PIOJ, IMF at one on 2021 growth projections
Despite an anticipated eight per cent decline in the local economy for the first three months of 2021, the Planning Institute of Jamaica (PIOJ) has said that its projections are in line with a recent International Monetary Fund (IMF) forecast of 1.5 per cent growth this year.
The nation’s planning agency says that it expects “significant” growth for April to June – the first quarter of the financial year.
The IMF’s prediction, noted in the recently published World Economic Outlook, references the calendar year, while the PIOJ’s forecast of four to six per cent growth covers the fiscal year which began on April 1.
“April to June 2021 will have the most significant growth because of what was happening last year. That would have been the period with the most stringent measures. So, it will be a very low base for the comparison,” said PIOJ Director General Dr Wayne Henry.
All four quarters of this fiscal year, ending March 2022, will have growth – “just not as strong”, Henry said, adding that overall, the PIOJ has observed growth “in the region that we have projected for the fiscal year”.
Speaking with The Sunday Gleaner regarding the projections, Finance Minister Dr Nigel Clarke reiterated the PIOJ’s assertions, noting that the slight difference in measurement periods “leads to the seemingly sizeable variance due to the economic impact of the pandemic”.
He said that while the Government “expects significant economic contraction in January to March 2021”, the following quarters would bring an expansion in the economy, “subject to the evolution of health conditions”.
While the outlook from both the IMF and the PIOJ has inspired hope for Jamaica’s financial horizon, businesses and consumers remain cautiously optimistic.
Pollster Don Anderson, speaking ahead of next week’s planned media briefing on the recent survey of business and consumer confidence, told The Sunday Gleaner that while business and consumer confidence has fallen off in the last few months, a testing of the pulse shows “a certain level of optimism” among local businesses.
“It may not be that great, but there is optimism that things will rebound. Businesses are beginning to say, ‘Maybe in the next three years or so, things will rebound and may even be booming’,” Anderson said, hinting that consumer confidence seems a more hard-fought case.
The projections for growth have, however, failed to inspire confidence in the members of the National Consumers League (NCL).
Founding member and former head of the NCL, Joyce Campbell, says the global pandemic has placed consumers in such a vulnerable position that it is hard to be optimistic.
“There are so many things happening, even with our regional trade and we are going into a hurricane season, so we don’t know what will happen,” Campbell said.
Speaking to the plans for his company over the medium to long term, principal of Adam and Eve Day Spa, Garth Walker, says the entity – which depends heavily on foot traffic and which, like many other local businesses, has been negatively impacted by the local pandemic containment measures, especially after making significant investments in 2019 to set up its new location – is holding off any immediate plans for further investments.
OPTIMISTIC AND PESSIMISTIC
“I am optimistic, but I am also pessimistic at the same time … . We definitely want to watch the pulse of what takes place over the next few months, at least for 2021,” Walker said, noting the anticipated positive impact of the vaccination efforts.
While the weekend lockdown measures implemented by the Government to curtail the spread of COVID-19 locally have left many companies reeling financially, the push to vaccinate 65 per cent of the population has also teased the acceptance of the projected growth of the economy.
“We are cautiously optimistic. Our concern is for [Jamaica] to reach herd immunity in order for anybody to really be confident in our economy,” said president of the Small Business Association of Jamaica, Michael Leckie, pointing out that Jamaica’s prospects of attracting overseas investment could also hinge on a successful vaccination programme.
Similarly, president of the Young Entrepreneurs’ Association, Cordell Williams-Graham, said that members of her organisation were also cautiously optimistic.
“Other larger economies are on the rebound, which is a good sign that our economy should soon follow,” Williams-Graham said, even as she urged improved government support for the micro, small and medium-size enterprise sector.
Meanwhile, reacting to the projections, president of the Jamaica Manufacturers and Exporters’ Association and CEO of Seprod Limited, Richard Pandohie, says that while it was important to note that the 2021 growth projection is against a lower base, the projections for Jamaica are realistic, given the context of global and regional growth projections.
The manufacturer sees an even more positive outlook.
“Huge pent-up demand in the tourism, entertainment and hospitality sectors will be unleashed from September onwards, and I expect the growth to be in the region of 3 to 3.5 per cent [for the calendar year],” Pandohie told The Sunday Gleaner.