Diaspora outlook improves but it’s still rough

Dennis Morrison, Contributor

About this time last year, I wrote about the build-up of airport traffic of non-resident Jamaicans coming home to celebrate the Emancipation and Independence holidays with their relatives. Jamaicans look forward to this time of year for family reunions, which have become a niche market for our tourist industry as well. This year, the industry, especially in Kingston, will be even more keen to woo the diaspora traffic after the disruptive events of May and June.

But Jamaicans living in the United States are having, no doubt, to contend with the unusual uncertainties about job prospects, and the loss of wealth and other after-effects of that country’s worst recession in over 70 years. This has depressed consumer confidence and spending, as a record 14 million Americans are out of work and there is only one job for every five persons who are seeking employment. Hence, the mood of pessimism has persisted, even though the number of jobs being lost monthly has dropped sharply and there has been a decline in the national unemployment rate from 10.6 per cent in January to 9.3 per cent in May.

Encouraging news

An encouraging piece of news for Jamaicans who depend on relatives in the United States for financial support is that there are signs that the economy is picking up in those states and major metropolitan centres where Jamaicans are concentrated. The leading area, Florida, has seen a modest fall from the peak January 2010 unemployment rate, but at 11.2 per cent, it is still above the national average. The level in the tri-state area of New York, New Jersey and Connecticut is, however, now running significantly below January’s peak and is less than the current national average.

Of the three major countries of residence of overseas Jamaicans, Canada has fared best in the recession with a far less severe decline in the economy and rise in the jobless rate.

Recovery of the Canadian economy also resumed earlier and has been more robust, recording growth of 6.1 per cent in the first three months of this year. Importantly, nearly all the job losses during the recession were regained over the July 2009 to June 2010 period.

There are indications, however, that the pace of the recovery is slowing as growth in the second quarter fell to three per cent. This caused consumer confidence to slip in July, particularly with respect to employment prospects, despite strong job growth in the period up to June. In the province of Ontario, where the bulk of Jamaicans reside, the uptick in the job market has been particularly strong.

Our relatives in the United Kingdom, which was traditionally home to the largest overseas Jamaican community, have had a more difficult passage, as economic recovery started late and has been weak. The second quarter, however, showed surprising acceleration in growth to the fastest pace in four years, and the unemployment rate fell in May for the first time in more than a year. Nonetheless, households in that country are still feeling a significant squeeze in living standards as a result of the financial crisis. They are also facing impending tax hikes and cuts in public spending, which have been instituted by the new coalition government.

Outlook improving

So, the overall outlook for the Jamaican diaspora is improving, and if the economies of the US, Canada and the UK remain on track, then this should have a positive impact on our local economic situation. Evidence of this is not yet reflected in the traffic of returning Jamaicans, which was flat in the first four months of this year, and would have plunged in the aftermath of the west Kingston violence. Remittance inflows more reliably indicate changing economic conditions and are usually the earliest signal that the worst has passed.

In fact, starting last November, there was a slight increase in these flows after more than a year of decline. This has strengthened in recent months, and the latest update indicates that up to May, inflows were running at around US$71.0 million above the corresponding five-month period of 2009. Still, this means that we had regained only about a half of the loss of US$144.2 million when inflows fell from US$844.2 in the comparable period of 2008, to US$700 million last year.

This year’s Emancipation and Independence festivities may be dampened by the economic difficulties here at home, but we can anticipate that overseas Jamaicans will return in numbers as their economic circumstances are now improving. In the worst of times, they make great sacrifices to maintain their links and reconnect with their families and friends during this time of year. More so, this year, they will be curious to see how life is after the recent turbulence.

- Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.