Minister of Finance and the Public Service Dr Nigel Clarke (Photo: JIS)

Jamaica’s Finance Minister predicts economic bounce this year

Minister of Finance and the Public Service Dr Nigel Clarke (Photo: JIS)

Jamaica’s Minister of Finance & the Public Service, Dr Nigel Clarke, expects a bounce in growth indicators in the April and September quarters of the new financial year, pointing out that global forecasters and the central bank are on the same page.

Jamaica’s Minister Minister of Finance and the Public Service Dr Nigel Clarke (Photo: JIS)

Clarke also said he expects the construction sector in Jamaica to be a strong part of growth, noting it grew by over 10 per cent in the first quarter of the 2020-2021 fiscal year.

Clarke, speaking at the Jamaica Stock Exchange’s 16th Annual Regional Investments and Capital Markets Conference at the Jamaica Pegasus Hotel on yesterday, said “The world is experiencing a contraction in economic output of the kind we have not seen in 90 years.

Nevertheless, he noted the Jamaican economy – which is expected to contract by 7.6 per cent – is at the low end of the spectrum in the context of the Caribbean.

Dr Nigel Clarke said he expects a lift in Jamaica’s growth in the next two quarters.

He said, “All of the agencies responsible for forecasting, all forecast a return to growth beginning in the April quarter. We expect the vaccine to be rolled out in April and that will mark the beginning of the end.  We expect a bounce in April and September quarters.”

The inability of local economic players including suppliers to congregate and meet in person has had a debilitating effect, he said.

Comparatively, in economies which have higher value added services, the impact was less. “Our economy is 75 paper cent services and 25 per cent on the goods producing side.”

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

Clarke said supporting a continuation of construction-related activity is likely to continue to provide an economic boost.

“An infrastructure based and construction based recovery is likely to be our best and quickest way out. Our priorities will be to maintain a healthy population and vaccines are a critical part of that.”

The Finance Minister said that the government is also committed to access to finance, pointing to the launch by the JSE of a new market for bond.

He stated, “When bonds are tradable they can form part of the liquid assets ratio of financial institutions. This broadens access to finance in certain segments of the market.”

Clarke outlined that government revenues, up to December 2020, were $72 billion less than in 2019. Concurrently, expenditure had risen to $466 billion year to date, he said.

However, he stated that the decline in GDP will cause the debt to GDP ratio to be significantly changed, with an 11.6 per cent decline in GDP forecast for the full year.  

To date, he said Jamaica has been able to maintain macroeconomic stability with Net International Reserves over US$3 billion at end of December. Meanwhile, over $50 billion has been assigned to COVID-19 support. 

Clarke asserted that it was the government’s decision to reduce fees paid by the JSE to the Financial Services Commission which enabled the bond market development.

“These things happen because we have a vision for improving access to finance in Jamaica,” he said. He added, “We are also focusing on broadening access to finance. We just passed the MicroCredit act which will enable the availability of competitively and fairly priced finance. 

“There is a legal requirement for disclosure of costs. Many consumers are unable to make an informed decision as to what product meets their needs best. The companies are now expected to tally all charges and express these as an annual percentage so the customer can make an informed choice about where they can access financing.”