The Planning Institute of Jamaica (PIOJ) in its latest review statistics has said that for the April-June quarter the economy could contract by as much as 14.0 per cent as a result of the impacts of the ongoing COVID-19 pandemic.

Dr Wayne Henry, director general of the PIOJ, said that a projection for the period showed that the economy will contract within the range of negative 12.0 to 14.0 per cent during April – June. This, he reasoned—follows from the findings of the previous quarter in January to March which saw gross domestic product (GDP) declining by 1.7 per cent.

Henry said the measures put in place to counter the effects of the virus were to be attributed for most of these contractions.

“For April–June 2020, growth prospects for the economy are generally negative based on the anticipated impact of the COVID-19 pandemic, which led to a fall in demand for goods and services, amidst the full roll-out of measures to contain the spread of the virus.

“Measures including the closure of Jamaica’s borders to passenger traffic; restrictions on operating hours; as well as physical distancing protocols have negatively impacted key drivers of economic activities such as hotels and restaurants, manufacturing, transportation, entertainment, and construction services.

The director general further said that spillover effects were also likely to be felt in other areas such as wholesale and retail, trade and finance and a continued contraction of the mining and quarrying industry due to the closure of the Jisco/Alpart aluminium plant —which would further exacerbate the negative impacts on growth for the quarter. He pointed to the significant reduction of tourism activity [with the sector being closed since March] as crucial to the contractions based on the sharp decline in stopover and cruise passenger arrivals.

“This sector is therefore expected to record the most severe contraction in activities, in areas including transportation, attractions, entertainment, and hotel and restaurant services,” Henry noted.

January – March quarter

The worsening effects experienced by tourism as a result of the pandemic began in the January to March quarter which saws the sector contracting by 13.9 per cent. This as the sector was grounded to a halt and data on total airport arrivals during the quarter indicated a 17.9 per cent decline. Fallouts in other major sectors also added to the contractions seen in the quarter such as a 37.0 per cent decline in mining and quarrying, construction down 2 per cent, services industry down 1.5 per cent and the goods producing industry down 1.5 per cent.

The contraction was partially tempered by an uptick in agriculture production [up 7.8 per cent], as well as increased manufacturing activities [up 2.7 per cent]. The finance and insurance services industry also grew by 1.3 per cent during the quarter.

Henry said that the materialisation of these projections will reflect an end to a trajectory of previous quarters of economic growth for the country.

“This would have ended an extended period of 20 consecutive quarters of no economic contraction, [wherein], the economy grew in 19 quarters and remained flat in the October–December 2019 quarter,” he said.