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Senator Don Wehby’s Contribution to The Debate on The Bill Shortly Entitled The Appropriations Act,2022

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MARCH 25, 2022

Mr. President, I rise in support of the Appropriations Bill, 2022, which when passed will approve the estimates of Heads of Expenditure in the 2022/2023 budget.
I would like to commend the Hon. Minister of Finance & the Public Service, Nigel Clarke, on the work he has put into preparing the budget. I think the Minister has lifted the level of budget debate to another level which sets a new standard. His budget presentation under the theme Recovery, Reform and Restoration was supported by empirical data and deep analysis of the issues and for me instilled confidence for the management of the economy now and going forward, by this Government.

I would also like to thank Ms Darlene Morrison, the Financial Secretary, and all the Deputy Financial Secretaries for the hard work they put into each year’s budget. My comment about the Minister of Finance & the Public Service is also a reflection of the professionalism and expertise of the staff at the Ministry. I also want to recognise the BOJ, PIOJ and STATIN, and all the technical staff at the various Ministries for their continued commitment to producing the budget.

I would like to congratulate the Most Hon. Prime Minister on a very comprehensive budget presentation which addressed the main issues facing our nation at this time, and setting out the plans for securing a better Jamaica, for all Jamaicans by Sowing S.E.E.D.S of Peace, Opportunity and Prosperity. S.E.E.D.S. meaning
Security
Environment and Energy
Education and Skills
Development of Infrastructure
Social Partnership & Unity

It was a brilliant presentation and very much prime ministerial and visionary. In terms of the Security aspect of his presentation, I was happy to hear the update that Plan Secure Jamaica is being systematically and strategically implemented through the provision of technological, telecommunications, training, and other resources.

Mr President, I recall for the last two fiscal years we have debated the Appropriations Bill in the context of dealing with the impact of the COVID-19 pandemic.
Countries around the world are opening their economies and easing COVID-19 restrictions. Jamaica has followed suit as the Hon. Prime Minister recently announced the lifting of the DRMA order. I am cautiously optimistic that we have passed the worst of the pandemic. However, this year we are debating the budget in the context of new challenges.

Economic Recovery
The economy has been recovering from the impact of COVID-19 well ahead of most of our neigbouring countries. Economic growth, job creation, debt reduction has all seen positive improvements.
• In the 1st quarter of 2021/2022 fiscal year, the economy grew by 14.2%-the highest ever recorded quarterly growth rate in Jamaica’s history. The economy is projected to continue to grow during the upcoming fiscal year at a rate of 7-9%.
• The Tourism sector is on the rebound to 70% of pre-pandemic levels and the majority of other sectors have also seen improvement.
• Unemployment reached an all-time low of 7.1% in October last year.
• Debt to GDP ratio has fallen to 96% and is on track to reduce even further.
• Business confidence increased by 24% in the quarter ended December 21; and
• Net International Reserves are now at pre-pandemic levels—US$3.6 Billion as at February this year.

These macro indicators have supported Fitch’s affirmation of the country’s B+ sovereign rating and our outlook remains stable. Fitch has highlighted Jamaica’s consistent fiscal policy effort to reduce our stock of debt as a key factor in the ratings.
Achieving these growth rates will firmly place the economy on a path towards pre-pandemic levels. The Government’s leadership through nearly three years of the worst crisis we have ever seen must be commended.

Budget 2022/2023
Mr. President, the budget for FY2022/23 is expected to support recovery, facilitate reform, and foster restoration of the Jamaican economy.
Total expenditure for the 2022/2023 fiscal year is set at J$912 billion, a 9.1% increase relative to the prior fiscal year. Total income estimates of J$906.4 billion, a 12.3% rise compared to FY2021/22.

A budget deficit of J$5.6billion will be funded by cash reserves from prior years’ budget surpluses. My understanding is that budget deficit should have limited impact on inflation and interest rates. I appreciate the Minister of Finance clarifying an unfortunate interpretation of the budget figures by the Opposition where it was suggested that the Government would collect J$99 billion more in taxes during 2022/2023. It is extremely important for the Jamaican people to get the facts.

To compute how much more the Government plans to collect in taxes this coming year, one would have to subtract the latest estimated amount of taxes to be collected this year (2021/22) from the projected amount of taxes to be collected next year (2022/23).

