PM downplays recent dip in business, consumer confidence
Published:Thursday | October 17, 2019 | 12:00 AMNickoy Wilson/Gleaner Writer
Prime Minister Andrew Holness has sought to allay concerns about Jamaica’s economic prospects following the release of a recent survey that showed a dip in business and consumer confidence.
The business confidence index in the third quarter fell by nine per cent from 150.7 to 141.2 while consumer confidence suffered a 1.9 per cent drop, moving from 183.4 points to 179.9 points.
“But it is the case that for several quarters, business confidence improved as reduction in business confidence in one quarter does not in any way suggest a change in the trend. This is prediction of expectation, so it is the psychology of economics operating,” Holness said.
“How do business people perceive the future, and how will they make their present business decisions? That is always why business people have to have a sense of conservatism that if you are earning supernormal profits, supernormal profits are not guaranteed to continue, and therefore, you recalibrate it to what you consider to be normal. And that is always the position when you are in a bullish economy that at some point, you pull back, you correct your position, and you move on.”
The prime minister was speaking yesterday at a groundbreaking ceremony for the construction of a new 258,000-square-foot complex in Bernard Lodge, St Catherine, by the Cari-Med Group.
GOOD PROBLEM
Holness cautioned that the fall in business and consumer confidence did not spell doom.
“Everywhere I go, what I am told is that this is the best business environment in many decades, so when I listened further to reports as to why business confidence is declining, the explanation was that business people in the present quarter earn profit above expectation, and, therefore, they were not expecting that this supernormal would continue into the future,” Holness said. “Now, that’s a good problem to have.”
Referencing Jamaica’s long-term foreign and local currency rating being upgraded from B to B+ by ratings agency Standard and Poor’s (S&P), Holness said that this was the strongest signal of the state of the country’s economy.
“It took us some time to get back to that rating, and I must tell you that the Government of Jamaica will never make the fiscal errors that were made in the past. I give you that as a commitment,” the prime minister said. “The duty of government is to take itself out of risk profile of the business. If you as a business person are going to take risks, you must feel confident that government is not a part of that risk.”