WHILE IT is too early for the authorities to compile accurate estimates of the damage wrought by Hurricane Ivan, one thing is certain: the impact on the economy will be significant, given the scope of the devastation.

The passage of the hurricane has demonstrated how vulnerable the economy can be to external shocks whether these be the international economy or acts of nature. It is a reminder of how fragile the incipient recovery can be.

Only recently the Minister of Finance was ecstatic that the fiscal numbers were performing more creditably than forecast. BoJ Governor Lattibeaudiere also spoke of the Central Bank's success in containing inflation within the projected limits. Further, the monetary authorities had raised more than the US$75 million projected from the latest successful U.S. index bond.

True, there was concern that crime was impacting negatively on the economy, but the consensus was that the economics statistics were moving in the right direction. Hurricane Ivan, however, has overturned the proverbial applecart, triggering a number of potential negatives.

First, the pace of economic recovery will slow, as resources will have to be diverted to finance the rehabilitation process. Of particular note in this regard is domestic agriculture which makes a substantial contribution to any increase in Gross Domestic Product (GDP). This sector was already affected by Hurricane Charley and so gets a double whammy.

A second point to note is that the economic targets with the IMF will have to be re-negotiated; among them, the inflation and government spending targets. This adjustment could have a positive side as the economy would get a little reprieve; but the much anticipated recovery would be derailed.

A third point is that the tourist industry that was on a roll could be hurt. This is so from the fact that the entire Caribbean has come in for a pounding by two major hurricanes. The usually pro-active Tourist Board can counter the negative image affecting the region.

The passage of the hurricane is a powerful reminder of how vulnerable is a small and open economy located in a region susceptible to acts of nature.

This is specially so when a fragile economic recovery is not fuelled by sustained and protracted economic growth.

There can be a positive side to all this, should the economy benefit from international assistance. Ultimately, however, it is back to the drawing board for the economic planners; and some belt-tightening for the rest of us.

THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.

Back to Commentary

Go-Jamaica | Jamaica Star | Go-Local Jamaica | Sports Jamaica | Letters to the Editor