The former figure is contained in the Second Supplementary Estimates tabled and passed in the House of Representatives in January 2022 which shows that estimated tax revenues for 2021/22 is approximately J$606 billion. This figure is included on Page 6 of the 2022/23 Fiscal Policy Paper. In addition, the Page 34 of the Fiscal Policy Paper summarizes the Second and Third Supplementary Estimates, inclusive of the expected revenue for 2021/22 of J$606 billion.
This compares with projected tax collection for 2022/23 of J$671 billion as contained in recently tabled budgetary documents. Tax revenues are therefore expected to grow by the difference between these two numbers, that is, J$65 billion.
So, in summary, the Government plans to collect J$65 billion more in taxes next fiscal year 2022/23 as compared with the current fiscal year 2021/22, without the imposition of any new taxes or tax increases.
The strong fiscal management performance of the government has resulted in the fifth year in a row that there will be NO new taxes.

Headwinds- Rise in Inflation and Commodity Prices
Mr. President, one of the main headwinds that in my opinion is a risk to reaching full pre-pandemic levels of growth is the increase in inflation globally and the uncertainty around the duration of global inflationary pressures.

The Governor of the BOJ and his team have been doing a good job in managing these pressures and I want to recognize him in this regard. Our situation is not dissimilar to developed economies such as the United States. The Federal Reserve launched a high-risk effort to tame the worst inflation since the 1970s, raising its benchmark short-term interest rate.

Proper fiscal management is key for us to navigate the choppy financial seas this year.

Mr President, I heard the opposition speak about the cost of living increase. But we have to place the rise in food prices in context of commodity prices. Global inflation is the highest it has ever been. United States’ inflation reached a 40-year high at 7.5%. The Russia/Ukraine war also has a significant impact on commodity prices.

Based on data I compiled from Business Insider and the World Bank, YOY 2020/2021 commodity price increases were as follows:

*Commodity 2020 2021
Corn (Maize) -3% 57%
Natural gas (US) -22% 92%
Soybeans 10% 43%
WTI Crude Oil -31% 73%
Brent Crude Oil -34% 67%
Wheat 8% 24%

These increases have gotten worse in 2022.
Russia and Ukraine are suppliers of about one third (1/3) of the global demand for wheat which has resulted in an increase in the cost of food items such as bread.

Mr President, when we are speaking to our nation, it is unfair to speak about increase in prices without putting in context why the prices are increasing, so Jamaicans can get a better understanding of the issues we are facing. I will speak to this later in my presentation, hopefully with some solutions.
As I listened to the proposal by the Opposition, I didn’t hear the analytics and empirical data to support what was being proposed.
Mr. President, today I refer to that as the “politics of promises” which is a knee jerk reaction to gain political popularity which has previously gotten us into trouble. For example, the Opposition’s proposal would cost 2% of GDP or J$40 Billion. The question that I must ask is how it is going to be financed. I would suggest that the only way to do so is to raise taxes or increase our debt stock which would spiral us into a bigger problem. Either way the most vulnerable will suffer the most.

So, Mr President, in my opinion, based on all that is happening in the global economy, the tensions in Europe, the discussion we should be having is around how we can become more self-sufficient as a country. I have said many times that we have to grow our way out of our debt problem. In crisis there is opportunity. With the rise in food prices we need to strategically focus our efforts on production to improve food security, raise productivity and create sustainable value-added food products. I have said it over and over that we need to set ourselves a target to cut our import bill from US$1Billion to US$500M by 2030. This is how we are going to cushion the effects of the rise in global food prices. We need to invest significantly more in agriculture, both for local consumption and export.

Debt to GDP Ratio
So, Mr President, earlier I raised the issue about increasing the stock of debt, I will say again, we cannot spend more than we earn and borrow our way to economic recovery. The future is too uncertain to take on more debt. We cannot afford another Jamaica Debt Exchange (JDX) or National Debt Exchange (NDX) restructuring. Our peers have Debt to GDP ratios that are still 10, 20, 30 and some even as high as 60 percentage points higher than their pre-
COVID levels.

