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Letter of the Day | Is EGC underestimating Jamaica’s growth potential?

Published:Friday | March 24, 2017 | 12:00 AM

One must commend the Economic Growth Council (EGC) for tackling the Herculean task of coming up with a growth plan for the Jamaican economy. There is a generous acknowledgement and a frank admission that they approached the task with sagacity and panache.

However, although the 5-in-4 is good, it's not good enough. It should be 7-in-4. The economy has fallen so far behind that 5-in-4 would put us in a constant state of catching up. After getting to the 7-in-4, we can then settle down into a tranquil five per cent growth. Growth must be pursued with a messianic zeal. It is a brutal necessity.

Because of the vertiginous economic decline, the chasm between the current economy and its true potential has widened substantially. The best way to rectify this is for Jamaica to significantly enhance its growth. Five percent growth is going to take too long to get to the acceptable performance. Seven per cent growth would most likely get us there in a more reasonable time frame.

Jamaica needs to make up for all those years of underperformance. If only Jamaica had performed at the average, there would not be this urgent need to grow above five per cent. The cynics will surely question the potential to grow at seven per cent in four years. They need to be reminded the Jamaican economy grew at 7.9% in 1987. Maybe it is time for them to temper their apocalyptic rhetoric.


Illuminated milestones


It is nice that the EGC has given us a road map with illuminated milestones. It would be nice if they told us what the size of the economy would be in those subsequent years.

Yes, the odious debt is an albatross around the county's neck, but with the proper growth rate, this can easily be resolved. It seems as if the leaders are hypnotised by the need to satisfy the IMF. However, the IMF's priority is reducing debt and spending. If the IMF was truly concerned about growth in the Jamaican economy, it would never have imposed the punitive 7.5% primary surplus.

Using 2001 at the base year, we see that the Jamaican economy grew from $9.2billion to $14b today. In the same period, Costa Rico grew from $16.8b to $52.9b; Dominican Republic from $26.6b to $67.5bil, Bolivia from $8.2b to $33.2b; Peru from $51.6b to $192.1b; Panama from $12.5b to $52.1b. In 2001, Turkey and Jamaica had the same credit rating, yet their economy grew from $196.1b to $733.6b. Except for the Dominican Republic, which grew at 153 per cent, all the others grew more than 200 per cent. In the case of Jamaica, we only grew 52%.


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