FROM THE perspective of a new year, we look back at a difficult 2005 in which the island was hard hit at many levels. Even without a direct hit from the record hurricane season which the region experienced, Jamaica had close encounters with two storms and rain aplenty. October experienced record levels of rainfall. The impact of this heavy rainfall proved negative for domestic agriculture as well as the physical infrastructure, chiefly roads and bridges.
All this happened just as the economy was recovering from the effects of Hurricane Ivan which had brushed past the island in 2004. Then there was the severe increase in oil prices that saw oil prices in the international market approaching US$70 per barrel. The negative pass-through effect of this soon became evident as the domestic price level jumped. As a result, inflation for the period January- November stood at 12.8 per cent - the third consecutive year of double-digit inflation
Against this background of uncertainty in the broad macro economy - even though in the main, the Central Bank managed to keep rates down - the stock market index that had burst past the 100,000 points level in the first quarter soon lost much of its steam. In this regard, for the period January-November, the index lost 15 per cent of its value.
But it was not all negatives for the economy in 2005. For one thing, the year ended on a high with investments in tourism remaining buoyant and the island welcoming in excess of a million tourists from the single destination United States market. Additionally, bauxite and alumina production and prices remained high. Further, the Government was able to raise US$200 million in the euros market in the third quarter. This was done at a time when international investors were still nervous about emerging markets.
In addition, BoJ's success in not having to reverse its policy of keeping rates down, even in the third quarter that has traditionally witnessed sharp reversals in interest rate policy, should not be underestimated.
However, there is no denying that the main negative carry-over from the past year that the economy will have to confront is the runaway crime problem. This remains the most intractable challenge that could threaten any possibilities of consolidating our economic gains this new year.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
