The latest Bank of Jamaica (BOJ) report on businesses perception of inflation control shows a deterioration in expectations among business leaders in Jamaica.
Businesses’ perception of the authorities’ control of inflation deteriorated in the March 2021 survey largely due to a decline in the proportion of respondents who were “satisfied” with how inflation is being controlled.
The view was supported by an increase in the proportion of respondents who were “dissatisfied” with how inflation is being controlled.
The most recent survey, conducted between 22 February 2021 and 26 March 2021 by the Statistical Institute of Jamaica (STATIN), had 297 respondents from among chief executive officers, managing directors, and financial controllers about the future movement of prices, current and future business conditions, and the expected rate of increase in wages/salaries.
Respondents anticipated depreciation in the value of the Jamaican dollar for the remainder of the year. In the March 2021 survey, the exchange rate was anticipated to depreciate by 3.4 per cent, 4.0 per cent and 4.5 per cent for the three-month, six-month, and 12-month time horizons, respectively.
This represents a faster pace of depreciation for the three-month, six-month and 12-month time horizons relative to the previous survey.
In the December 2020 survey, respondents expected the rate to depreciate by 0.1 per cent, 0.7 per cent and 0.8 per cent over the three-month, six-month and 12-month time horizons, respectively.
As regards central bank policy, the majority of respondents expected that BOJ’s policy rate would remain the same over the next three months. This proportion decreased marginally relative to the previous survey.
With regard to the financial sector, the majority of respondents expected that the Bank’s policy rate would also remain the same. Furthermore, responses from the financial sector revealed that 17.4 per cent of respondents expected the rate to be marginally higher. This represented a decline relative to the December 2020 survey.
In the March 2021 survey, the Present Business Conditions Index rose to 58.9 relative to 23.3 recorded in the previous survey.
BOJ said that the outturn for the Future Business Conditions Index mainly reflected an increase in the proportion of respondents who believe that conditions will be “worse”.
This outlook for Future Business Conditions was underpinned by a reduction in the number of respondents of the view that things are “better”.
Respondents indicated that they expected the largest increase in production costs over the next 12 months to emanate from stock replacement, wages and salary as well as raw materials.
The cost of fuel and transport is anticipated to be the least likely to increase.