Jamaica’s economic decline could worsen
Jamaica’s economic decline could worsen given the latest projections of a steep fall in global growth this year by the international monetary Fund (imf).
As the global economy struggles to recover from the Covid-19-induced recession, its worst collapse in nearly a century, the IMF estimates that the global economy will shrink 4.4 per cent for 2020, which would represent the worst annual plunge since the Great Depression of the 1930s.
President of the Jamaica Manufacturers and Exporters Association (JMEA), Richard Pandohie, points out that already Jamaica’s projected economic decline of eight to 10 per cent for 2020 is far worse than the global contraction of 4.4 per cent. For the July to September quarter, the economic decline was in the order of eight to 10 per cent.
It was preceded by the economic decline of a whopping 18 per cent for the April to June quarter, thus putting Jamaica into recession mode by registering two consecutive quarters of economic decline. Speaking with the Business Observer yesterday, the JMEA president argued that with the world economy shrinking, Jamaica’s economic contraction could worsen.
He contended that Jamaica’s economic decline for 2020 could go as high as 12 per cent if critical sectors such as tourism, which the economy is highly dependent, on doesn’t improve. Pandohie acknowledged that the recession is seen in every sectors of the economy and that double-digit decline is the definite outcome for 2020.
MANUFACTURING RESILIENCE
While the manufacturing sector has shown its resilience in this post-pandemic period, Pandohie stated that it has suffered and this is corroborated by the recent data from the Statistical Institute of Jamaica, which showed a nine per cent decline in the sector. “However, going forward with the focus on recovery, manufacturing has become a key pillar as we build a more diversified and more resilient economy,” he said.
Pandohie, who heads manufacturing and distribution conglomerate Seprod Group of companies, expressed confidence that the manufacturing sector will continue to hold steady during this difficult period. He pointed to some bright sparks in the sector, where some large manufacturers have been weathering the recession and have even found new overseas market for their products, thereby growing exports.
On the flip side, many small manufacturers are finding it hard to survive and are in fact suffering. He pointed out that several have found their “cash flow being decimated with many of them depending on the hotel/hospitality sector for business, have lost all these things.”
PIVOTING IN MANUFACTURING
Pandohie admitted that there has been some pivoting in the sector with many manufacturers expanding into sanitation supplies and other things and found new product lines and export opportunities from the global disruption caused by COVID-19. He emphasised that “for Jamaica to move forward and recover quickly we going to need all the pillars to contribute, the manufacturing sector, which includes export, and the agricultural sector will play a key part of that recovery.”
He was adamant that Jamaica is going to recover with no doubt in his mind. Declaring that the recovery needs to be fast, get more people back to work and building an export led economy, but the JMEA boss expressed his concern about education.
He said the inequity in the education system is widening as many children are being left behind, pointing out that fixing education is essential in the move forward.
itself reduce informality, especially considering the size and the scale of that sector.
What is needed as well, Distant said, is the identification of the needs and priorities of the informal sector to establish sustainable and suitable public policies to enable and ensure that this takes place.
“We got to get deep in understanding what the real requirements of people are in the informal economy, and the recognition that there will not be one answer that fits all, but we need a solution that is multi-tentacled in providing for people in these situations,” Distant argued.