Jamaica is out of econimic slump
KINGSTON – The Planning Institute of Jamaica estimates that Jamaica has exited the recession.
The State agency is projecting economic growth in the range of 0.5 per cent to 1.5 per cent for the current quarter, which ends September 30.
The PIOJ projects that growth seen in the mining sector in the second quarter of 2013 will continue through to September.
“There is an expected return to positive performance for most industries reflecting a resurgence in output following the impact of Hurricane Sandy,” said Colin Bullock, director general of the PIOJ, at the organisation’s quarterly press briefing held yesterday.
He figures that the continued roll out of growth inducing capital projects approved for the current fiscal year, which runs to next March, and restoration of investor confidence with the passing of the first International Monetary Fund (IMF) test, will also aid in boosting the economy.
Continued recovery in the global economy also factors in, and with expectation that Jamaica will end the year with growth coming from several fronts, including the Bank of Jamaica, the recovery in the domestic economy is expected to be sustained.
Up to July, Jamaica saw five consecutive quarters of economic decline, including the 0.4 per cent contraction reported for the April-to-June quarter.
Preliminary data for last month showed declines in electricity generation, airport arrivals and mining and quarrying.
But the PIOJ is projecting that the growth seen in mining in the second quarter of 2013 will continue through to September, as higher utilisation of alumina refinery capacity outweighs the reduction in crude bauxite production.
Lower global demand for bauxite and a dramatic fall in alumina prices were to be blamed for the five quarters of decline reported for the industry, before registering five per cent year on year growth in the three months to June.
Bullock did not hazard a guess on the outcome for the tourism during the current quarter, but his team and the planning agency expects that the “gradual abatement of drought conditions is expected to strengthen performance” when will lead to growth in the electricity and water supply industry.
Similarly, the agricultural sector is “expected to grow based on recovery in export crop production due to increased rainfall”, according to Bullock.
Contraction in agriculture started last October, but the decline didn’t wipe away gains made in the previous year. During the three months to June, the eight per cent decline in the industry was mainly attributed to a 44 per cent fall in exports of traditional crops.
More specifically, sugar cane and banana output were significantly lower than year-earlier levels – down 41.3 per cent and 57 per cent, respectively.
“This was partially offset by increased output recorded for Cocoa, up 15.1 per cent, and Coffee, up 143.8 per cent,” said Bullock.
The construction sector had already started to see recovery from January – it grew by 0.7 per cent in the first three months of 2013, and by 1.5 per cent in the second quarter, mainly as a result of higher levels of residential building construction.
Housing starts were up 219.6 per cent due mainly to increased activities by some of the major housing developers, while housing completions increased by 37.4 per cent.
Scaling down of activities of Mount Rosser Bypass, the completion of the Sandy Bay to May Pen leg of Highway 2000 last year, and fewer activities associated with the Jamaica Development Infrastructure Programme (JDIP) dragged a little on the sector in the second quarter.
But increased infrastructure work by the National Water Commission and a 224 per cent increase in spending on telecommunications networks helped prop up the industry.
Incidentally, the intensification of competition leading to lower user costs (and an increase in the number of minutes sold) in telecommunications is expected to spur growth in the transport, storage and communication industry.
That sector has been one of the few areas to have been consistently reporting growth since last July, but reduced activities at the Kingston Container Terminal and lower cargo handled across Jamaica’s ports led to a 0.2 per cent decline in the sector during the three months to June 30.
The PIOJ expects contraction in the finance and insurance services industry, which was recorded at 2.5 per cent in the June-end quarter, to continue through to September, reflecting a real decline in net interest income associated with the National Debt Exchange.
Manufacturing is also expected to continue to register decline in economic activity.
For the three months to June 30, the sector recorded its fifth consecutive quarter of decline, registering 0.4 per cent contraction.
Lower output of chemicals and chemical products (aluminium sulphate was down 57.8 per cent) and rubber and plastic products (other plastic products down 13.5 per cent) translated into a one per cent decline in other manufacturing.
Food and beverage manufacturing recorded flat performance. (Observer)