Jamaican consumers, businesses more cautious as world economy slows

Consumers’ outlook on the Jamaican economy has been improving over the last seven years but the Jamaica Chamber of Commerce (JCC) reported on Tuesday (Oct 5) that the consumer confidence index declined for the first time in as many years.

Former JCC President Larry Watson

“For the first time in seven years, consumer optimism recorded a slight decline of 3.5 points, with an index of 179.9 points for the third quarter,” the Jamaica Chamber of Commerce said in a release. “The dip is associated with consumers’ current realistic perception of business conditions and their expectations for jobs in the future.”

The disclosure was made during an event at the AC Marriot Hotel in Kingston.

This means that whereas Jamaican consumers expressed a willingness to purchase houses and cars in the past few years and months, they are now more cautious to do so. In fact, as many as 66 per cent of consumers surveyed indicated they have no plans for the upcoming Christmas season.

On the business side, the JCC outlined that firms had also lowered their expectations during the July to September period.’

‘Despite this decline, businesses remain positive that their financial position will change.’

— JCC

“Business optimism also recorded a significant decline of 9.5 point, recording an index of 141.2 points from the second quarter’s index of 150.7, mirroring the third quarter’s index of 2018. Despite this decline, businesses remain positive that their financial position will change,” the JCC stated.

Firms that expected the Jamaican economy to improve fell from 76 per cent between April and June to 54 per cent, while those expecting it to worsen moved from four per cent to 15 per cent. This impacted the economic index for business, which experienced a sharp decline from 172 points in the second quarter to 139 points third quarter.

Nevertheless, JCC Immediate past President Larry Watson maintained that “…even though we have had a slight dip [the] trend analysis will show that it is improvement”. He argued further that both indices are “still at the highest level and whereas a slight dip exists, this is just a temporary reduction based on the current conditions”.

Watson noted, however, that while there is some optimism from both consumers and business, international events could have contributed to the decline in the Business and Consumer Confidence Index. The current trade issues between the US and China and a pending Brexit deal have been dominating headlines of global business news, while also factoring into the decisions of investment pundits.

“…the looming conversation in the international arena on the possible slowdown in the world economy will put people on a review basis; I wouldn’t go as far as saying pause, but certainly on a review basis looking ahead, because our economy is so dependent on the international arena and our growth agenda has to be stimulated by exports,” the former JCC president reasoned.

Article written by Josimar Scott