Jamaica imports far more than it exports. Ships being unloaded at Kingston Wharves.
JAMAICA HAS to continue to strengthen its economy in the new year. One major plank that could do with restructuring, should be a target of achieving a reduction in its current account deficit by the end of 2006.
For readers who are not fully familiar with Balance of Payments (hereafter called BOP) terminology, the BOP is the external accounts of a country, from its dealings with the rest of the world. It is made up of two main accounts: Current Account and the Capital & Financial Account. The Current Account is the most critical of these accounts, as any shortfall in this area has to be made up by the Capital & Financial Account, even if this means borrowing heavily from private markets and multinational institutions to balance the BOP.
The Current Account comprises four main areas: Goods (Exports and Imports); Services (Travel, Transportation, and various other services); Income; and Current Transfers (Official and Private). In targeting how we would accomplish a reduction in the current account deficit, we will look at each of these areas.
The Goods, Merchandise or Trade sub-sector has historically been a major drain on Jamaica's current account. While countries like Trinidad & Tobago can run trade surpluses (those oil reserves), Jamaica can only look enviously at its neighbour and countries like Brazil and China, which do well in the world on trade. Jamaica incurs a large trade deficit every year, and what's more the trade deficit figure exceeds the value of exports earned since 2001. In the year 2004 for example the value of exports earned by Jamaica was US$1.5 billion while imports cost us US$3.5 billion, leaving a US$2 billion trade deficit.
CONCERTED DRIVE
This is unacceptable. There must be a concerted drive (led by the Jamaica Exporters' Association) to raise the value of export earnings. We must devise strategies to reduce contaminated export shipments (while reducing bureaucratic procedures), to keep costs competitive, to improve packaging, to meet global requirements, and become known for reliability and dependability in meeting export orders. Incidents like the recent ackee fiasco should not happen again as it is in the area of non-traditional agricultural exports that we can make the fastest growth.
With more access to markets across CSME countries this year, and other developing countries like China and Venezuela in a growing global trade, Jamaica should be able to increase its share of the global trade pie. What must be done is to raise our export share of GDP from the measly 16-18 per cent, to a respectable 25 per cent as soon as we can (this is in sharp contrast to 40-44 per cent import share of our GDP).
PHYSICAL IMPROVEMENTS
Tourism inflows are expected to grow in 2006 and if TPDCO and respective local parish councils can work together to increase the linkages and multiplier effects from tourism, there could be increased gains. Physical improvements of not only resort areas is a necessity, but more must be done with public education and beautification campaigns, as well as more enforcement of anti-littering laws across the country. Transportation expansion seems well set (especially the seaports and airports).
In terms of income earnings, let our skilled professionals and artisans also use the recent CSME free movement for some to earn more in that area by offering their services when needed.
Finally, as regards the current transfers, this is a traditional area of strength, despite the steady decline in the level of official inflows, but the jump in inflows of private remittances has been good, so with more competition for providers, hopefully this will reduce the cost of users of this service. Good steps were also made last year by both the Government and the Opposition to have greater dialogue with the Jamaican Diaspora and may this be strengthened this year to build on this relationship.
