Jamaica's Balance of Payments Challenge

At the start of the last fiscal year, I indicated that in 2009 the fiscal deficit would not be the most important economic indicator to focus on, as it was in the past. I thought that the Balance of Payments (BOP) would be the most important indicator to manage as I saw two things happening - (1) oil I thought, would go to US$120 per barrel and (2) the drying up of credit meant that the only way to create stability in the economy would be to manage the BOP.

Well, oil went to US$147 per barrel and, as expected, the trade deficit widened even further. I then expected that as the recession set in oil would fall to below US$70 per barrel and foreign exchange earnings would fall also, even more than the benefit from the fall in oil prices.

This again played out, and both the foreign exchange earnings and the oil price fell more rapidly than I expected, particularly after the fall of Lehman Brothers. I also indicated that even though in the second quarter of the last fiscal year, inflation as running over 20 per cent annualised, I expected that it would end the year between 11 and 14 per cent, which it did.

Why do I say all of this? It is because it is easy to predict the general trend of numbers given the relationship that exists between both of them. So it really should not be any surprise what happens in the economy, because if one is able to project one of two indicators, and general sentiment, then it is usually simple to predict the others.

The problem with Jamaica's economy still remains the BOP, to which all our other fortunes are tied, and therefore the only way to fix the economy is to address the BOP.

There is another worrying trend developing that we need to be aware of and put policies in place to deal with. These can be seen as follows:

1. Oil is again on the rise, and as I had anticipated at the start of the year, it could well average a price of US$70 per barrel for the year and hit US$100 per barrel by next year (I had told some of my friends when oil was at US$30 per barrel to buy oil, so I am coming for my commission, even if they didn't buy it).

2. The recovery that is coming may very well be a jobless recovery, meaning that the jobs lost will not be recovered.

3. Even after the global economies start to recover it will be a very long process, and this means that demand for consumer products, such as cars, may not recover any time soon. Remember that the average American has lost 25 per cent of his/her wealth, which was based on air in the first instance.

These are worrying signs for Jamaica as it will have a negative consequence on the BOP as follows:

1. Oil in January 2009, when the price was near US$30 per barrel was 23 per cent of the BOP, and will no doubt become a serious drain again.

2. Jamaica's main foreign exchange earners - tourism, remittances, and bauxite/alumina - depend heavily on consumer spending, and so may see little growth, at best.

This no doubt means that the country and companies will have to find ways to deal with this problem. I have suggested some of these possibilities in the past so will not bother to go over them, but suffice to say that I mentioned three areas:

1. I indicated that the most important minister in 2009 would be the agriculture minister, as the country's growth prospects depend on agriculture. He has in my view, done a good job within the confines of the environment he has to work in. In the first quarter of 2009, agriculture and fishery grew by 10 per cent while no other sector grew.

2. Crime, I indicated, would still be the biggest challenge for Jamaica, and it continues to be.

3. Bureaucracy - this continues to be a bug bear and will stymie the growth of the real growth prospect for the economy, the small business sector, as this is where future job growth will come from.

Change will only come from Jamaicans
While the government continues to grapple with the problem, we must all realise that real change will only come from us as individuals. Some of us have given up on Jamaica and have left her shores. In fact, I do receive a lot of email and messages on Facebook, re Jamaica's plight and what needs to be done.
Two weeks ago, I received an email from someone I know asking if I still had hope for Jamaica, and why I continued to try with a sinking ship. Similar sentiment has been expressed to me in other emails, but not in so direct a manner.

The fact is that we cannot as a people give up on our country. We cannot have any other country of birth, unless we believe in reincarnation, and then again, you may come back as a cockroach, only to be stepped on. But then again, is that any different from the way Jamaicans have been trampled on since independence? We could debate that.

The point is that Jamaica's change will only come from us Jamaicans and we must persevere to ensure that positive change comes. It is not going to be easy, as many Jamaicans themselves do not care too much about Jamaica. As long as their bellies are full then "Jamaica, no problem". And what I find is that this attitude is amongst those who are most vulnerable if Jamaica fails.

There are, on the other hand, some good Jamaicans I have the privilege of knowing, and these mostly are men who do not have to concern themselves about Jamaica, in reality, as they could always lead a good life elsewhere.

When US President Obama was elected to office, and Jamaicans were celebrating and joining in with the feeling of hope, I indicated that Jamaica would soon fall back into its own way. The fact is that we always celebrate and help the cause of everyone except Jamaicans. I remember our assistance in the Grenada revolution, and being at the forefront of the war against apartheid. We even applauded the courage of Colin Powell to break ranks with his party and support Obama, even though if someone ever supported someone in either political party they are thought of as JLP or PNP. In Jamaica there are no Jamaicans, apparently. And so we remain divided.

I appeal to all Jamaicans to stand up for what is right for Jamaica, as each time I see the likes of a Usain Bolt, Bob Marley, Mike Macullum etc I realise how much of a mighty people we are. Imagine, if we were to really take seriously the advancement of Jamaica, where we would be today.