Shirley and Palmer

THE PLANNING Institute of Jamaica (PIOJ) is defending the Vision 2030 plan as a credible framework for national development.

Economist Ann Shirley has said that she is not sufficiently convinced that the crafters of the plan made the necessary adjustments for the possible economic fallout as a result of the worldwide recession.

The PIOJ projected that the country's annual growth rate or gross domestic product (GDP) would be three per cent at the end of 2012, and five per cent at the end of 2015.

Leila Palmer, the national development planning director at the PIOJ, who leads the Vision 2030 initiative, told The Sunday Gleaner that the goals and outcome objectives contained in the blueprint for national development were credible projections.

reasonably confident

"We were reasonably confident that, given that this is a three-year period, we feel that if we get it right in the first year, spending some time recovering from our bruises this year, then by 2012, we should be starting that process and we believe that three per cent is very reasonable," Palmer said.

Speaking with The Sunday Gleaner last week, Palmer conceded that the achievement of many of the goals would be contingent on how damning the gobal recession was.

"We are in an uncertain environment right now. The recovery of the global market is really what we would want to call a binding constraint," Palmer said.

However, Shirley has argued that the content of Vision 2030 is no much different from the draft presented last November when the country had not yet acknowledged the effects the recession could have on the country.

"We are behaving as if everything is normal," Shirley said.

Among the macroeconomic projections are that the per capita growth for Jamaicans would increase from US $4,817 in 2007 to US$5,354 at the end of 2012. By 2015, it is expected that per capita income would increase to US$6,629 and then jump to US $23,567 in 2030.

The PIOJ also projects that debt-to-GDP ratio would improve from the 2007 base of 111.4 to less than or equal to 100.

But Shirley is uncomfortable with the way the numbers are presented.

"You need to set us a road map for us to look at those targets and see whether or not you are achieving them," Shirley said, while arguing that all the indicators must be accompanied by yearly deliverables.

wicked global recession

The country's economy contracted by 0.6 per cent in 2008 as it buckled under the weight of a wicked global recession.

The forecast for the 2009-2010 is for real GDP to contract in the range of 2.5 to 3.5 per cent.

"Real sector activities are expected to be negatively affected by the declining demands for exports, lower capital flows and a reduction in remittance flows," finance minister Audley Shaw said during the opening of the Budget Debate in Parliament on April 23.

Prime Minister Golding, during his Budget presentation last week, said that the fallout in the bauxite/alumina sector, which accounts for 60 per cent of total exports, and the decline in remittances, could significantly impact the country's economic situation this year.

Meanwhile, the PIOJ, in its Medium-Term Socio-Economic Framework 2009-2012, acknowledged that "as a small economy, Jamaica is not immune to the effects of this global downturn ..."

It added: "The impact of the global economic crisis on Jamaica is likely to limit, in the near term, access to capital markets, reduce the profitability of local businesses, stymie economic growth, reduce employment in critical sectors of the economy, and worsen our balance of payments."

But the International Monetary Fund (IMF), in its May publication of the World Economic and Financial Surveys Regional Economic Outlook, has supported the view that Jamaica, as is the case for other economies of Latin American and Caribbean (LAC) countries, could rebound by 2010.

"We project LAC growth will rebound to about 1.5 per cent by 2010, in line with global growth but at a faster pace than in advanced economies," the IMF said.

It added: "This is supported by the absence of systemic banking problems in the region, which would allow LAC economies to resume growth more quickly than in regions where severe problems persist in the financial sector."

The IMF further stated: "In addition, the greater scope for countercyclical policies, including to sustain public spending on infrastructure and social safety nets, would support growth going forward."

daraine.luton@gleanerjm.com