The signals being sent by the Bruce Golding administration is that things are not going to be too bad during the current fiscal year, even though there will be a general slowing down of the overall economy.

The economy is forecast to contract further during the current fiscal year, but there are signs on the horizon that the economic crisis in Jamaica's major trading partner, the United States, might be bottoming out and that things might turn in that economy towards the end of 2009, or early 2010.

If those projections hold, it would be good news for Jamaica, sparking a turnaround in the economy next year, or at worse in early 2011.

Pessimistic outlook

Given this picture, there is no need for the markets to be skittish here at home, or to worry about the more pessimistic outlook that is envisioned by others.

It would, therefore, have been helpful if the Government had presented the medium term targets for the period 2009/10 - 2011/12 as a critical part of its recent budget presentations.

This information was notably absent from the final version of the medium term socio-economic policy framework 2009-2012 which was tabled in the House of Representatives by Prime Minister Bruce Golding when he made his contribution to the 2009 Budget Debate.

Even now it is not too late to place this information in the public domain.

The draft November 2008 version of the medium term socio-economic policy framework 2009-2012 contained some targets (see insert) that the Planning Institute of Jamaica said earlier this year were being updated by the Ministry of Finance.

To come

Still to come is the IMF's Article IV consultation on Jamaica.

Jamaica is currently under intensified Fund surveillance. It is understood that an IMF team visited the island earlier this year and that a draft copy of their 2009 report had been prepared and discussed with the Jamaican authorities.

It is further understood that another IMF team will be visiting the island next week to hold talks with government officials, and that release of the Article IV findings may be done shortly after.

In the 2008 Article IV consultations, the IMF staff had projected Jamaica's current account balance (excluding interest payments) as moving from a deficit of 9.5 per cent of GDP in 2008/09 to 7.7 per cent for the current fiscal year 2009/10; and continue declining to 6.0 per cent in 2010/11 and 4.7 per cent in 2011/12.

Real GDP growth was projected at 2.7 per cent in 2008/09; marginally higher at 2.8 per cent in 2009/10; 3.1 per cent in 2010/11 and 3.3 per cent in 2011/12.

The inflation rate (GDP deflator) was projected by the IMF staff at 17.2 per cent for FY 2008/09, 9.7 per cent for 2009/10; 8.3 per cent for 2010/11 and 6.8 per cent for 2011/12.

In contrast, Senator Don Wehby, Minister without portfolio in the Ministry of Finance and the Public Service, pointed out last week that for 2008, GDP contracted by 0.6 per cent and in FY 2009/10 the expectation is that the Jamaican economy will contract in the range of 2.5 per cent to 3.5 per cent.

Current account deficit

The current account deficit is expected to narrow to 14.2 per cent of GDP, down from its current position of 19.2 per cent. And inflation is expected in the range of 11 per cent to 14 per cent for the current fiscal year.

In the absence of detailed information in the public domain, it will be difficult for the market not to be nervous and skittish given the conflicting signals that are being sent about the severity of the current economic problems facing the country and the prospects for the near to medium term.

renee.shirley@gleanerjm.com