BUOYED by the continuation of strong tourist arrivals, the reopening of the Jamalco alumina plant, and overall positive out-turns across most industries, the local economy is recovering faster than previously projected.

Director of the Planning Institute of Jamaica (PIOJ) Dr Wayne Henry, presenting the preliminary estimates on gross domestic product performance (GDP) for the October-December, or last quarter of 2022, during a quarterly briefing on Tuesday, said that by all indications it is likely the country will return to pre-COVID levels this fiscal year (FY) — ahead of the upcoming 2023/24 fiscal year as previously anticipated.

“The Jamaican economy continues to recover during the review quarter, with some industries already surpassing COVID-19 levels of output. The latest projections indicate that the economy is likely to fully recover to pre-COVID-19 output in fiscal year 2022/23 — earlier than the previously projected fiscal year 2023/24,” he stated while noting that the recovery of the employed labour force is, however, expected to be confirmed in FY 2023/24.

“For FY 2023/24 the economy is projected to grow within the range of 1-3 per cent, largely reflecting a faster-than-expected pace of recovery in the previous fiscal year, leading to an earlier-than-anticipated normalisation of output, and a return to the long-term trend of growth,” Henry stated, pointing to some seven quarters of consecutive growth.

For the October to December review quarter the economy expanded by 3.4 per cent, owing to strong growth across both the goods-producing and services industry. The goods-producing industry, which was led by positive out-turns from the mining and quarry industries up almost 116 per cent following previous quarters of contractions, was also supported by growth in the agriculture and manufacturing sectors up 5 and 3.7 per cent, respectively, despite fallouts in construction which declined by 4.7 per cent.

The Jamalco plant, which resumed operations in July 2022 following a fire in August 2021 that negatively affected production, though not back at full capacity is said to be gradually picking up pace and has already started to make significant contributions to real value added.

“We expect, as time goes on, that it will eventually reach about 70-80 per cent, which is normal operating capacity. It will unlikely operate at 100 per cent but our expectation is that it will continue to ramp up production as the year goes by,” commented James Stewart, senior director of the PIOJ’s Economic Planning and Research division.

The services industry, driven by continued growth across its hotels and restaurants subsector, also accelerated the pace of recovery, adding some 23.4 per cent increase in out-turns and accounting for the largest growth in the division as a result of increased stopover and cruise passenger arrivals.

“Visitor expenditure was estimated to have increased by 46.3 per cent to US$543.7 million for the months of October and November 2022,” preliminary data revealed.

The sector similarly, for the full calendar year of 2022 at which time the economy was said to have registered growth of 5.1 per cent, also accounted for the bulk of growth accompanied by higher real value added across most of the other industries.

“Growth during 2022 was led by hotels and restaurants, up 48.9 per cent; other services, up 11.1 per cent; agriculture forestry and fishing, up 9 per cent; and transport, storage and communication, up 6 per cent,” Henry said.

Henry, in sharing a short-term outlook for the economy, said that while the prospects for growth generally remain positive, some downside risks — including tightened monetary conditions globally, persistence of supply shocks, and extreme weather events — could impact outcomes.

For the current (January–March 2023) quarter the projection is for the economy to grow within the range of 3.0 per cent to 5.0 per cent.

“Growth will be led by the strong performances from the hotels and restaurants, and mining and quarrying industries. For January 2023, preliminary airport arrivals grew by 63.8 per cent and alumina production increased by 125.7 per cent,” Henry further noted.

In light of the accelerated recovery the director general, however, concluded that as more industries recover the expectation is that the pace of economic growth during the upcoming financial year will slow, similar to that of the global economy.

“With this in mind the GOJ’s economic team has refocused its efforts on building economic resilience by removing inhibitors to growth, and developing policy initiatives geared at addressing these constraints to support the continued expansion of economic activity during the medium term,” he said, citing the continued focus on climate and environment resilience-building, deeper examination of the labour market to identify skill gaps, and further diversification of the economy to increase economic resilience, among the strategies being engaged.