Quarterly Jamaica Diaspora & Returnee Update — April to June 2008

Published: 2 July 2008 | Jamaica Homes News

Key Takeaways

• Obama Clinches Democratic Nomination, Defeating Hillary Clinton
• Oil Prices Break Above 130 Dollars Per Barrel
• Global Food Crisis Squeezes Remittance-Dependent Families in Jamaica
• Jamaica’s JLP Government Settles Into Its First Full Quarter
• UK Economy Shows Serious Signs of Slowdown
• Caribbean Diaspora Voters Mobilising for November’s Historic Election

Introduction: The Primary That Defined a Generation

Q2 2008 was defined, for the Caribbean diaspora, by the resolution of the most contested Democratic presidential primary in modern history and by the global commodity price crisis that was compressing real incomes in Jamaica and across the developing world. As we publish on 2 July 2008, the Beijing Olympics are six weeks away and the November election is four months distant: the diaspora is living through a summer of political anticipation and economic anxiety in almost equal measure. This update draws on Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and Caribbean diaspora media through 30 June 2008.

Obama vs Clinton: The Primary That Changed Everything

Barack Obama’s clinching of the Democratic presidential nomination on 3 June 2008 — achieved on the final night of primary voting, following a primary campaign of extraordinary length, intensity, and historical significance — produced reactions in Caribbean diaspora communities that ranged from elation to relief after a contest that had, in its most heated moments, exposed tensions within the coalition that Obama would need to win in November. The primary’s racial dimensions — Obama’s overwhelming support among Black voters, the explicit and implicit racial appeals that had characterised some of the campaign’s most contested moments, and the unprecedented position of a Black man as the presumptive nominee of a major American political party — had engaged Caribbean diaspora communities in both the US and UK with unusual political intensity for a primary season.

For Jamaican-American community organisations that had been running voter registration drives since early 2008, the nomination’s confirmation sharpened the focus from the primary’s community-dividing contest to the unifying general election challenge. The November election — Obama against the presumptive Republican nominee Senator John McCain — was now the priority. Caribbean-American community organisations in Florida, New York, New Jersey, and Georgia were among the most active components of the broader voter registration coalition.

In the United Kingdom, British-Jamaican community interest in the US Democratic primary had been intense and largely pro-Obama, reflecting both the community’s historical alignment with progressive politics and the particular resonance of a Black candidate’s credible challenge for the world’s most powerful political office. Caribbean community media in the UK had provided extensive primary coverage, and the community’s response to Obama’s clinching of the nomination was one of collective celebration even though British residents had no vote in the American election. The significance of the moment was understood as transcending national political boundaries.

Oil and Food: The Twin Commodity Crises

The global oil price hit an intraday high of $147.27 per barrel on 11 July 2008, in the days just after this quarter’s close — but the price’s trajectory through Q2, moving from approximately $100 in April to over $130 in June, was already having severe downstream effects. For Jamaica, a net oil importer with a large oil import bill relative to GDP, the price surge was directly damaging to the current account, to the cost of domestic energy, and to the transport costs that flowed through the entire economy. Electricity tariff increases, transport fare increases, and rising food prices — driven partly by the higher cost of transporting food — were compressing real incomes for Jamaican households at every income level.

The global food price crisis — in which the FAO food price index had risen by over 50 per cent in the preceding year, driven by drought, biofuel demand for grain, and speculative financial flows into commodity markets — was superimposed on the oil shock. For Jamaican families dependent on remittances, the combination was severe: remittance purchasing power was falling even when the dollar amounts transferred remained stable, because the staple food basket’s cost had risen sharply. Diaspora households sending to Jamaica were being asked to increase transfers to maintain the same purchasing power, at precisely the moment when rising fuel costs and the early signs of the US financial stress were beginning to compress diaspora household incomes.

Jamaica’s Golding Government: First Quarter Assessment

The Jamaica Labour Party government of Prime Minister Bruce Golding, which had come to office with its one-seat majority following the September 2007 general election, was completing its first full quarter in office. The government’s early priorities — economic stabilisation, crime reduction, and governance reform — were being tested against the difficult external environment of the commodity price shocks. Golding had brought a reformist and technocratic disposition to governance, and his early appointments had been received with cautious optimism by diaspora community organisations that had been critical of the PNP’s last years in office.

The diaspora investment community was watching the new government’s macroeconomic management with interest. Jamaica’s debt-to-GDP ratio remained among the highest in the world, and the global financial market stress that was already visible in the US housing sector raised questions about Jamaica’s external financing conditions. For returnee-intending diaspora members who had been building Jamaican financial assets and property positions, the macroeconomic environment’s evolution would determine the timing of their return decisions. The 3rd Biennial Jamaica Diaspora Conference, scheduled for June 2008, had just concluded and produced a further set of returnee facilitation recommendations for the new government to consider.

The UK: Slowdown in British-Jamaican Communities

The UK economy was showing increasingly clear signs of the slowdown that would become a recession by the year’s end. House prices, which had been rising for over a decade, were now falling month-on-month. Northern Rock’s nationalisation in February — the first UK bank run in 150 years and the first bank nationalisation in decades — had shaken confidence in the financial system. Mortgage lending was tightening significantly, affecting the remortgaging and property investment activity that significant numbers of British-Jamaican households had been pursuing through the house price boom years. Community organisations were beginning to see increased demand for debt advice and mortgage payment assistance.

We look ahead to a quarter that will contain the Beijing Olympics — where Usain Bolt and Jamaica’s sprint team are among the most anticipated performances of the Games — and the accelerating US financial crisis. We report next from 2 October 2008.

This Quarterly Jamaica Diaspora and Returnee Update is researched and published by Jamaica Homes News. Sources include Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and PICA. All figures and developments are accurate as of the publication date, 2 July 2008.

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