Bank of Jamaica (BOJ) Governor, Richard Byles, says prospects for Jamaica’s economy remain positive.
The governor posited the view at a Central Bank’s quarterly briefing recently. He noted that the economic outlook remains positive, despite “headwinds” and “clouds of uncertainty” arising from the global economy.
“Domestic economic activity continues to show signs of recovery, although at a slower pace than earlier observed,” he noted.
The Governor added that foreign reserves are at “adequate levels”, the current account of the balance of payments is in a “sustainable position”, the fiscal performance is “strong”, public debt continues to decline at a “steady pace” and market rates remain “generally low”.
“The near-term outlook is for real gross domestic product (GDP) to expand at an average quarterly rate of one to two percent, which is below the previous projection for a quarterly expansion of 1.5 to 2.5 percent,” he said.
Consequently, Mr. Byles said the output gap, being growth relative to Jamaica’s economic capacity, will be wider than previously expected, suggesting that inflationary pressures “will, largely, remain contained over the next eight quarters”.
The Governor said notwithstanding the anticipated slower pace of growth, labor market conditions continue to improve, as evidenced by the fall in unemployment, to a record low of 7.8 percent in April 2019.
“We expect to see even further improvements in labor market conditions over the next two years, with more jobs anticipated in tourism, manufacturing, finance, and insurance, and business process outsourcing,” he noted.
Citing the BOJ’s view that the economy continues to “operate below its potential” based on several indicators, Mr. Byles said, “we believe that there is room to accommodate a faster pace of growth in economic activity without compromising the inflation target [of four to six percent]”.
“In this context, the Bank of Jamaica will maintain an accommodative monetary stance to support a faster return of inflation [which stood at 4.3 percent in July] to the center of the target [of four to six percent],” he added.
Nigel Bell, Readers Bureau, Fellow
Edited by Jesus Chan
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