Tue | Jun 19, 2018

IMF deal weighs on new year business outlook

Published:Friday | December 28, 2012 | 12:00 AM
Meredith Derby, president of the Small Business Association of Jamaica.
Christopher Zacca, president of the Private Sector Organisation of Jamaica.
Brian Pengelley, president of the Jamaica Manufacturers' Association.

Sabrina Gordon, Business Reporter

Jamaica's top business lobby groups are cautiously optimistic about prospects for the new year, which kicks off in four days with a bailout agreement with the International Monetary Fund still unresolved and expectations that prices will increase.

"The outlook for 2013 is a guardedly optimistic one," said Christopher Zacca, president of the Private Sector Organisation of Jamaica, on Thursday.

"We are optimistic that we will get an IMF agreement early in the new year, failing which it will not be a good year. The nation is suffering from IMF-fatigue, and we want to get it behind us now and get down to the work of growing the economy," he said.

Sharing similar sentiments, president of the Small Business Association, Meredith Derby, said it will be challenging but there will be opportunities that can be capitalised on.

"Its going to be a tough year; it will have its pros and cons - one concern is the IMF deal - but there will be growth opportunities, new developments," Derby told the Financial Gleaner. "It can't be business as usual. We have to be ready to capitalise on the opportunities," she said.

little less optimistic

The president of the Jamaica Manufacturers' Association was a little less optimistic, citing various problems that need to be tackled.

"We are exceptionally concerned for 2013, because there are still many problems that are not yet successfully dealt with," said Brian Pengelley.

Reeling off the challenges, he cited the "foreign exchange situation, the IMF agreement - although it's just a stabiliser and not an answer - and energy costs", saying they require Jamaican businesses "to do exceptional things next year" to keep their operations humming.

"The manufacturing sector has a large role to play ... because it has the ability to create jobs and also help reduce demand for foreign exchange which are critical components of recovery," he told the Financial Gleaner.

Manufacturers will need the government to deliver on cheaper energy prices, he adds.

"We still don't know where we are going with energy sources and the high cost of electricity has a major impact on manufacturing," he said.

Pengelley also suggested that consumers should brace for higher prices, noting that there is only so much businesses can do to cut cost through improved efficiencies.

"With input costs so high, price increases become inevitable. We can try to be efficiency and cut, cut, cut! But companies have to be profitable to survive," he said.

Zacca, meantime, says the signing of an agreement with the IMF could be positive for prices.

"Prices are tied to confidence and when we get an agreement behind us and things get going, any price increase will be mitigated somewhat," said Zacca.

However, the PSOJ president shares some of the same concerns going into the new year as his JMA peer.

"The issue of energy cost, we still don't know where we are going with that and the PSOJ would like to hear clearly the expectations and timeline for reduced cost," he said.

"In addition, the lottery scam needs to be kept on the radar as it has the potential to damage the call-centre industry, which presents a good opportunity for us."