The Planning Institute of Jamaica (PIOJ) review of the period October to December 2006 indicates that the economy continues to show solid signs of growth, with strong performances in the Agriculture, Mining & Quarrying and Electricity & Water sectors.

Wesley Hughes

Although the manufacturing sector recorded a decline, the upsurge in hotel construction activities, as well as the preparations for Cricket World Cup 2007, impacted favourably on the construction & installation industry over the quarter. This announcement was made during PIOJ's quarterly press briefing held last week.

In terms of real Gross Domestic Product (GDP), preliminary data revealed an estimated 2.7% growth relative to the corresponding period of 2005. Goods production increased by 2.8%, while the Services sector grew by 2.5%.

Speaking at the press briefing, director general of the PIOJ, Dr Wesley Hughes, stated, "within the Goods-producing sector, the main areas of growth were Agriculture, which registered an increase of 12.4%; Mining & Quarrying, which grew significantly by 7.2%; as well as the Construction & Installation Industry, which rose by 1.0%. However, the Manufacturing Industry declined by 1.9%."

According to the director general, the continued growth within the Agricultural sector was largely due to favourable weather conditions as well as initiatives primarily geared at improving productivity levels. Exports crop production showed significant improvement (up 27.6%), with an upsurge in banana production, which increased by 141.7% as well as cocoa and coffee production up 546.7% and 13.4% respectively. Domestic crop production also registered growth, up 15.1%.

In the Mining & Quarrying sector total bauxite production increased by 7.1%, this was attributable, says Hughes, to the growth in crude bauxite production, up 6.2%, with increased capacity (up 125.1 kilo tonnes) at the St Ann Bauxite Company. Production levels in alumina also increased by 7.2%, due to the expansion in the productions capacity at WINDALCO.

Pointing to the improvements in the Construction & Installation Industry, Dr Hughes stated that increased activities in hotel construction, the preparations for Cricket World Cup 2007 and the heightened port expansion activities by the Port Authority, impacted positively on the Industry.

Addressing the decline in the Manufacturing sector, the director general outlined that the poor performance of the sector was due to the closure of the sole tobacco company in December 2005, which continued to be a drag on the sector, as well as the fall in food, beverages and tobacco production, down 1.3%. Food processing also fell by 4.2% with sugar and condensed milk down by 56.7% and 46.7% respectively. Other Manufacturing, also registered a decline of 1.5% primarily due to the fall in the output of petroleum products and to the decline in the cement production by 9.8%.

The Services sector continued to experience positive growth. Some of the main growth areas included Miscellaneous Services (up 3.9%), which was largely impacted by increased tourism activities. Real GDP of Hotels, Restaurants & Clubs (which captures most of the tourism sector), grew by 4.0%. Total Visitor arrivals increased by 12.7%, while cruise ship passengers increased by 24.7% and stop over arrivals rose by 2.7%.

Transport Storage & Communication also increased, registering a growth of 3.9%, while real GDP for Electricity & Water grew by 4.7%, compared with the corresponding quarter last year. This increase was attributed to higher levels of electricity generation (up 5.8%). The Financial Services sector also performed well with growth of 2.8% an expansion in loan activities at the commercial banks.

In outlining the performance of the macroeconomy for the quarter, Dr Hughes stated that this should be seen within the context of the relative stability in the exchange rate and a quarterly inflation rate of 0.3%. A fiscal deficit of J$21.0 billion was recorded, which was J$11.3 billion more than programmed.

Post Quarter Prospects
PIOJ's assessment of the overall economy for the period January - March 2007 continues to remain positive. Widespread growth is expected in the goods producing sector and in the Services sectors. Both sectors should register increases of 3.9% and 2.2% respectively.

This projection is predicated on the continued growth in the Tourism, Transport Storage & Communication, Construction, Mining and Agricultural sectors. GDP is expected to grow by 2.9% during the next three months, relative to the corresponding period last year. The economy also should experience further boost, with the upcoming Cricket World Cup in March 2007.

Executive Class

Gardens with Gravel

Death to the Mullet!