Jamaica records third consecutive quarter of growth

By Paul Allen Business reporter allenp@jamaicaobserver.com

Friday, November 25, 2011

Though weaker than expected, Jamaica recorded a third consecutive quarter of growth as it continues to recover from the global recession.

The economy grew by half per cent for the quarter July to September 2011, this after posting growth of 1.6 and 2.1 per cent for the first two quarters said Gladstone Hutchinson, director general of the Planning Institute of Jamaica. Previously, the country had 13 consecutive quarters, over three years, of negative growth.

"This slowdown was somewhat anticipated, as you will recall we had forecast growth for this quarter to be within the range of 0.5 per cent to 1.5 per cent, with the attainment of the upper bound largely predicated on the reopening of the Kirkvine Alumina Plant", Hutchinson said.

However, plans for the plant's reopening were delayed given projections of weakening demand and declining prices for alumina.

Although Mining and Quarrying suffered from the delayed restart of Kirkvine, the industry posted strong growth of seven and a half per cent. This was mainly due to the reopening of the Windalco Ewarton Alumina Plant and increased production by the Noranda Bauxite Company, which contributed to the nine per cent increase in total bauxite production.

National growth was further stymied by a slowdown in tourism which had shown resilience during the recession. Gladstone said the industry was "adversely impacted by global developments. As such, it saw a decline in stopover arrivals, down almost half a per cent, and a general slowing in its economic activities."

Growth was further hampered by Manufacturing which declined by 0.2 per cent, affected largely by a three per cent decline in the Food, Beverages and Tobacco sector. The downturn in this particular sector is the result of "a contraction in Sugar production, down 14 per cent; Poultry, down six per cent; Rum and Alcohol, down eight per cent; and Beer and Stout, down 14.5 per cent.

Transport, Storage and Communication declined by three per cent largely due to a fall off in activities at airports. A 10 per cent decline at the Norman Manley International Airport and a 0.2 per cent decline at the Sangster International Airport resulted in total air passenger movements falling almost four per cent. This was enough to outweigh the effects of increased activities at the seaports, where cargo volume handled increased by nine per cent to 4.3 million tonnes, Hutchinson said.

Some areas performed creditably well, helping to bolster the economy's recovery efforts.

Agriculture, Forestry and Fishing grew by 2.5 per cent, thanks to favourable weather conditions when compared with the same period last year. There was also a seven per cent increase in the total hectares of domestic crops reaped.

Construction grew by almost two per cent, much of which came from road works such as the Jamaica Development Infrastructure Programme, the Palisadoes Roadway and Washington Boulevard Road Improvement Project.

Building Construction is also estimated to have grown due to increases recorded in the residential construction and increases in the volume of mortgages, almost seven per cent, and their value, one per cent.

Electricity and Water increased by 1.5 per cent due to higher levels of electricity generation, half a per cent, and water production, over two per cent, when compared to the same period last year.

Other areas which saw marginal growth of less than a per cent are Real Estate and Business Services, Wholesale and Retail Trade, and Hotels and Restaurants.

Even with restricted growth and a challenging global environment, the nation's outlook is positive, said Hutchinson.

He said general demand could be strengthened with the expected intensification of election campaigning. Sectors which could benefit from this are Transport, Storage & Communication; Manufacture, its Food & Beverage component and Wholesale & Retail.

Though not yet announced, many political analysts expect that a general election, constitutionally due by late 2012, will be held by year end.

Growth for this final quarter is expected to be between one and two per cent.

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GCT to go down, white rum prices going up

Jamaica records third consecutive quarter of growth