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An aerial view of New Kingston, Jamaica. (Photo: wikicommons)

Jamaica economy recovering but still vulnerable — EPOC

An aerial view of New Kingston, Jamaica. (Photo: wikicommons)

JAMAICA’S economy is showing signs of recovery but still remains vulnerable. That’s the assessment of the Economic Programme Oversight Committee (EPOC) in its latest review of the nation’s economic indicators.

“Fiscal performance has definitely outperformed expectations and, from a monetary perspective, our international reserves are solid, with the challenge being our inflation rates which are trending upwards. Notwithstanding the positive economic indicators, EPOC is quite [mindful] of the high level of risk and the many factors which could derail recovery. It is clear that it will continue to be a balancing act between public health and economic activity, and the only way to reduce restrictions on movement and economic activity is to control the spread of the virus through vaccination and adherence to the protocols,” said EPOC Chairman Keith Duncan during a virtual media briefing on Friday in which he provided an update on the country’s economic reform programme (ERP).

Economic Programme Oversight Committee co-chair Keith Duncan speaking at a recent press briefing on the country’s performance under the Economic Reform Programme. (File photo)

During its review of macro-fiscal programmes on September 17, the committee said positive performances during the April-July quarter reflected creditable revenue performance as tax revenues and grants continue to outperform budget target and as economic activities increase. During the period tax revenues totalled $17.1 billion, being approximately 10.7 per cent ahead of budget and 39.4 per cent ahead of the previous year, largely due to recovery in international travel and tourism. For that quarter the Planning Institute of Jamaica had projected 12.9 per cent in economic growth, with tourism or activities from the hotel and restaurant industry contributing some 330.7 per cent in output.

For the review period, total expenditure of $229.8 billion was also $7.3 billion lower than budget, this as some $2 billion less was spent on capital projects due to slower-than-planned execution. The primary surplus — sums set aside for paying down the debt — at the end of July was $38.2 billion. It was almost $12 billion higher than planned.

“The Jamaican economy continues to strengthen quarter over quarter, which is very encouraging. ”

— Keith Duncan, co-chairman, Economic Programme Oversight Committee

“July was a standout month because we were able to relax restrictions for the economy,” Duncan stated.

He, however, said that while most indicators were trending positively, upward trends in inflation was becoming a cause for great concern as businesses and the domestic economy continue to feel the pinch of global supply chains and logistics challenges which have adversely influenced the price of commodities.

Containers and cranes at the Port of Kingston in Jamaica. Global supply chain and logistics challenges, which drive up commodity prices, continue to impact Jamaican businesses. (File photo)

“Over the next coming weeks we are expecting to see a tightening of Jamaican-dollar liquidity and the Bank of Jamaica has also indicated that they will be ensuring that movements in the exchange rate do not further threaten the inflation target,” the EPOC chairman said.

Strong net international reserves of almost US$4 billion and remittance increases of US$230.4 million during the period continued to lay the pathway for positive rebounding of the local economy during the period.

The Bank of Jamaica building in downtown Kingston. (File photo)

“The Jamaican economy continues to strengthen quarter over quarter, which is very encouraging. The consistency of COVID-19 measures is required to maintain stability and confidence for sustained economic activities. With all the attendant risks, we are comfortable at this point in time that our economic indicators are moving in the right direction and [that] we are on a recovery path,” Duncan concluded.