http://jamaica-gleaner.com/gleaner/20110904/focus/focus4.html
Published: Sunday | September 4, 2011 
Kevin O'Brien Chang, Contributor

'There are lies, damned lies and statistics,' goes one argument. 'It's easy to lie with statistics, but it's easier to lie without them,' says another. At any rate, numbers only mean anything when put in perspective, especially economic numbers.

Jamaica having 2.5 per cent inflation from January to June of this year, and our economy growing by 1.5 per cent in the first two quarters, doesn't really ring bells. But Jamaica having both lower inflation and higher GDP growth than the United States for the first half of 2011 makes you sit up and pay attention. When has this happened before, if ever? (Sources: BOJ, USBEA)

JA inflation: 2011 Jan-June 2.5%

US inflation: 2011 Jan-June 3.0%

JA GDP Growth: 2011 Jan-June 1.5%

US GDP Growth: 2011 Jan-June 0.7%

Cynics will say this doesn't mean much to people without jobs and who can't afford 'chicken back'. But even a child will understand that better basic economic numbers than the US signals sound financial management, and fiscal discipline is the mother of prosperity.

In fact, since about two-thirds of our tourists and remittances and exports come from and go to America, perhaps the best way to measure Jamaica's economic performance since 1962 is to compare our main indicators with those of the US. As they say, when America sneezes, Jamaica catches pneumonia. A corollary might be: 'When America gets fat, Jamaica smiles'.

Here are tables contrasting the average GDP per capita growth, inflation, and unemployment for both Jamaica and the US from 1963-2011. They are also broken down by administration: 1963-1972 (Bustamante/Sangster/Shearer), 1973-1980 (Michael Manley), 1980-1989 (Seaga), 1990-2007(Manley/Patterson/Simpson Miller), and 2008-June 30 2011 (Golding). [Each administration starts from the first full year in office. Sources: BOJ, USBEA, World Bank, STATIN, Nationmaster.]

The US figure is then subtracted from the Jamaican figure to get the differential for each period, which is then compared to the overall differential. See Table 1.

GDP growth

For the entire 1963-2011, Jamaica's GDP growth averaged 0.7 per cent, while the US averaged 1.9 per cent, meaning Jamaica grew -1.2 per cent slower than the US (0.7 per cent minus 1.9 per cent = -1.2 per cent).

From 1963-1972, Jamaica's GDP growth averaged 4.3 per cent, while the US averaged 2.7, meaning Jamaica grew 1.6 per cent faster than the US (4.3 per cent minus 2.7 per cent = 1.6 per cent).

So the 1963-1972 GDP growth differential was 2.9 per cent above the long-term average (1.6 per cent minus -1.2 per cent = 2.9 per cent [rounding factor]).

The GDP growth differentials by administration: 1963-1972 were 2.9 per cent above average, 1973-1980 was -5.0 per cent below, 1981-1989 was -.2 per cent below, 1989-2007 was 0.6 per cent above, and 2008-2011 was 0.7 per cent above.

In comparative GDP growth terms then, the 2008-2011 performance was second only to 1962-1972, and better than in order 1989-2007, 1981-1989, 1973-1980. True, the Jamaican per capita GDP declined by -1.2 per cent since the end of 2007. But since the US also declined by -0.6 per cent, the 2008-2011 differential was actually 0.7 per cent above overall average of 1.2 per cent. (-0.6 minus -1.2 = 0.7 per cent [rounding factor])

For the entire 1963-2011, Jamaica's inflation averaged 16.6 per cent, compared to 4.5 per cent for the US, meaning Jamaica's inflation was 12.1 per cent greater than the US's.

From 1963-1972, Jamaica's inflation averaged 6.8 per cent, compared to 4.3 per cent for the US, meaning Jamaica's inflation was 2.5 per cent greater than the US's.

So the 1963-1972 inflation differential was -9.7 per cent below the long-term average (2.5 minus 12.1 per cent = -9.7 per cent [rounding factor]).

The inflation differentials by administration: 1963-1972 was -9.7 per cent below average, 1973-1980 was 0.8 per cent above, 1981-1989 was -2.5 per cent below, 1989-2007 was 4.8 per cent above, and 2008-2011 was -3.8 per cent below. (For inflation and unemployment, less than average is good, and more is bad.)

So in comparative inflation terms, the 2008-2011 performance was again second only to 1962-1972, and better than in order, 1981-1989, 1973-1980, and 1989-2007.

Comparative unemployment terms

The 1981-1989 unemployment differential was 5.8 per cent above the long-term average, 1990-2007 was 1.4 per cent below, and 2008-2011 was 6.9 per cent below. (No numbers available before 1980). So in comparative unemployment terms, 2008-2011 was better than 1989-2007 and 1981-1989.

When the JLP took office in September 2007, the US unemployment rate was 4.7 per cent. It has almost doubled to 9.1 per cent, and been more than eight per cent for 30 consecutive months, a post-1930s Great Depression record. Bruce Golding has failed to create the promised 'jobs, jobs, jobs', but comparatively, Barack Obama has done even worse.

To sum up, when compared to the US in terms of per capita GDP growth, inflation, and unemployment, Jamaica has actually performed better from 2008-2011 than 1973-1980, 1981-1989 and 1990-2007. If you disagree, please argue with the numbers. (Mistakes are always possible, and if anyone finds discrepancies in these calculations, their corrections are welcome.)

Jamaicans are statistically poorer today than in 2007, yet times are tough in most Western economies, especially the English-speaking ones with whom we are closely intertwined. (Some naively talk about 'realigning with China and Brazil', but economic ties are strongly linked to geography and language, and take decades to develop.) Oil-rich Trinidad and commodity-endowed Australia and Canada have weathered the financial crisis fairly well. But the US, Britain and most of the Anglophone Caribbean have also suffered GDP declines since 2008. (Sources: World Bank, BOJ, USBEA, BBC). See Table 2.

With the global downturn making incumbents everywhere unpopular, it's no surprise to see the present government behind in the polls. Probably 80 per cent plus of ruling parties would be unseated if worldwide democratic elections were held tomorrow. Chile's president has a 26 per cent approval rating, and the Australian governing party trails by 20 points - and these are supposedly booming economies.

Whatever its errors, the Golding administration can boast four major accomplishments since 2010. The Jamaica Debt Exchange reduced the national debt-servicing burden by some 40 per cent. The homicide rate has been cut by a third. Air Jamaica and the sugar industry, which cost us hundreds of US millions annually, have been divested.

Other roadblocks to growth remain. Irresponsible energy policies have produced exorbitant electricity costs. Property rights, especially for small landowners, need regularising across the board. The ill-conceived forward selling of alumina to Glencore has cost taxpayers some US$250 million.

Jamaica entered the worst global economic downturn since 1930 with one of the world's 10 highest debt-to-GDP ratios. Poor management might have produced a situation like that in Greece - riots, strikes, looming default, more than 10 per cent GDP decline. Bad as things are, they could have been much worse.