Using Reggae to Communicate Monetary Policy

(Bloomberg) -- The best-performing stock market in 2018 was an unlikely contender, and better known for its beaches than its economy. The Jamaican Stock Exchange sits on the waterfront in Kingston and has surged more than 300 percent over the last five years. Last year, the main index tracking the country's stock exchange rose 29 percent. That success for Jamaica has not stopped in 2019. In January, Fitch upgraded the island's debt to a B+ rating with a stable fiscal outlook.

On "What'd You Miss This Week", Scarlet Fu, Joe Wiesenthal, Caroline Hyde, and Romaine Bostick spoke with Jamaica's finance minister, Nigel Clarke, about this streak of success. He credited a series of fiscal and monetary reforms the country has taken. "Jamaica is emerging from a period of high debt and low growth over a long period of time," he said. "Now we're seeing growth at a level of two percent, and we've had sixteen consecutive quarters of economic growth, the longest such stretch of quarterly growth since we started measuring."

Economic numbers are not the only things coming out of Jamaica that have garnered global attention. The Central Bank of Jamaica, the world's other BOJ, has become something of a viral sensation online, by using the reggae music that the island is famous for to communicate monetary policy. Clarke said no one anticipated the videos to receive as much attention as they did, but was pleased with the effectiveness. "It's very important to communicate to the Jamaican people in the best way possible," he said. "When you're in Jamaica whether you're communicating about a glass of juice or beer or you're communicating complex monetary policy, music helps the communication effort."

Ruchir Sharma, the chief global strategist and head of emerging markets at Morgan Stanley Investment Management, joined to discuss why he thinks emerging markets are set for a reversal after "a lost decade" in which they returned almost nothing. Sharma, who manages fourteen funds with $3.9 billion dollars in total assets, explained why he thinks a potential trade deal between the U.S. and China is not going to be the "enduring story" for emerging markets. "I think that ex-China is much more interesting," he said.

Sharma said the real theme for the sector should be de-globalization, which China stands to be one of the "biggest losers" from. "I think that a lot of optimism in the trade deal is in the price," Sharma said. "But beyond that I think even markets know this, that this era of de-globalization is here to last for many years."

The Center for a New American Security has graded China's five-year-old Belt and Road Initiative. Daniel Kliman, a senior fellow for the national security think tank's Asia-Pacific security program, was one of the authors of the report and came on to talk about their findings. The report developed a list of seven risks for countries to check when evaluating infrastructure projects financed by Beijing.

"The Belt and Road is ultimately a geopolitical vehicle for China to pursue its ambitions," he said. "Knowing that, I would ask things like is this deal that I might enter into, is it going to uphold my sovereignty or undermine it?" The study focused on ten different projects. "Not one of them was problem-free," Kliman said.

The biggest indicator of the outcome was the country itself. "China would play by whatever the local rules were, and if there weren't a lot of rules, they would engage in practices that were problematic," he said. "Countries that have strong rule of law that tend to be wealthier, China had to play by the rules. The countries constrained what China could do."

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