A high level of debt results in tremendous debt servicing costs which makes the country susceptible to adverse shocks. A high level of debt increases macroeconomic uncertainty and lowers our ability to engender long term growth as public investment capacity is crowded out by debt service obligations. We have been on the precipice of disaster with respect to our debt to GDP—we cannot go back there.
The former Minister of Finance, Dr Peter Phillips’ did an excellent job in running the first leg of fiscal reform. Audley Shaw took the baton from Dr Phillips and passed it to Nigel Clarke who is doing and excellent job. We must continue to build on those wins, otherwise we will end up in a virtuous cycle of debt.
The key is to find the right balance between fiscal austerity and protecting the most vulnerable in our society. I commend the Minister of Finance for finding this balance with the budget.

Fiscal Commission
Mr President, on a previous occasion, in this House I indicated my support for the establishment of the Fiscal Commission, so that we can have in place a body that will provide the level of oversight and hold the Government accountable to staying on track to achieving the debt to GDP target. This will take away the temptation of “politics of promises” that has gotten us into significant trouble since independence. I noted the update from the Minister of Finance that plans are underway to appoint the Fiscal Commissioner within the 2022/2023 fiscal year. The Commission is not a “nice to have” it is an imperative to enhance the governance structure so that we can continue our path to economic independence.

Renewable Energy
Mr President, another important factor in building our country’s resilience, is reducing our dependence on Crude Oil which I just mentioned increased by 67% YOY 20/21. This significant increase has impacted electricity costs. I want to highlight the efforts of the Government to cover 20% of the JPS Bill for households that consume 200Kwh of electricity or less. This is an example of timely welfare targeting so that only those who are most vulnerable will benefit and the assistance is time bound. Mr President, we also need to incentivize a cultural change towards more renewable sources of energy and put the polices in place to effect the change.

Jamaica’s current usage rate for renewables is 13% and the Government’s target is to reach 30% by 2030 with possibility to formalize a 50% target. It is an ambitious target, but it can be done if we create the right policies the environment and incentives to achieve this objective. In Barbados for example businesses and homeowners engaged in the renewable energy and energy efficiency sectors benefit from energy tax incentives.
The Minister responsible for energy should report to the Parliament on an annual basis of how we are doing against the target and the actions being taken to stay on track.

Social Protection Initiatives
Mr President, I also wanted to note my support for the allocation of J$16.9 billion to the PATH Programme, to support the vulnerable sectors. This support will be provided through the PATH cash grant, Social Pension for the Elderly, Rehabilitation Grants, the Social Intervention/Youth Empowerment Strategy and the support for needy students. We care for all Jamaicans.

Capital Expenditure
Capital expenditure initiatives will stimulate economic activity by providing jobs and creating capital capacity earnings to fuel economic recovery. The total projected spend on capital expenditure for the upcoming fiscal year is J$65.1billion an increase of 20% YOY. Some of the major projects announced which I am pleased about include:
• Southern Coastal Highway Improvement Project
• Montego Bay Perimeter Road; and the
• Northern Coastal Highway

Mr President, in closing, I would like to again offer my support for the Bill and say that, our resilience as a country has been tested more than ever before but we have shown that we can get through this together and we will recover stronger.

Thank you, Mr. President

Entrepreneurship

Building a Business While Working a 9–5: The Real Hustle Behind the Dream

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Starting a new business is bold. Starting one while managing a full-time 9–5? That’s a different kind of brave.

For many aspiring entrepreneurs, the safety net of a full-time job provides stability while pursuing a passion project or startup dream. But make no mistake — it takes strategy, discipline, and an honest understanding of your limits.

Here’s what I’ve learned (and am still learning) as I straddle both worlds:

1. Time Becomes Your Most Valuable Currency
With only early mornings, lunch breaks, and late nights to spare, you begin to spend time like money. You’ll learn quickly that not every meeting is worth it, not every opportunity is aligned, and not every “yes” deserves your energy.

2. Boundaries Are Everything
Your job deserves your full attention during business hours. Your startup deserves its own sacred space. Without clear boundaries, burnout is inevitable and performance can suffer — in both areas.

3. You Don’t Have to Do It Alone
Whether it’s a co-founder, a freelance designer, or a virtual assistant, small investments in support can pay off big in time and sanity. And yes, your network is a secret weapon.

4. Progress Over Perfection
You won’t launch with the perfect website, the flawless pitch deck, or a viral brand — and that’s okay. The most important step is the next one. Small, consistent progress compounds.

