time in the four-year history of the surveys. Businesses anticipated renewed strength in the economy and favourable financial prospects for their own firms for the year ahead. Optimism about economic prospects was widespread as it was shared by firms of all sizes."
Jamaican companies also booked higher profits than they had originally anticipated. And while the survey showed that 40 per cent of businesses thought it was a good time to invest in the expansion of their business, 60 per cent said it was not.
Dr. Curtin explained: "For businesses looking to invest in their business, expansion plans will be concentrated in Kingston. However, crime has cost further investment in Kingston as many businesses hold back expansion plans."
He said that the true cost of crime can be seen in terms of the locations where the international dollars are placed: "Rural investment is from Spanish investors in tourism and off-shore investors in bauxite. So it shows how crime impacts the country."
NEGATIVISM ABOUT JOBS
Consumers judged the economy quite favourably, but they were somewhat more guarded about economic prospects for the year ahead.
According to Dr. Curtin, "Consumers frequently cited the adverse impact of rising prices, rising taxes as well as persistent crime in terms of the prospects for the year ahead."
He said: "Consumers continued to hold quite negative views about jobs. Eighty five per cent of consumers said that jobs were scarce, a view that has hardly changed over the last four years."
However, consumers were buoyed by the remittances from overseas and this helped to meet their personal, household and educational expenses.
And the survey revealed that one third of all Jamaicans who received remittances said the dollar amount had increased this year.
While concerns about crime were a common thread in both sectors, consumers were not as pleased as businesses with the current level of interest rates.
Dr. Curtin said, "Consumers expressed less favourable plans to purchase homes and cars than last year." These two consumer items are generally facilitated by loans.
Dr. Curtin said, "As the cost of living goes up, interest rates can become unbearable. However, due to inflation and other factors, interest rates can go down only so much. I think that longer terms of repayments versus lower interest rates can help spur demand for loans."
For the survey, 100 business firms and 600 consumers were interviewed.
