'Brace for more economic storms' - PIOJ boss says financial forecast grim for next two years
Published: Thursday | February 5, 2009
THE PLANNING Institute of Jamaica (PIOJ) says the country should brace itself for consecutive years of economic decline, heightened by the onslaught of the global financial crisis.
Examining the Jamaican economy in the context of the global economic downturn, PIOJ director general, Dr Wesley Hughes, painted a gloomy picture of what could unfold in the next two years.
He was making a presentation yesterday to the Economy and Production Committee of Parliament.
Batten down
Dr Hughes said the country was now experiencing the outer bands of the global financial storm and he warned Jamaicans to batten down for the gale-force winds.
His gross domestic product (GDP) forecast for 2008-2010 suggests negative outturns.
The country should take no comfort in the marginal negative GDP outlook for the period mentioned, as the forecast is tentative. According to Dr Hughes, the numbers given were "best-case scenarios".
"We are not fully able to conclude as to the overall impact of the crisis on Jamaica because it is unfolding. The only thing we can conclude definitively is that the impact is going to be severe and will touch almost all sectors of the economy and society," Hughes told committee members.
Definite impact
The PIOJ head said the crisis would exacerbate the already difficult social and economic situation in Jamaica.
He said in the context of a significant debt to GDP ratio, a large fiscal deficit and a challenge in maintaining macroeconomic stability, "the gale-force winds of the current global crisis is going to be fairly significant on the Jamaican economy".
Looking at prospects for global economic recovery, Dr Hughes said he did not expect an economic rebound until about 2011.
However, he pointed out that Jamaica lagged about 18-24 months behind developments in North America and Europe. In this regard, the full brunt of the economic disaster would not be felt at home until it has been fully manifested in those continents.
Ready to weather the storm
He said a similar principle applied in terms of economic recovery.
On Tuesday, Prime Minister Bruce Golding said, despite the tough challenge facing Jamaica, his administration was ready to "weather the storm".
Making his contribution to the debate on the first supplementary estimates of expenditure, Golding declared: "We are going to lead this country through this storm, through this nightmare and into a brighter day."
The House of Representatives passed the estimates, effectively giving the Government permission to spend $19 billion more than was passed in the original budget.
Parliament passed a $489.5 billion budget in April 2008.
GDP forecast
| 2008 | 2009 | 2010 | |
| Goods-producing | |||
| industry | -2.9 | -5.2 | -0.8 |
| Services industry | 0.4 | -0.7 | 0.1 |
| Total GDP | -0.5 | -1.9 | -0.1
|
