Confidence falls due to COVID, but it’s been worse
Published:Wednesday | July 22, 2020 | 12:19 AM
Business and consumer confidence dipped as expected due to the economic fallout from the COVID-19 pandemic, but still hovers well above the lows that followed the terrorist attacks on the United States in September 2001 and the subsequent fiscal crisis.
The Jamaican economy, meanwhile, is projected to experience its worst contraction in decades.
“Since 2015, we have had growth in business confidence and a more resilient and sustainable macro economy, which put us in a very good position to weather the storm,” said Jamaica Chamber of Commerce past president Larry Watson, in response to a Financial Gleaner query on possible reasons confidence levels were outperforming previous crises.
He was speaking at the livestreamed release of the latest quarterly JCC-Jamaica Conference Board Survey of Consumer and Business Confidence reports.
Last week, the Rebuild Jamaica report from the COVID-19 Economic Recovery Task Force, indicated that the impact of COVID-19 could result in the largest economic decline ever experienced since Independence. To date, the largest decline in annual economic output in Jamaica’s history was negative 6.5 per cent in 1976, according to the report.
“It is clear that COVID-19 has affected confidence,” said pollster Don Anderson at the release of the confidence reports via livestream. But despite the fall, he said, the index remains higher than five years ago.
CONSUMER CONFIDENCE
Consumer confidence closed the second quarter at 165.2 points, down from 172.9 points in the first quarter and from the peak of 183 points in the second quarter of 2019. The index started at 100 following the ‘9/11’ terrorist attacks but dipped to lows under 90 points, at times, in 2003 and 2013.
Anderson said “consumer confidence is still high”, despite COVID-19, saying it hovers above the four-year average of 164 points.
However, at 25 points, few respondents were optimistic about job prospects. That’s down from 62 points from its peak in the third quarter of 2019.
Additionally, the majority of consumers do not anticipate vacationing or purchasing a home or car within the year ahead. But consumers have high expectation that the economy will eventually rebound. That figure stands at 148 points in the quarter and was the highest in at least 15 periods.
Firms were less optimistic about present conditions, with business confidence declining to 115.4 points in the June quarter from 129.2 points in the first quarter of this year and from its peak of 150.7 points in the second quarter of 2019.
Optimism about current business conditions also recorded its lowest since 2013, with 51 per cent of businesses thinking they will not survive. On the matter of staffing, firms said they reduced their workforce by, on average, 57 per cent due to COVID-19.
“Farming, agriculture, tourism and construction and installation were the most affected industries in this regard,” said Anderson, who added that on the positive side, the number of persons thinking of starting a business grew.
“The large majority of firms, at 76 per cent, anticipate recovery within the short term. That is one to three years,” Anderson said.
Of note, while the size of remittances may have dwindled, the number of households that say they receive remittances – that is, money transfers usually from overseas – reached its highest levels at 41 per cent, up eight percentage points.