The decline in the value of the Jamaican dollar replaced crime as the major concern for businesses in determining their investment decisions.
Since 2001, when the first quarterly Jamaica Chamber of Commerce (JCC) Business and Consumer Confidence Survey was done, crime has almost always held the first place in the list of disincentives to doing business locally.
But yesterday, Don Anderson, managing director of Market Research Services, who released the findings of the latest quarterly survey at a media briefing, noted that during the July to September period, it was the exchange rate that was most problematic.
“The data does clearly indicate … that crime is still a big deterrent, it is just that the devaluation of the dollar in this particular quarter is of heightened concern,” said Anderson.
“But both of them are big elements in business decisions,” added Anderson.
For JCC President Larry Watson, there should be no surprise that the movement in the price of the dollar was a major consideration for businesses during the quarter based on the uncertainty in the foreign exchange market in the period the survey was done.
“We started the year with an exchange rate of $125 (to the US dollar) and that rate was quite consistent with ups and downs. We got complacent at $125,” said Watson, as he noted that the rate started to creep in June and reached J$128 to US$1 during that month.
“In July, it ended the month at $130.16. Now remember the survey started July 6 to September 25, and at the end of August, the rate was $135.48, and within that time … over a six- to eight-week period, there was a run in the (value) of the dollar and there was a hesitancy to react by the Bank of Jamaica, because, in their minds, they had moved from foreign exchange rate targeting, to inflation rate targeting.”
“What you are seeing on one hand is that businesses, the dollar moved too quickly to keep them comfortable, and that disrupted the confidence,” added Watson.
He argued that the recent actions of the central bank should restore some confidence to the market, and it would be interesting to see the reaction of the business community when the next survey is done.