Optimism in Jamaica’s business community is on a downward trend, according to the latest Jamaica Conference Board Survey of Consumer Confidence, which showed that the business confidence index declined for a third-consecutive quarter in 2019.
Revealed at the Jamaica Chamber of Commerce’s 4th Quarter Business and Consumer Confidence Indices today (January 21), the business confidence index has slumped by 20 points since the first quarter of 2019. At 151.3 points for the period January – March 2019, business optimism in the Jamaican economy declined to 131.3 points for the period October – December 2019.
Speaking at the function, pollster Don Anderson argued that a dip in the business confidence for a single period would not point to a decline. However, considering the business confidence index has recorded declines over three consecutive quarter, one can conclude that there is a downward trend in firms’ optimism, he said.
“Over the last two periods, from the second quarter of 2019 to third quarter of 2019, business confidence slipped, causing a buzz within the business community, and the fourth quarter revealed that there has been a further slip in business confidence, so that an apparent decline has set in. We can now speak definitively about a decline,” he said at the Spanish Court Hotel in New Kingston, Jamaica.
The overall business confidence index is measured against seven variables: current business conditions, business expectations, current return on investment, investment/expansion climate, expected change in the economy, expected change in firms’ finances and expected change in profitability.
Having polled 100 businesses across various industries, all the variables used to calculate the business confidence contracted.
“…the devaluation or significant fluctuation of the Jamaican dollar… is making it more difficult for long-term planning— Don Anderson, managing director, Market Research Services Limited
As to why business people are less positive in their outlook on the Jamaican economy, Anderson noted that the feedback has centred around two main factors.
“Businesses have been [plagued] with cries over the last two quarters, that is from the middle of 2019, about two main factors. One, the devaluation or significant fluctuation of the Jamaican dollar, which is making it more difficult for long-term planning,” Anderson pointed out.
“Secondly, the other factor that is bearing very heavily is the high level of crime and violence. Both factors are pairing to have the potential of serious negative impact on the psyche of the Jamaican businessperson,” he added.
Still, Anderson argued that the decline in the business confidence “has to be contextualised” given that Jamaica’s business confidence index has been on a growth trajectory since 2014.
He posits, further, that the index is still at an “all-time high, despite the number of businesses optimistic about investing in the short-term declining from 64 per cent to 57 per cent.
“Firms remain bullish on investment,” Anderson stated, listing construction, wholesale and retail, tourism, and business process outsourcing as industries in which business confidence is growing.
Ask to respond to the survey, Jamaica Stock Exchange Managing Director Marlene Street Forrest said that businesses seem optimistic about the future.
“When we look at what has happened in the stock exchange in 2019, what we see is that we have consistently had new listings… In 2019 we had 18 listings that raised $18.9 billion; that is bigger than the year before and the year before,” she said.
Compared with 2018, the funds raised from new listings on the JSE in 2019 were 25 per cent more, Street Forrest revealed.
Additionally, based on the pipeline of new listings expected for 2020, the JSE head said that there are no signs of waning business confidence.
However, Jamaica Chamber of Commerce Immediate Past President Larry Watson cautioned that the index may reflect sentiments among micro, small and medium-sized businesses, rather than large corporations.
He also noted, “When there is stability in FX rates then business confidence has remained high.”