Dennise Williams, Staff reporter
CURTIN
JAMAICANS CONTINUE to be confident in the economy, seemingly discounting the effects of crime and the threat of inflation.
"Jamaican firms expect good times ahead," said Professor Richard Curtin. He expressed this view at the release of the 1st quarter 2005 Business and Consumer Confidence Indices held at the Hilton Kingston Hotel yesterday.
In fact, according to survey done by Don Anderson's Market Research Services and commissioned by the Jamaica Chamber of Commerce Conference Board along with the USAID, Jamaican businesses are the most confident they have ever been since the start of the survey four years ago.
And consumers are also confident, although not as confident as they were during the last quarter of 2004.
Professor Curtin explained, "This great peak indicates that businesses and consumers expect the economic recovery to begin and gain steam in the rest of 2005."
Despite the seemingly rosy picture painted by the survey, Professor Curtin warned, "a band of uncertainty surrounds the optimism."
He explained, "You know, the Jamaican economic was buffeted by external and internal shocks over the last few years. And this forecast seems to say that this has all gone away but that is far from the case.
The confidence of business firms and consumers might be shaken if gas prices continue to rise and feed into rising inflation. Additionally, higher taxes and increased interest rates could also negatively affect the gains in made by the Memorandum of Understanding (MOU). So it is easy to be both optimistic and pessimistic."
BUSINESS FIRM OUTLOOK
Not withstanding the possibility of shocks to economy, business firms outlined their outlook on the economy in the first quarter of this year.
The survey revealed that businesses cited recent declines in inflation and interest rates, the stabilisation of the Jamaican dollar, and record tourism as the reasons for their increased confidence.
CURRENT PROFITS SOAR
A record portion of firms reported that they experienced higher profits than they had originally anticipated for the first quarter of 2004.
FASTER ECONOMIC GROWTH EXPECTED
Businesses anticipated faster economic growth in the year ahead. And the last four quarters mark the longest sustained period of optimism about the outlook for the national economy. New investments in mining and tourism and the memorandum of understanding with the unions were all seen as positive factors. Inflation and high crime rates were cited as the main negative factors.
More firms thought that it was a good time to invest in the expansion of their firms than ever before.
A record number of firms reported that their financial balance sheet had improved and a record number expected higher profits during the year ahead.
For consumers, although their positive feelings on the economy were tempered during the first quarter of 2005, this was not a turn to pessimism. According to the survey results, "consumers simply thought that their initial views were just to be optimistic, expecting too much too soon after the devastating hurricanes, the damage to agriculture and the bush fires."
The less optimistic consumer viewpoint was reflected in their answers to the survey questions.
Although consumers viewed the current state of the Jamaican economy slightly less favourably than in the prior quarter, they still judged it more positively than a year ago. However, consumers believe that number of jobs still remain inadequate.
ECONOMY EXPECTED TO EXPAND
While consumers pulled back from last quarter's more optimistic outlook for the economy, consumers still expected gains in the economy during 2005.
One in three consumers in the first quarter expected their income to be higher during the year ahead, down from one in four in the last quarter and one year ago.
Additionally, more than one third of all households reported that they had received remittance from aboard, with nearly half that received remittances reporting that they had received money at least amounts than three years ago. Also about half of the respondents save some of the remittance received on a regular basis.
Spending Plans Stagnate
Jamaicans expressed less favourable purchase plans in the first quarter survey, falling back to the same levels recorded a year ago. Vehicle buying plans were held by 13 per cent in the first quarter down from 15 per cent in the prior quarter.
Vacation plans were reported by 25 per cent in the first quarter, down from 27 per cent last quarter. Nine per cent unchanged from the last 2004 survey held home buying plans.