5. Clarity Comes Through Action
You might start your business thinking it will go one way, only to find your true niche or product-market fit halfway down the road. That clarity won’t come from overthinking — it comes from doing.

Starting a business while working a full-time job isn’t about being superhuman — it’s about being deeply committed to a bigger vision while managing your current responsibilities with integrity.

To those in the thick of the hustle — keep going. You’re not alone, and you’re not crazy. You’re building something meaningful.
If you’re in this season too, I’d love to hear your story. What’s your business? What’s working? What’s not?

Let’s connect and support each other.

Rojah Thomas Co-Founder at Kree8 Hive!
Sales & marketing maven, passionate marketer with a love for sales. With over 8 years experience in the field, I offer a refreshing new age approach to marketing with a direct focus on sales and ROI.

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Business Insights

You Can’t Fix What You Can’t See: Why Jamaica Broilers’ U.S. Collapse Wasn’t Just Financial, It Was Strategic

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A supply chain leader’s take on how weak governance, poor integration, and reactive leadership cost Jamaica Broilers billions, and what Caribbean firms must do differently.

As a Jamaican-born supply chain executive working in the United States, I’ve seen firsthand how ambition without execution can quickly become a liability. That’s exactly what happened to Jamaica Broilers Group Limited. For nearly 70 years, JBG has been a symbol of Caribbean manufacturing excellence. However, in early 2025, the company announced its first quarterly loss in history, primarily driven by a $1.15 billion loss from its U.S. operations.

Recent news articles suggest that miscalculations in valuing inventory and biological assets contributed to financial losses. As a leader in operations, financial transformation, and supply chain audits, I can state:

This was not just a financial mistake. It was a strategic failure of systems, governance, and business leadership.

The Numbers Tell the Story

Based on regulatory filings and media reports from Our Today and the Jamaica Observer, here’s what went wrong:

  • JBG admitted to using “unsubstantiated accounting valuation methodologies” affecting inventories and biological assets
  • The company expects a material restatement of U.S. earnings
  • It recorded a J$1.15 billion quarterly loss, compared to a J$1.3 billion profit the year before
  • U.S. operating profit fell from J$2.98 billion to J$922 million over nine months
  • The entire U.S. leadership team was removed, including Stephen Levy, the CEO’s brother
  • External financial advisors were brought in, and reports were delayed twice before being released

This wasn’t an isolated oversight. It was a total breakdown in the systems that connect supply chain performance to financial truth.

Where the Strategy Failed

1. Operations and Finance Were Completely Disconnected

JBG’s misstatement of inventory and biological assets tells me one thing: Finance was not operating with real-time data from the supply chain. In an asset-heavy industry like poultry, valuation accuracy is directly tied to production yields, biological input tracking, and inventory turnover. If those systems are disconnected, your balance sheet is based on assumptions.

Insight: You can’t fix what you can’t see. Real-time inventory visibility is no longer optional, especially in a low-margin industry.

2. Governance Was Passive, Not Proactive

The issues in the U.S. operation were only uncovered during a quarterly review. This means that for months, the leadership based in Jamaica had no visibility into what was truly occurring. There were no warning signs, no escalation triggers, and no governance frameworks in place to identify these missteps earlier.

Insight: Foreign subsidiaries must be governed as extensions of the enterprise, not as independent silos. Operational governance is not a meeting, it is a system.

3. No Strategic Positioning in the U.S. Market

JBG tried to enter the U.S. poultry market as a mainstream player. No diaspora segmentation. No culturally driven SKUs. No unique value proposition. That meant they were competing directly with industry giants like Tyson Foods and Sanderson Farms, with no brand edge or pricing power.

Insight: In the U.S., don’t compete on commodity. Compete on culture, value, and customer alignment. JBG ignored the Caribbean diaspora, and with it, a major advantage.

4. Overexpansion Without Standardization

JBG operated two facilities in the United States, located in Iowa and South Carolina, without a unified operational model. The systems were not standardized, and the processes were not synchronized. The resulting consequences were significant.

  • Ballooning operating expenses
  • Fragmented performance metrics
  • Reduced supply chain efficiency

Insight: Expansion is not growth unless it is built on a repeatable model. Two facilities without one process is not scale, it is confusion.

