by Silbert Barrett
CANADA -The Jamaican Government pride itself on having one of the fasting growing stock markets in the world. But Stock Market growth must be linked to productivity gains and economic growth not just the growth in the foreign exchange rate spread.
Think we are overlooking economic fundamentals and instead hyping a stock market and values subsidized by Direct Remittance Investments.
For example, the rate of Capital Formation has not increased relative to the growth in stock values which is a huge indicator of risk.
Even when Jamaica’s GDP to Debt was 87% the growth rate was negative.
The government of Jamaica must find ways to unlock Private Sector Wealth to drive economic development beyond the confinement of equities and foreign exchange in the broader economy.
False Dichotomy of Jamaica Stock Market where the FX Rate Movement subsidized stock value from the inflow of Remittance. Jamaica has the fastest growing stock market in the world yet poverty increased by 16% according to Finance Minister.
Current monetary policies administered by the Bank of Jamaican (BOJ) point to a very interesting investment framework in which private capital for economic development of the broader economy is held exclusively in an almost perfect asymmetry defined within the overlapping boundaries of investment returns between the Jamaica Stock Exchange (JSE) and the Foreign Currency Exchange (FX) market Spreads in a bidirectional movement.
The rate of Capital Formation (Investments in Plant, Machinery, and Equipment) has not increased relative to the growth in stock values that a huge indicator of risk.
Since 1976 Total Household Consumption in the Jamaican Economy averaging around 72% GDP of which Direct Remittance Investment (DRI) impact accounted for 53% of total consumption spending. Household Expenditure outpaced Private Sector Investment (Capital Formation) by 4:1 which only accounts for an average of 23% of the same time period.
When we looked at financial and economic growth in developing and emerging markets the overwhelming evidence points to good governance as the basis for having a pronounced impact positively on GDP growth rate.
Hence it is about time that multilateral lending agencies start demanding governance conditionality, now that countries like Jamaica have achieved some degree of macroeconomic stability as a policy condition or else will be heading for another financial crisis as financial development is positively linked to the overall governance structure in the country related to good governance.
The greatest thing you could do to improve the lives of all Jamaican is to demand Diaspora Voting.
Giving the Jamaican Diaspora a vote will create a critical mass of well-informed voters who are independent enough to demand accountability hence ensuring governance conditionality.
In all cases, the vote is the only mechanism to facilitate Diaspora engagement and without it they won’t be accountable to the Diaspora on their investments.
