FINANCE AND Planning Minister Dr. Omar Davies said that whichever party forming the next government would face major challenges with earnings tourism and the bauxite and alumina industry, primarily because of the sluggishness of the United States economy during the past year.

Noting that the United States economy has not recovered as many had predicted, the Minister said the performance in its stock market (see story, D6) mirrored a general uncertainty about the future in that country.

The performance of the US economy, he said, was partly, but not totally related to the after effects of the September 11, 2001 terrorist attacks on the United States, which have continued longer than anticipated. However, that performance would continue to have an effect on the performance of the local economy.

Speaking at a breakfast presentation hosted by Citibank's Citiservice at the Terra Nova Hotel in St. Andrew yesterday, Dr. Davies said that "as long as there is this concern about travel, as evidenced in the present problems facing every single major airline in the US, whether it be United, American, US Air, that doesn't speak well for our tourism."

He said that while Jamaica may seek to garner a larger percentage of the tourism market, "the fact is, the overall pie is not growing in terms of international trade as we had projected." The Minister said that whatever growth there may be, the US domestic tourism market would absorb a larger percentage. "That is a challenge which faces us, both in terms of foreign exchange earnings as well as insurance of employment," he said.

Dr. Davies said that although Jamaica has done better in the context of that uncertainty than many other countries, "in doing better one of our strengths is also our weakness in the sense that Jamaica's tourism product is more intricately linked to the rest of the economy than say Bahamas or Barbados" since the downturn in tourism has also impacted agriculture and manufacturing.

"So that's one reality that we have to face and whichever party forms the next Government, the issue is how do we carve out a bigger slice of a pie, which is not growing at the rate we anticipated in the tourism sector," said the Finance Minister.

Dr. Davies said the sluggishness of the US economy also implied that demand for a product such as alumina would suffer. The extent to which that would impact on Jamaica's industry clearly has implications in terms of plans for expansion and foreign exchange receipts, he added.

A third factor, he said, related to the fact that Jamaica was 98 per cent dependent on imported fuel and the country would have to accept the product at whatever price it was being sold on the international market. Among other effects, he said, that has implications for the balance of payments.

Those were three major challenges which any new administration would have to face, he said