What They Still Haven’t Fixed

Despite public admissions and leadership changes, JBG has not yet addressed:

  • Whether it will consolidate operations under a single facility
  • How will it implement diaspora-driven branding and product segmentation
  • What new controls are being put in place for real-time operational audits
  • How will its ERP or financial reporting systems be upgraded

The response remains focused on personnel. But this was never just a people problem. It was a process problem.

My Recommendations for Caribbean Firms Entering the U.S.

As someone who has optimized supply chains, here is what I recommend:

1. Integrate ERP Systems Across All Operational Units

Ensure that inventory data, production yields, and cost accounting are aligned and communicate effectively with one another daily.

2. Establish Governance With Clear Escalation Protocols

Don’t wait for quarterly reports. Build monthly audits, early-warning triggers, and local compliance reviews into your operations.

3. Build With Culture at the Center

Diaspora markets are not just nostalgic, they are loyal. Own that connection with specialized SKUs and targeted marketing.

4. Standardize Before You Scale

Replicate only what works. Make sure your first location operates with precision before opening a second.

5. Tell the Truth Sooner

Market trust is built on clarity. Communicate failures transparently, and show the systems being built to prevent recurrence.

I’m not writing this to criticize JBG. I share this because I’ve witnessed this narrative repeatedly. This was a billion-dollar lesson, highlighting the need for Caribbean businesses to prioritize operational discipline over mere optimism when expanding into the U.S.

Financial breakdowns start as operational blind spots. Visibility isn’t a luxury—it’s the foundation of trust.

Jermaine Robinson, MBA, CSCP
Strategic Supply Chain Leader | Global Logistics & Distribution Leader | Driving Operational Excellence & Digital Transformation

The views and opinions expressed are those of the author/s and do not necessarily reflect the official policy or position of companies or clients for whom the author/s are currently working or have worked. Any content provided by the author/s is of their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.

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Leadership Conversations

Why Some CEOs Resist the Concept of Buy-In

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In my years of working with CEOs during strategic planning, I’ve noticed a surprising resistance among some leaders to the concept of buy-in. To these CEOs, seeking input or engagement from employees feels like a sign of weakness. They believe leadership should be about mandating change and that buy-in dilutes their authority. This resistance, while common, often undermines the very success they aim to achieve through strategic planning.

The CEO’s Perspective on Buy-In
For many CEOs, strategic planning aims to create change—often significant, organization-wide change. They understand that change is difficult and frequently met with resistance, particularly from employees accustomed to the status quo. However, their response is often to mandate change, dismissing the need for employee involvement.

This approach stems from the belief that engaging employees in the planning process equates to surrendering control or being held hostage by their resistance. Confident in their vision, these CEOs view buy-in as an unnecessary hurdle, preferring to impose decisions with a “comply or leave” mentality.

The Case for Buy-In
My counterargument is simple yet profound: decisions are only effective if they are supported by those who must implement them. Dr. Robert Zawacki of the University of Colorado articulates this well in his book Transforming the Mature Information Technology Organisation. He argues:

Effective Decisions = The Right Decision X Commitment to the Decision (ED = RD x CD).

This formula highlights that even the best decisions will fail without the commitment of those responsible for implementing them. Commitment doesn’t arise from compulsion—it comes from understanding and shared ownership.

The Power of Participation
Engaging employees in the planning process fosters a deeper understanding and greater alignment. When employees are involved in crafting the parts of the plan that impact their work, they are more likely to accept and embrace the required changes. It aligns with the adage:

“If they create it, they understand it. If they understand it, they commit to it.”

Participation doesn’t mean ceding control; it means building a coalition of committed individuals who will champion the plan’s execution. Buy-in transforms resistance into ownership, turning a potential liability into an asset.

The Bottom Line
CEOs who dismiss buy-in as a weakness fail to see it as a tool of strategic strength. Leadership is not just about creating the right plan—it’s about ensuring that the plan succeeds. Engaging employees is not a concession; it’s a strategy for building commitment, aligning efforts, and achieving lasting change.

Buy-in isn’t just a nice-to-have; it’s the multiplier that turns the right decisions into practical actions.

 

 

 

 

 

 

Ronnie Sutherland
Managing Partner – Strategic Solutions Limited.I am a strategic planning facilitator ready to guide you through your next strategic planning process.”

