Tweet
Firms concerned over high cost of crime, sluggishness of new gov't to make changes
Wednesday, January 09, 2008
It only took a couple of months for businesses to decide that the bounce in economic and commercial activity that most believed would be heralded in by a change in administration would not be achieved.
So it would seem, based on the latest Jamaica Chamber of Commerce (JCC) Survey of Business Confidence, which saw business optimism drop from record levels the quarter before, when four out of five businesses believed that a change in government after the general elections held last September would have led to an improvement in the economy.
Professor Richard Curtin (second right) shares a laugh with research team member Don Anderson (left), and NCB Captial Market managing director Christopher Williams (second left), while Milton Samuda looks on.
At 109.8, the index of business confidence, which was recorded at 134.2 during the third quarter of 2007, was the lowest it has been in a year-and-a-half. The index stood at 96 back in the second quarter of 2006 before climbing above 110 and staying there until now.
"The fourth-quarter decline did not simply erase pre-election hopes, since there was only a small third-quarter gain, rather it represented a rollback of all the gains recorded in 2007," said Richard Curtin, University of Michigan professor and head of the survey team.
When asked to explain their positive views in the previous quarter, four-fifths of firms specifically cited the positive impact of a new government on prospects for economic growth. This quarter businesses have "expressed apprehensions about the specifics of the economic policies of the new government, especially plans to increase tax compliance and to promote private investment."
"Its not that they disagree with the government, but it's just that they are apprehensive of what the actual implementation of these new policies might be," he added. "There are some concerns among businesses as to how the government is going to increase taxes or cut spending and that affects business somewhat more in a more apprehensive way."
But chief among the concerns of corporate Jamaica was the high cost of crime and violence, according to Curtin. The high cost of crime was said to be a deterrent to business growth by one-third of those surveyed.
The percentage of firms that expressed optimism about future economic growth dropped from 45 per cent in the third quarter of 2007 to 28 per cent during the quarter under review, which, apart from uncertainty surrounding "shifts in government spending and taxing priorities", reflected the sluggishness of the new administration in its implementation of policy.
Interestingly, consumers did not hold as pessimistic a view of the current economic climate, creating an anamoly in the difference between consumer and business optimism.
"Its quite unusual to have such a gap between the two (Consumer Confidence vs Business Confidence)," Curtin told the Business Observer. "But I think it's going to come back together again - consumers are going to ease back down a bit more and business confidence is going to rise."
After reaching as high as 163 leading up to the general elections in September, the consumer confidence fell modestly to 147.7 during the last quarter of 2007, remaining at record levels despite the pullback in optimism related to election euphoria. The latest reading was the highest on record next to the confidence level during the third quarter of 2007.
"The relatively small pullback indicates that once the election euphoria disappeared most consumers remained quite optimistic about future economic conditions," said Curtin.
"When asked to explain their (positive) views, two-thirds of those that anticipated an improved economy attributed their optimism to a change in government."
Overall, consumers maintained a favourable outlook for job and income growth, although spending plans showed mixed changes. More consumers expressed plans to buy a home than in the previous quarter - 15 per cent, up from 11 per cent - while fewer intended to purchase automobiles or spend on vacation.
Wednesday, January 09, 2008
It only took a couple of months for businesses to decide that the bounce in economic and commercial activity that most believed would be heralded in by a change in administration would not be achieved.
So it would seem, based on the latest Jamaica Chamber of Commerce (JCC) Survey of Business Confidence, which saw business optimism drop from record levels the quarter before, when four out of five businesses believed that a change in government after the general elections held last September would have led to an improvement in the economy.
Professor Richard Curtin (second right) shares a laugh with research team member Don Anderson (left), and NCB Captial Market managing director Christopher Williams (second left), while Milton Samuda looks on.
At 109.8, the index of business confidence, which was recorded at 134.2 during the third quarter of 2007, was the lowest it has been in a year-and-a-half. The index stood at 96 back in the second quarter of 2006 before climbing above 110 and staying there until now.
"The fourth-quarter decline did not simply erase pre-election hopes, since there was only a small third-quarter gain, rather it represented a rollback of all the gains recorded in 2007," said Richard Curtin, University of Michigan professor and head of the survey team.
When asked to explain their positive views in the previous quarter, four-fifths of firms specifically cited the positive impact of a new government on prospects for economic growth. This quarter businesses have "expressed apprehensions about the specifics of the economic policies of the new government, especially plans to increase tax compliance and to promote private investment."
"Its not that they disagree with the government, but it's just that they are apprehensive of what the actual implementation of these new policies might be," he added. "There are some concerns among businesses as to how the government is going to increase taxes or cut spending and that affects business somewhat more in a more apprehensive way."
But chief among the concerns of corporate Jamaica was the high cost of crime and violence, according to Curtin. The high cost of crime was said to be a deterrent to business growth by one-third of those surveyed.
The percentage of firms that expressed optimism about future economic growth dropped from 45 per cent in the third quarter of 2007 to 28 per cent during the quarter under review, which, apart from uncertainty surrounding "shifts in government spending and taxing priorities", reflected the sluggishness of the new administration in its implementation of policy.
Interestingly, consumers did not hold as pessimistic a view of the current economic climate, creating an anamoly in the difference between consumer and business optimism.
"Its quite unusual to have such a gap between the two (Consumer Confidence vs Business Confidence)," Curtin told the Business Observer. "But I think it's going to come back together again - consumers are going to ease back down a bit more and business confidence is going to rise."
After reaching as high as 163 leading up to the general elections in September, the consumer confidence fell modestly to 147.7 during the last quarter of 2007, remaining at record levels despite the pullback in optimism related to election euphoria. The latest reading was the highest on record next to the confidence level during the third quarter of 2007.
"The relatively small pullback indicates that once the election euphoria disappeared most consumers remained quite optimistic about future economic conditions," said Curtin.
"When asked to explain their (positive) views, two-thirds of those that anticipated an improved economy attributed their optimism to a change in government."
Overall, consumers maintained a favourable outlook for job and income growth, although spending plans showed mixed changes. More consumers expressed plans to buy a home than in the previous quarter - 15 per cent, up from 11 per cent - while fewer intended to purchase automobiles or spend on vacation.