Business

PIOJ eyes 13-year high growth of 2% for Q2

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Friday, May 24, 2019

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THE Planning Institute of Jamaica (PIOJ) has high hopes for economic growth to hit 2 per cent for the second quarter ending June 2019, following 12-year high growth levels for the quarter January to March 2019.

Growth in the upcoming quarter is anticipated to come from the construction industry, hotels and restaurant industry and the mining and quarrying industry.

All three industries were named as top contributors to growth for the first quarter which ended at 1.5 per cent, and also marked the 17th consecutive quarter of growth for the country.

If materialised, the out-turn of the first quarter would bring Jamaica's growth rate for fiscal year 2018/19 to 1.9 per cent — the strongest fiscal year growth since FY 2006/07, according to director general of the PIOJ, Wayne Henry.

The target of 1.5 per cent to 2 per cent growth by the PIOJ for the April to June quarter seems already on track, as preliminary data indicates that airport arrivals increased by 13.1 per cent for the month of April while alumina production increased by 11.5 per cent.

For the first quarter ending March, growth was spurred by a 10 per cent increase in Jamaica's mining and quarrying operations, from increased production at Alpart; and a 7 per cent growth in the hotels and restaurant industry led by an increase in foreign national arrivals, up 13.4 per cent to 668,185 persons from the USA, Canada and Europe.

The country's construction industry also experienced growth of 3.5 per cent, reflecting increased activity in both the building construction, as well as increased civil engineering activities associated with road construction and rehabilitation.

During a press briefing on Wednesday to update the nation on the first quarter performance, Henry noted that the positive out-turn largely reflected the impact of increased demand from both major trading partners, tourists and locals as business and consumer confidence across continues to trend upward.

The increases in both external and domestic demand were facilitated by an expansion in hotel room stock, air seat capacity and flight frequency; higher capacity utilisation, especially in the mining and quarrying industry; an uptick in loans and advances to the private sector; and major infrastructure works, including road rehabilitation and expansion projects.

“With regard to external demand, Jamaica is expected to benefit from the improved performance of the global economy, which is projected to grow by 3.3 per cent, and in particular our main trading partner, the US economy, which is projected to grow by 2.3 per cent,” the director general said.

“Domestic demand will be boosted by the anticipated year-on-year growth in employment,” he continued.

Growth for the April to June quarter is expected to emanate from increased capacity utilisation as a result of increased global demand for aluminium. For the construction industry, increased residential activity will be driven by plans by the National Housing Trust to construct 8,640 units, with a total expenditure of $39.4 billion. As for the hotels and restaurants, growth is expected to increase in visitor arrivals, facilitated by an expansion in hotel room stock, greater flight frequency and passenger load factor.

Henry, however, outlined main downside risks to the forecast presented to include: plant downtime in the industrial sectors, lower than anticipated global growth, especially in the economies of Jamaica's main trading partners, spike in commodity prices, in particular crude oil, and crime, and its potential impact on production and productivity.


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