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Businessuite News24

Finance Minister Highlights Middle Managers’ Key Role in Jamaica’s Economic Growth

“As Minister, I see every day how important strong leadership is to sustaining the progress we’ve made in stabilising our economy, attracting investment and opening new opportunities for our people,” Mrs. Williams said.

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Minister of Finance and the Public Service, Hon. Fayval Williams, has underscored the pivotal role middle managers play in driving Jamaica’s economic progress.

“As Minister, I see every day how important strong leadership is to sustaining the progress we’ve made in stabilising our economy, attracting investment and opening new opportunities for our people,” Mrs. Williams said.

She declared that middle managers are “the energy that gets things done” as they move their companies along, exhibiting true leadership that shapes the transformation of teams and influences the drive towards national development.

“[True leadership] is the consistent demonstration of values, authenticity and strategic focus that leaves behind a real legacy… one not written in résumés but in lives changed, organisations built, and futures secured. I know that you know that titles may grant authority, but only influence grounded in service, discipline and integrity builds the trust that moves countries like Jamaica ahead,” Mrs. Williams said.

Minister of Finance and the Public Service, Hon. Fayval Williams (second left), converses with (from left) Director, Montego Bay Chamber of Commerce and Industry, Donovan Chen-See; Managing Director, Make Your Mark Consultants (MYMC), Dr. Jacqueline Coke-Lloyd; and Bishop Dwight Fletcher, during the MYMC two-day Middle Managers’ Leadership Conference at The Jamaica Pegasus hotel on Tuesday (April 29). Mrs. Williams delivered opening remarks.

She was addressing stakeholders on day one of the Make Your Mark Consultants (MYMC) two-day Middle Managers’ Leadership Conference at The Jamaica Pegasus hotel in New Kingston on Tuesday (April 29).

Mrs. Williams noted that strategic and decisive leadership is especially critical in navigating current global uncertainties.

“In today’s increasingly dynamic global trade environment, Jamaica’s agility or ability to move swiftly, decisively and strategically is essential for national success; and at the execution level, it is you, it is our middle managers who drive that success.

You’re the ones ensuring that vision becomes reality, solving problems, coaching teams, delivering results and adapting to change with confidence and clarity,” she contended.

The Minister further pointed out, “In a Jamaica that is growing steadily stronger with sound leadership, prudent economic management, historic low unemployment rates, a transparent inflation-targeting regime, real investments in education, infrastructure, and innovation, it is clear that, as a country, we are on the right path.”

Meanwhile, Mrs. Williams lauded MYMC for organising what she described as the premier management conference in Jamaica, noting that the event is critical as Jamaica navigates an increasingly complex global economy.

She noted that this year’s conference theme – ‘A Legacy of Change, Transformation and Execution’ – is apt for the occasion.

“It reminds us that leadership is not about titles, offices, or positions. It’s about action [and] the courage to move when others hesitate. It’s about vision… the ability to see beyond today’s challenges and into tomorrow’s possibilities. Most importantly, it’s about influence – the ability to inspire people to believe in a cause greater than themselves, to push past limits to build institutions that will stand the test of time,” the Minister emphasised.

Mrs. Williams encouraged the participating middle managers to take advantage of the conference by actively engaging in the discussions, learning from the experts, sharpening their skills and strengthening their networks so they can be better and stronger leaders, driving Jamaica’s continued growth and transformation.

By: Donique Weston, JIS

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Leadership Conversations

Reinvigorating Global Growth through Productivity Reforms – Nigel Clarke

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Distinguished guests, ladies and gentlemen, good morning. I want to thank the China Development Forum for inviting me to speak today. It’s an honor to be here, especially as this marks my first visit to China since joining the IMF.

This is the Year of the Snake—a year of renewal and transformation. A fitting symbol, given the pace of change around us.

Patterns of trade and capital flows are shifting. AI is rapidly advancing. Trade is no longer the engine of global growth it used to be. Divergences across countries are widening. And governments worldwide are shifting their policy priorities.

Meanwhile, global growth is steady but underwhelming. Our five-year ahead growth forecast remains at 3.1 percent—well below the pre-pandemic average of 3.7 percent.

