Government Spending Should Help Boost Economy Experts Say
Written by Claudio Mendonca on December 30, 2004
By Claudio Mendonca
Government spending and an influx of pharmaceutical-related business is likely to fuel Miami-Dade County’s economy next year, local experts say.
"I am optimistic 2005 is going to be a good year for us," said Bryan Finnie, president and CEO of Miami-Dade Empowerment Trust, an economic development entity.
He said he expects a big year in government spending, especially in building infrastructure and transportation projects.
Mr. Finnie said the county’s half-penny sales tax earmarked for transit improvements – collected since 2003 – should start paying dividends in transportation and workforce expenditures.
The county’s economy also could start to benefit from the sale of $2.9 billion in General Obligation Bonds.
"Moneys stemming from the General Obligation Bonds can be used in the construction of libraries, museums and infrastructure projects," he said. "It also can be allocated to the private sector so businesses such as hospitals can make capital investments."
Mr. Finnie also projected growth in pharmaceutical research, development and manufacturing.
With the interest of multinational companies such as Scripps Research Institute and MediVector, he said, similar industries are making decisions and inquiring about coming to Miami-Dade.
MediVector, a privately held drug development company in Cambridge, MA, is planning a pharmaceutical manufacturing company that would use graduates from the biopharmaceutical training institute to fill positions. The company plans to settle in the Liberty City area of Miami within two years. The industrial park it will call home is expected to provide nearly 1,500 jobs for workers ranging from pharmaceutical researchers to temporary construction workers.
Mr. Finnie said he is confident but cautious about the effect of the national economy on Miami-Dade. In the near future, he said, the county has enough momentum to sustain growth. By 2006, he said, the national scenario of war and the valuation of the dollar could have larger implications on the local economy.
One constant, Mr. Finnie said, is that the local economy will continue to depend on residential development.
With millions of real estate dollars still flowing into the area, Mr. Finnie said, he expects construction to grow, especially in southern Miami-Dade.
Consumer confidence is the reason Jaap Donath, vice president of research and strategic planning of the Beacon Council, said he is predicting economic growth in the county.
"Trade has improved, and we have had continued job growth and a decrease in the unemployment rate," he said.
Unemployment numbers for November are down to 5.7% from 6.8% in November 2003.
Mr. Donath said he sees growth in health care, education, government, retail and professional services.
Economists say the weakening of the dollar would be beneficial to the local economy in the short term – especially with euros flowing into the real estate market.
"With the stronger currency, Europeans end up having a 35% discount when purchasing properties," said Tony Villamil, CEO of the Washington Economic Group, a Coral Gables consulting firm.
But if the dollar continues to weaken, he said, the Federal Reserve Bank will have to step in and tighten monetary policy, which could result in continued interest-rate hikes.
"With a gross county product of $72 billion, Miami is very dependent on external factors such as interest and exchange rates," said Mr. Villamil.
Miami’s prosperity, he said, will be dependent on the strength of European and Latin American economies.
He said he expects the US economy to grow 3.5% and the Latin American to expand 4%.
With real estate construction as one of the pillars of the local economy, Mr. Villamil said, Miami is interest-rate sensitive. Though rates will increase, he said, they won’t affect local activity. "Housing might slow down a little," Mr. Villamil said, "but can be offset by stronger Latin American economies."