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Jamaica: Economic reform program tames inflation – BoJ Governor Wynter
Bank of Jamaica Governor, Brian Wynter. PHOTO/Jamaica Gleaner
The Governor of the Bank of Jamaica, Brian Wynter, has praised the Simpson-Miller administration’s economic reform program (ERP) saying it has helped keep inflation to a low despite significant economic shocks over the past 2 years.
According to Wynter, inflation remains in single-digit, at 8 percent, and has trended down between September last year and the end of June this year.
He told the Bank of Jamaica’s quarterly media briefing that this has resulted from the transformation taking place under the ERP that aims to spur economic growth; contribute to reducing the country’s public debt; maintain the country’s balance of payments schedule; and enhance its global market competitiveness.
Wynter said that headline inflation stood at 8 per cent at the end of June 2014, down from 8.8 percent from the corresponding period last year.
“Not least of the shocks that occurred during the period was the 13.3 percent and 10.8 percent depreciation in the exchange rate in the last 2 fiscal years, respectively.”
Wynter noted that the strong fiscal conditions created by the reform program were among some of the factors which accounted for this resilience, resulting in producers and retailers unable to pass on to consumers the impact of some of these shocks – especially the exchange rate depreciation.
“In the productive sector, especially in agriculture, which has a significant impact on inflation, there were significant improvements in efficiency and output, with the advent of supply-side initiatives, such as the agro parks,” he added.
Wynter emphasized that maintaining the current stance of fiscal discipline will continue to temper the emergence of excess domestic demand, and thereby deepen the economy’s resilience. He noted that the preservation of economic stability, together with the maintenance of recent gains in external price competitiveness, will allow the productive sector to grow faster, led by exports and competitive import substitution.
“I think in addition to these, from an inflation perspective, are the expectations of the public, which represent a critical factor in managing inflation in a market economy like Jamaica’s. If we are going to achieve our objectives, we have to pay careful attention to these expectations.” -(CMC)