(Extracted from the Business Observer – Jan 21, 2015)
JAMAICA'S confidence in the country's investment climate has reached its highest with 65 per cent of firms reporting that it is a good time to expand their productive capacity to take advantage of the future economic opportunities.
The Jamaica Chamber of Commerce (JCC) Conference Board reported that business confidence peaked by 25.2 per cent at the end of the fourth quarter last year compared to the same period in 2013 on the Business and Consumer Confidence Indices on Tuesday. Additionally, consumer confidence has shown a 5 per cent improvement despite little flexibility in spending power.
"People are looking at what's happening around them at the macro level in terms of oil prices going down, the government passing the IMF tests as well as the fact that as we approach the elections consumer confidence usually peaks," managing director of Market Research Services, Don Anderson, stated.
The business confidence index was 122.9 in the 4th quarter survey last year, up from 112.1 in the 3rd quarter and well above the 98.2 recorded in the 4th quarter of 2013. What's more, investment plans have surged 10 per cent higher than the prior peak of 55 per cent set in the 2nd quarter of 2014.
Business firms have expressed increased confidence that the economic policies of the government will act to improve the economy as well as their own firm's prospects, according to the survey which was conducted by Market Research Services. The surge in optimism has occurred despite the fact that firms have so far reported weaker profits than they had anticipated three months earlier.
Anderson stated that the renewed willingness reflects a strong and growing sense that government policies are on the right course. While no comprehensive change in economic policies will be favoured in every detail in every firm, the data clearly indicates that most firms believe that the country is at the forefront of a new economic era, the report added.
"Business confidence is solid. It is the first year in all the 13 years that we have been conducting these surveys that most of the business firms indicate that it is a good time to invest," Anderson told the audience.
"The government's commitment is now essential in reducing any lingering uncertainty about turning the initial promise into actual economic gains," he said.
Anderson added that business firms expect to see high growth in the tourist industry, while real estate, vehicle purchasing and vacation spending are expected to be flat.
Consumer confidence rose at the end of 2014 to its highest level since the closing of the quarter in 2012. Consumer confidence climbed by 16.2 at the end of 2014, moving from 94.6 in 2013 to 110 a year later. This resulted from increased confidence that the economy and job prospects will begin to improve in 2015.
"Consumers are also confident and they believe that things will get better in 2015," Anderson stated. "With an election approaching, consumers believe that the difficult environment that they are now living in cannot continue into the next year, but then somewhere along the line nothing seems to happen and they lose that confidence."