By Al Edwards, Business Co-ordinatorJAMAICA'S ECONOMY faces a bleak year and tough challenges if it is to begin to pull out of its current malaise. So surmised Dr. Omri Evans as the special guest speaker at the Lions Club luncheon held at the Jamaica Pegasus yesterday.
The title of Dr. Evans address was "Will 2004 be another challenging year on the economic front?"
"Today, Jamaica's economic conditions have shown no improvement over what they were this time last year. Indeed, it is my view that the IMF May 2003 report on the Jamaican economy has painted a picture of an economy that is progressively sinking into a deeper hole, under the increasing weight of a growing and expensive public debt.
"On top of that there are no major public assets left to be privatised to bring in substantial amounts of resources to pay down any significant share of the debt. And so I see this year as another very challenging one on the economic front."
He saw little prospects for meaningful growth over both the short and medium term and cited the IMF projections to support this view. According to Dr. Evans, over the next four years the IMF is projecting a real annual GDP growth rate of 1.6 per cent as a baseline scenario for Jamaica. Under a worse case scenario with high interest rates and a skyrocketing fiscal deficit, it puts the growth rate at less than 1.0 per cent per year. If things were to turn around with increases in foreign direct investment and regaining access to the capital markets, then real GDP might grow at an average of 3.5 per cent per annum over the next four years.
Small and micro businesses did no escape his attention and he called for more affordable and competitive financial resources to be made available to them.
"In my judgement, some of the best potential for growth in the Jamaican economy is in the micro and small business sectors," he said.
He added that it would be very difficult to positively address the growing public debt, and the widening fiscal deficit which now stands at $29 billion, without cutting the size of the public sector.
The Government appears keen to impose a wage freeze in order to address its financial woes but Dr. Evans does not see this as going far enough to deal with the impact of the wage cost push on the fiscal deficit and sees some job retrenchment as therefore inevitable.
For more on this story, see tomorrow's Financial Gleaner.
