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EDITORIAL - No place for naivety, Mr Shaw
published: Tuesday | February 5, 2008
We appreciate the need of government ministers to espouse confidence and to gee up people in the face of difficulty.
There is, however, sometimes a thin line between confidence building and foolhardiness bordering on arrogance, of which we would advise Audley Shaw, the minister of finance, to be aware. If the minister is not cognisant of this, he runs the risk of encouraging complacency in the face of danger.
Take Minister Shaw's speech at last week's capital markets conference in Montego Bay, put on by the Jamaica Stock Exchange, at which he addressed the possibility of the American economy heading into recession. That has been a bad issue for most of the rest of the world. For despite the growing power of China and India and the others of the BRICs, Brazil and Russia, the United States remains the global economic engine. A slowdown in America usually causes the rest of the world to sputter.
Mr Shaw, it appears, has no such worries for Jamaica. An American recession, he argues, provides opportunities for Jamaica and will have little or no impact on Jamaica's growth forecast of between two and three per cent in the next fiscal year.
Maintaining the growth target is not our issue of concern per se, or even Mr Shaw's overall analysis of the situation and what this country might gain from an American slowdown. For, on the face of it, recession in the US could ease demand for oil and other commodities that are heavily imported by Jamaica. This could mean a fall in the price of oil and other products, with the impact of moderating inflation in Jamaica.
But that, as Mr Shaw should be aware, is only one side of the economic equation. There is another, which we believe Mr Shaw addressed with far too much naivety.
It is true that the opening of several Spanish-owned hotels in Jamaica over the past three years has followed with a rise in the aggregate number of tourists from Europe. But it remains a fact that around 70 per cent of Jamaica's stopover visitors come from the United States.
When people feel poorer, as in times of recession, among the first things they are likely to give up are foreign holidays. Mr Shaw acknowledges as much, except that he does not believe Jamaica is the place to which American tourists may not come.
According to Minister Shaw's analysis, with more shallow pockets as well as being burdened with the psychology of recession and a weaker dollar, Americans will most likely shelve their holidays to expensive European destinations. They will stay closer to home, travelling to cheaper destinations like Jamaica - as if Jamaica is all that cheap.
So, looked at through the prism of Audley Shaw, an American recession may just be what is needed by Jamaica to jump-start its economy.
In some respects, Mr Shaw's optimism is refreshing. He will perhaps cite it as his capacity to think outside the box. All of which, of course, is very good.
However, we would prefer an optimism overlaid by a good measure of realism. Like the fact that tourism is Jamaica's major 'export' earner and a serious analysis of what is likely if the biggest market goes soft. Or what the impact will be on remittances if Jamaicans in America lose their jobs. Hard stuff, Mr Shaw. The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Tuesday | February 5, 2008
We appreciate the need of government ministers to espouse confidence and to gee up people in the face of difficulty.
There is, however, sometimes a thin line between confidence building and foolhardiness bordering on arrogance, of which we would advise Audley Shaw, the minister of finance, to be aware. If the minister is not cognisant of this, he runs the risk of encouraging complacency in the face of danger.
Take Minister Shaw's speech at last week's capital markets conference in Montego Bay, put on by the Jamaica Stock Exchange, at which he addressed the possibility of the American economy heading into recession. That has been a bad issue for most of the rest of the world. For despite the growing power of China and India and the others of the BRICs, Brazil and Russia, the United States remains the global economic engine. A slowdown in America usually causes the rest of the world to sputter.
Mr Shaw, it appears, has no such worries for Jamaica. An American recession, he argues, provides opportunities for Jamaica and will have little or no impact on Jamaica's growth forecast of between two and three per cent in the next fiscal year.
Maintaining the growth target is not our issue of concern per se, or even Mr Shaw's overall analysis of the situation and what this country might gain from an American slowdown. For, on the face of it, recession in the US could ease demand for oil and other commodities that are heavily imported by Jamaica. This could mean a fall in the price of oil and other products, with the impact of moderating inflation in Jamaica.
But that, as Mr Shaw should be aware, is only one side of the economic equation. There is another, which we believe Mr Shaw addressed with far too much naivety.
It is true that the opening of several Spanish-owned hotels in Jamaica over the past three years has followed with a rise in the aggregate number of tourists from Europe. But it remains a fact that around 70 per cent of Jamaica's stopover visitors come from the United States.
When people feel poorer, as in times of recession, among the first things they are likely to give up are foreign holidays. Mr Shaw acknowledges as much, except that he does not believe Jamaica is the place to which American tourists may not come.
According to Minister Shaw's analysis, with more shallow pockets as well as being burdened with the psychology of recession and a weaker dollar, Americans will most likely shelve their holidays to expensive European destinations. They will stay closer to home, travelling to cheaper destinations like Jamaica - as if Jamaica is all that cheap.
So, looked at through the prism of Audley Shaw, an American recession may just be what is needed by Jamaica to jump-start its economy.
In some respects, Mr Shaw's optimism is refreshing. He will perhaps cite it as his capacity to think outside the box. All of which, of course, is very good.
However, we would prefer an optimism overlaid by a good measure of realism. Like the fact that tourism is Jamaica's major 'export' earner and a serious analysis of what is likely if the biggest market goes soft. Or what the impact will be on remittances if Jamaicans in America lose their jobs. Hard stuff, Mr Shaw. The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.