Jamaica is among a select group of countries in the region being eyed for investment by executives of Scotiabank Capital, the investment arm of Scotiabank International based in New York.
Last week, the lead investment executive of Scotiabank Capital with responsibility for the Caribbean and Latin American region flew into the island with a small team for a brief meeting with key personnel from Scotiabank Jamaica executive management team. The meeting also included local financial and political analysts, as they assess Jamaica’s climate for foreign investments.
Joe Kogan, head of Latin American Strategy at Scotia Capital, said Jamaica’s improving fiscal position and favourable economic outlook upon completion of the recently concluded International Monetary Fund economic reform programme were the factors that influenced consideration as an ideal destination by their international investment clients.
Kogan, in his meeting, acknowledged Jamaica’s success at fiscal consolidation and overall economic improvement under the IMF programme. However, he was concerned about anaemic GDP growth, the high crime rate and the imminent general election.
But Dr Adrian Stokes, senior vice-president of Scotiabank Jamaica, explained that the Jamaican economy is currently in recovery mode. He stressed that the island’s economic base is now rebuilding after the economic crisis of 2008, which accounts for the limited GDP expansion despite significant fiscal consolidation and improving macroeconomic indicators.
“Just to put it in perspective, we are pretty much at the level of real GDP that we had 10 years ago. A lot of what you have seen is significant recovery going back to the pre-crisis peak (2008) of real GDP. A lot of work now is on the next leg of the economic trajectory which is to get greater levels of growth,” Dr Stokes explained.
Commenting on the improvement of Jamaica’s fiscal accounts, he said: “With that fiscal consolidation and the Government’s reduced appetite for borrowing and the central bank being able to target inflation as their monetary anchor, what we are seeing is significant downward pressure on local interest rates in line with what we would have seen in other places across the world like in the US … So Jamaica has benefited significantly from that reduction in interest rates.”
The Scotiabank Jamaica senior vice-president explained further that the reduction in interest rates pushed investors to the real estate and the equities markets.
“That has given significant upward movement in asset prices, in particular real estate and the local equity markets, and in some cases we are seeing solid companies doing really well,” Dr Stokes told his colleagues from Scotia Capital.