"It is in this context that Golding said that Jamaica's fate must be considered. "Part of our own reality is that even before the onset of the crisis the Jamaican economy was not in good shape. We have lived for almost a generation with prolonged periods of low growth, huge debts, large fiscal deficits, high unemployment and weak export performance," the prime minister said."
Government must prepare the nation for economic survival
Tuesday, March 10, 2009
1)Jamaica is already feeling the effects of the global meltdown. For January 2009, remittance declined by 10 per cent, exports by 13 per cent and tourism by five per cent, when compared with January last year. The bauxite/alumina sector is perhaps the worst affected. Fifty per cent of the alumina produced worldwide is used in automobile manufacturing and housing construction. Another significant portion is used in the packing industry. All three are down considerably, resulting in a drastic cut in the demand for and price of aluminium.
2)Jamaica is also feeling the effects in terms of its foreign exchange market. Reduced exports, tourism earnings and remittances mean less foreign exchange inflows to meet demand. The situation is exacerbated by the fact that the international capital market on which Jamaica has come to depend for budget financing is virtually shut down. It is not difficult, therefore, to understand why there has been pressure on the foreign exchange market resulting in the depreciation of Jamaica's dollar. If demand exceeds supply for any prolonged period, the price will go up.
3)The prospects for the Jamaican economy are challenging. The economy declined by 0.4 per cent last year. With the continuing fallout from the global crisis, it is expected to decline by 2.2 per cent this year. This is in line with what is expected of the major economies in the world, Golding said.