This is largely due to declining productivity growth. Total factor productivity, which measures the ability to create more outputs with the same inputs, has been growing at a slower pace since the 2008-09 global financial crisis.

Reviving medium-term growth

My focus today, therefore, is on how to revive medium-term growth. The path to success lies in pursuing structural reforms to raise productivity.

This applies to all countries. In ageing societies—where the share of the working-age population is shrinking—productivity growth has a vital role to play in maintaining living standards.

It also applies to emerging market and developing economies trying to close the gap with richer countries. To provide better jobs and a higher stand of living, they too need to ignite productivity growth.

Without ambitious steps to enhance productivity, global growth is set to remain far below its historical average.

So, what can we do? Let me focus on two priorities that are especially relevant for Asia.

First, innovation. We know that productivity growth increases with technological advances—advances made possible through investments in research and development, a proxy for innovation effort.

Technology transfer, scientific collaboration and policies that fund basic research can foster the kind of innovation we need for long-term growth. And can have a sizeable impact when combined with closer public-private cooperation. In fact, our research shows that productivity growth in advanced economies can increase by 0.2 percentage point a year with a hybrid policy that boosts public research expenditure by a third and doubles subsidies to private research. Because these are average numbers only, the increase could be even higher in emerging markets and developing countries.

Investments in AI are a case in point. No longer an emerging technology, AI is beginning to revolutionize industries and reshape economies. We estimate that AI could boost global GDP growth between 0.1 and 0.8 percentage points per year in the medium term, depending on how it is adopted.

Second, boosting productivity through better resource allocation. The movement of labor and capital toward more productive firms and industries has long been an important source of overall productivity growth. As workers move from farms to factories, for example, their productivity increases dramatically. So too do their income and living standards, with spillovers to the whole economy.

There are many ways countries can achieve a better allocation of resources, including by implementing policies aimed at increasing the mobility of workers, such as re-skilling programs. And more importantly, by strengthening market forces, which create the necessary incentives, through prices and wages.

Asia provides an example of how such reforms can fuel growth. Over the past few decades, Asia prospered as employment and production moved from agriculture to manufacturing. Now, the region contributes over 60 percent of global growth, and is home to some of the world’s largest, most innovative companies.

Continued success, however, requires continued reforms.

Reforms such as strengthening the private sector. Entrepreneurs drive creativity and innovation, investing in sectors with the highest returns. To create the environment they need to thrive, it’s important that there’s a level playing field between the private sector and state-owned enterprises.

For many Asian countries, including China, reforms also involve expanding the services sector.

Services are a potentially important new source of growth. The sector has already drawn about half of the region’s workers, up from just over a fifth in 1990.

And productivity in some services sectors is high. In fact, our analysis shows that Asia’s labor productivity in financial services is four times higher than in manufacturing, and it’s twice as high in business services.

China

In China, reallocating resources to services would have another important benefit: by creating jobs and increasing incomes, it could help boost consumption. A welcome goal that is also a top priority of the government.

While household consumption as a share of GDP in China has risen, it is still among the lowest compared to OECD countries. A sustained increase in consumption’s share of GDP could lead to continued rapid gains in living standards and provide a welcome lift to global demand. This rebalancing of demand also requires reforms to reduce the need for precautionary savings, especially by middle- and lower-income households.

Overall, our analysis suggests that a comprehensive package of reforms to boost consumption and lift productivity could raise China’s potential growth by about 1 percentage point per year over the medium term. That translates into a level of GDP that is close to 20 percent higher than our baseline by 2040.

The IMF’s role

Through our policy advice, lending and capacity development, the IMF has consistently supported countries in establishing macroeconomic and financial stability as a foundation for growth.

To further help in this endeavor, we have formed a new IMF Advisory Council on Entrepreneurship and Growth. The goal is to get new ideas on how countries can ease regulatory barriers, adapt tax systems to a more business-friendly environment, and incentivize long-term savings, so countries have more to spend on innovation.

In this Year of the Snake, let’s embrace change and focus on reforms and policies to revive growth. This will lead to better prospects for people everywhere.

Thank you.

Remarks by International Monetary Fund Deputy Managing Director Nigel Clarke at the China Development Forum
Beijing, China, March 23, 2025

https://www.imf.org/en/News/Articles/2025/03/23/sp032325-dmdclarke-chinadevtforum?s=03

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