Joseph Issa, Executive chairman of the Cool Group of over 50 companies which trade internationally, says he is pleased with the resilience shown by Britain’s economy, stating it augurs well for Jamaica.
“Any crises in the US or UK will affect us here in Jamaica. It is like the proverbial ‘if they sneeze we catch a cold’.
“The US and the UK are our main trading partners, and if they do well, we also do well; if they do not then, we do not either.
“We are mainly an importing country and rely on stable prices and availability of our imported raw materials for industry, which is more assured in an economy that is growing.
“Similarly, our manufacturing exports and tourism product will be more affordable in a growing international market than one which is in recession,” argues Issa.
“Moreover, the level of remittances is more assured and sustainable when the Diaspora economies are performing well.
“I must admit, though, I did not expect that level of performance by year-end, given the devaluation, high inflation and a cautious central bank which have engulfed the UK since mid-year.
“There has also been much uncertainty surrounding the Brixit negotiations from early in the year,” said Issa, who is an economics major from the London School of Economics (LSE).
Issa was commenting on an article in The Telegraph which reported that the UK economy accelerated this year to defy the gloomy forecasts.
It said, “Britain’s economy grew by 0.4pc in the third quarter and by 1.7pc on the year, an unexpectedly strong result which indicates the UK is proving more resilient than feared.”
The increase is said to have been driven by the sustained growth of household spending and expansions in the accounting, recruitment and retailing sectors – the strong performers in the dominant services industry.
Using numbers generated by the Office for National Statistics (ONS), it said manufacturers were also boosted by rising exports and sales of new car models.
Growth in Retail & Manufacturing
It cited Scotiabank economist Alan Clarke who reportedly said this augur well for overall GDP growth in 2017, defying expectations of a severe slowdown.
It said Clarke had previously forecast growth of between 1.5pc and 1.6pc but has since upgraded it to 1.8pc.
“It is quite a pleasant end to the year. The IMF got loads of headlines for downgrading their forecasts, but they are the Johnny-come-latelies, they should have waited for this data. It is looking better than we all thought.
“If anyone had said in the immediate aftermath of the Brexit vote that the economy would only slow from 1.9pc in 2016 to 1.8pc now, we would have been delighted with that,” Clark was quoted as saying.
He believes that growth will stay at similar levels in 2018 as the squeeze on incomes from inflation gradually fades, the article said.
According to the ONS numbers, “real household disposable incomes rose by just 0.2pc in the third quarter, while the savings ratio dipped to 5.2pc – one of the lowest levels on record over the past 20 years”, said the article.
“We are addicted to shopping, so we are spending out of savings, or we are borrowing more to maintain that level of spending growth,” Clarke added.
“Business investment also performed steadily, rising by 0.5pc in the third quarter – in line with the expansion in the previous three months, and marking the third consecutive rise in what has historically been a reasonably volatile index”, the ONS figures reportedly show.
This expansion is said to have been driven by investment in buildings and intellectual property.
Deloitte’s chief economist Ian Stewart reportedly hailed the positive GDP figures saying, “The UK’s performance has been rather better than the gloomy talk would suggest.”
He added: “Overall, growth has slowed modestly, not collapsed. Talk of an end to UK growth has been somewhat exaggerated.”
Stewart reportedly said that while a year ago the “near-universal view” was that unemployment would rise this year, it has instead “fallen by 150,000 and the jobless rate is at a 42 year low”.
“A whopping sterling devaluation certainly has squeezed spending power and incomes, just as you would expect, but it is also helped reboot manufacturing output.”
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