By Dennise Williams, Staff reporter
Professor Curtin
BUSINESS AND consumer confidence in the economy have rebounded substantially in the September quarter, though not enough to wipe out the plunge of the previous quarters.
The Jamaica Conference Board released its Business and Consumer Confidence Indices at the Terra Nova Hotel yesterday. Presenter of the results, Professor Richard Curtin, head of the Survey Research Centre at the University of Michigan, cautioned that the increased optimism did not mean the economy is rebounding in real terms.
"There is a change in the basic optimism of the Jamaica, but it is not enough to solve the problem of the budget deficit or how Government handles their payments of debt," Professor Curtain stated.
Increased confidence was the right first step in getting the economy growing, but fiscal mismanagement by the Government could derail the gains made in the third quarter, he said. Confidence had reached all time lows in the June quarter.
Nonetheless, the numbers pointed to increased hope by businesses and consumers.
BUSINESS CONFIDENCE
In the third quarter, businesses expected that in the year ahead, there would be increases in tourist arrivals and a more competitive position of Jamaican exports due to the devaluation of the Jamaican currency.
Businesses also expected a stronger pace of economic growth among Jamaica's major trading partners, and especially the United States.
In addition 59 per cent of all Jamaican firms in the September quarter reported that the current rate of return on investments met or exceeded their original expectations.
Thirty-five per cent of firms viewed said that now was a good time to invest in expansion of their businesses. In the second quarter, only 28 per cent of businesses believed this.
Larger profits were expected by 43 per cent of all firms surveyed as opposed to 31 per cent in the second quarter.
In the third quarter, 51 per cent of companies expected their balance sheets to improve for the first time in 2003, up from 36 per cent in the second quarter.
The report noted, however, that business confidence has yet to be fully restored due to concerns about the adverse impact on the Jamaican economy from devaluation, higher oil prices, and rising crime. Professor Curtin said, "crime is considered the most serious problem that Jamaica has. The recent rise in crime is very much at the top of 80% of businesses surveyed."
CONSUMER CONFIDENCE
Consumer confidence rebounded in the third quarter, recovering the entire second quarter loss. The improvement in consumer confidence was greater in Kingston and tourist towns than in other parts of Jamaica.
But regardless of the level of confidence, uppermost on the consumer's mind is jobs. The survey revealed that 90% of consumers believe that jobs are scarce and hard to find today.
"Jobs, jobs, jobs," Said Prof. Curtin. "This the universal point with consumers in recent surveys in over 40 countries that I have worked with."
Overall, more than half of Jamaican consumers state that their economic conditions were average or better in the third quarter. Consumers also judged prospects for the national economy more favourably in the third quarter.
Thirty-five percent of Jamaicans expected a larger income in the third quarter, against only 28 per cent with this expectation in the 2nd quarter.
Consumers plan to increase spending in the September quarter, with motor vehicles being the item where more dollars were directed.
MAJOR CONSUMER PURCHASES
REAL ESTATE VEHICLE VACATION
According to Prof. Curtin, both businesses and consumers see the economy headed in the right direction, but don't expect real changes until next year, and not in a meaningful way to solve the country's financial worries.
"In the last quarter (Q2) that I was here, I said that Jamaica has seen the worst, and that the Jamaican economy is expected to grow," Professor Curtin said, "but it is not expected to grow in such as way that it will erase all problems that businesses and consumers face."
