Economy grows 2.9% in 6 months
THE pace of growth in the local economy slowed in the first half of this year to 2.9 per cent as the country completed the recovery from the pandemic-induced decline and settle down to lower rates of expansion.
The Planning Institute of Jamaica (PIOJ), who revealed the preliminary data for the country’s growth over the January to June period of this year, on Thursday said the services industry led with growth of 3.5 per cent followed by the goods producing industry which marginally grew by 1 per cent.
“The industries which were estimated to have recorded the largest increases during the first half of the year were mining and quarrying, up 137.7 per cent; hotels and restaurants, up 18.5 per cent; other services, up 11.4 per cent and transport, storage and communication, up 6.1 per cent,” PIOJ Director General Dr Wayne Henry said during a quarterly briefing held yesterday.
The April-June quarter, which saw growth of some 1.5 per cent, was driven by growths of 1.8 and 1 per cent in the services and goods producing industries, respectively.
Performances in the services industry, which continued to benefit from robust growth in tourism, paved the way for a 9 per cent increase in the hotels and restaurants subsector following increased visitor arrivals of over 705,000, up 14 per cent over that for the same period last year. This was further backed by total visitor expenditure of US$368.7 million, almost 20 per cent above that of the corresponding quarter of 2022.
Preliminary airport arrivals up to July reflected a 14.7 per cent increase or 273,376 persons.
Developments in the goods producing industry, which saw wholesale contractions across its agriculture (down 7.1 per cent), manufacturing (down 0.6 per cent) and construction industries (down 3.3 per cent), was buoyed by a 163.1 per cent increase in mining and quarrying, largely due to an expansion in alumina production since the reopening of the Jamalco refinery.
The PIOJ, in maintaining a short-term positive outlook for the economy, said that factors such as higher than expected demand, strengthened business confidence, more robust increases in employment levels (which up to April saw a record unemployment level of 4.5 per cent) and better weather conditions would drive its expectation.
This it, however, said was tempered against risks including extreme weather conditions, increased factory downtime as a result of aged equipment and slower growth in the economies of its main trading partners.
“Against this background, for July-September 2023, growth in output is anticipated to fall within the range of 1 per cent to 2 per cent,” the director general said.
Projections for FY2023/24, he further said, are for the country to record higher levels of output relative to its performance last year, spurred by growth within the range of 1-2 per cent for the full fiscal year.
“This projection is based on the expectation that the recovery in industries such as mining & quarrying and the growth momentum for industries such as hotels & restaurants and other services will continue. Additionally, the current drag on growth from industries such as agriculture and construction is expected to dissipate, as these industries return to positive performances by the end of the fiscal year,” Henry added.
Henry, in further signalling that as the economy “enters a new growth phase”, having overcome the setbacks of the novel coronavirus pandemic, said that going forward, sustained efforts around the infusion of technology across industries, increased economic diversification and the continuation of expansion and modernisation activities, he believes, could lead to even better out-turns.
Pointing, however, to the challenge of maintaining robust rates of growth above the long-term average, he said there was also a need for people to upskill or re-skill if they are to take advantage of new opportunities or play a significant role in improving the skill of the labour force and for some to move out of poverty. The poverty rate up to 2021 stood at 16.7 per cent.
“There are efforts underway, and we have been a part of those efforts, for the sustained training and skilling of the labour force. We’ve had discussions with partners in the ministries of education and labour to speak about the supply of labour going forward. It’s something we’ve been watching and have also now started to work on,” Henry said.
James Stewart, senior director in charge of economic planning at the PIOJ, in referring to two main initiatives done across government, said they were specially targeted at addressing current skills deficiency.
“There is one in the Ministry of Tourism which examines the skills gap in that industry and other by the Ministry of Labour which will undertake a comprehensive review of the labour demand conditions in Jamaica. From these studies we expect some policy recommendations as to how to address some of these labour shortage issues that are emerging,” he said.