Economy flatlines at 0.3 % cent growth

Economy grows 0.3 per cent for July to September quarter — PIOJ

BY KELLARAY MILES
Business reporter
milesk@jamaicaobserver.com

Wednesday, November 20, 2019

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The Planning Institute of Jamaica (PIOJ) in its latest review of economic performance has said that the Jamaican economy grew by an estimated 0.3 per cent in the July to September quarter relative to the corresponding quarter of 2018.

Speaking yesterday the PIOJ's quarterly press briefing on the performance of the macroeconomy for the quarter, Director General Dr Wayne Henry said that growth was driven mainly by increases in the finance and insurance services, hotels and restaurants and the manufacturing industries.

“All industries within the Services Industry grew during the quarter. The industries registering the largest growth rates were finance and insurance services at 3.0 per cent; hotels and restaurants by 2.3 per cent and other services by 1.5 per cent,” he said.

Dr Henry further reported while there was an estimated 1.6 per cent increase in output for the manufacturing industry, the goods producing industry contracted by 2.1 per cent in real value added. This resulted from declines in industries such as: Mining and quarrying by 18.5 per cent; construction by 1.5 per cent and agriculture forestry and fishing by 0.2 per cent.

He noted that some industries such as agriculture, forestry & fishing and electricity & water were negatively impacted by drought conditions.

Outside of this growth in other areas, the director general said was tempered by “the operational closure of the Alpart Alumina Refinery during the period, which resulted in a sharp contraction in the mining & quarrying industry.

The impact of the trade war between the USA and China which has resulted in the slowing of economic growth in some of the more advanced economies; negatively impacting Jamaica's demand for goods and services particularly in the mining & quarrying and hotels & restaurants industries.

The delayed start-up of some of the major infrastructure projects, challenges in implementation, including procurement delays and slow mobilisation also resulted in a slowing in growth, particularly for the construction industry, in which several projects that were initiated in 2018 or earlier have ended or are in the process of winding-down.”

Growth in the building construction component was, however, supported by an increase in the National Housing Trust (NHT) housing starts and work-in progress on previously started developments.

EMPLOYMENT INCREASES TO NEW HIGH

The review also indicated increased levels of employment by 31,000 to 1,254,100 people relative to July 2018, representing the highest level of employment ever recorded during a single month.

As at July 2019, 11 of the 16 industry groups recorded higher employment levels, including construction up by 7,500, public administration & defence; compulsory social security up 6,900 and real estate, renting & business activities, up by 6,200 people.

In the hotel and restaurants industry, an increase of 4.9 per cent in foreign national arrivals was also reflected. Total stopover arrivals grew by 5.3 per cent, reflecting stronger performance from the USA up 9.4 per cent to 449 829 people; Caribbean, up 8.9 per cent and Latin America, up 8.0 per cent. Cruise passenger arrivals, however, declined by 25.6 per cent to 218 962 persons, largely resulting in decreased arrivals to all major ports, including Ocho Rios, Montego Bay and Falmouth.

In terms of the overall gross domestic product (GDP) performance, the review noted that for the first nine months of 2019 (January- September); real GDP is estimated to have increased by 1.2 per cent.

“This reflected higher real value added for the goods producing industry, of 0.1 per cent and the services industry, of 1.6 per cent. The industries which recorded the largest increases during this nine month period were manufacturing (up 1.2 per cent); finance & insurance (up 3.3 per cent); and hotels & restaurants (up 5.3 per cent),” it noted.

OUTLOOK

Dr Henry in a short-term economic outlook moved to outline the prospects for the next quarter running from October to December. He projected that for this period there will be “an expected rebound in the agricultural industry following the contraction in this quarter, due to drought conditions, continued increase in finance, electricity consumption and tourism-related activities, anticipated intensification of major infrastructural works with the start-up of key residential and road construction projects and continued stability in the macroeconomic environment, evidenced by relatively low inflation and interest rates—which continue to drive increased investment and a general expansion in credit”.

“We expect real GDP for the October to December 2019 quarter to grow within the range of 0.0 to 1.0 per cent, resulting in a calendar year 2019 projection within a range of 0.5–1.5 per cent. For fiscal year 2019/20, the economy is projected to grow within the range of 0.0–1.0 per cent,” he closed in saying.


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