Analyst warns of economic 'tsunami'
Published:Wednesday | August 10, 2011 | 12:00 AM
- Shirley says US credit-rating downgrade could affect Jamaica
Edmond Campbell, Senior Staff Reporter
FINANCIAL ANALYST Anne Shirley says the Government should spearhead bipartisan talks with the Opposition and engage the private sector and other stakeholders to examine the possible implications of the historic Standard and Poor's (S&P) downgrade of the United States (US) top-notch triple-A rating last Friday.
S&P cut the long-term US credit rating to AA-plus as it raised concerns about the American Congress' debt-consolidation plan.
Shirley argued that, while no one was expecting the US to default on its debt in the immediate future, S&P was of the view that, because the US Congress did not get its act together, the potential of a default could not be ruled out.
"This is the time when we should be having bipartisan discussions and getting together with the private sector and others to sit down and hammer out, privately, what we think the implications could be (for Jamaica)," Shirley told The Gleaner yesterday.
Shirley said she was concerned that the "(finance) minister did not see it fit to talk about it (S&P downgrade of the US) in his speech".
Finance Minister Audley Shaw, in a national broadcast on Sunday, dismissed Opposition claims that the Government had failed the International Monetary Fund (IMF) quarterly tests for December 2010 and March 2011.
He also warned that the country should brace itself for tough times on the economic front.
However, Shirley is cautioning that Jamaica should not allow itself to be caught flat-footed this time, with the fallout in the US economy.
She pointed out that when the US previously went into a recession, the Jamaican Government was criticised for believing the country would not be severely impacted.
Clear signs
"I have been saying for ages, the signs are there for a tsunami. We have known of the problems in Europe, we have known that America had this debt situation coming up ... you are looking at the possibility of higher prices locally and fewer tourists coming to the island, etc.," Shirley said.
Meanwhile, economist Dr Peter-John Gordon argued that Jamaica was open to fluctuations in the world market and a fallout in the US economy would negatively impact the island's tourism sector and global demand for bauxite and alumina.
He suggested that a double-dip recession in the US was possible, adding that such a development would spell more trouble for Jamaica's economic landscape.
"The last time, we didn't take the signs very seriously, so a lot of things were forced upon us," Gordon said.