EXPANDING by two per cent in the last fiscal year, substantial growth in the local economy continues to be impacted by slower levels of productivity and economic diversification, senior technocrats from Planning Institute of Jamaica (PIOJ) have said.

Responding to questions from the Jamaica Observer during a quarterly press briefing held yesterday, director of modelling and research at the PIOJ Hugh Morris said the country can grow past certain levels if it is able to successfully address certain issues.

“For us to grow above the one to two per cent we have to address productivity gaps in the country. The HEART[/NSTA] Trust is now offering free trainings up to Level IV, so this is expected to improve the capacity of our labour force — which we expect to further drive growth. Also, in diversifying our economy we have seen where approximately 21 new products have been [added] over the last two years, and as those products/ sectors and industries grow we expect the economy to also grow further,” he said.

“A country will only grow faster if it is able to produce more goods and services — and ones [goods and services] that are also more complex. We have been doing this, however it has not yet reached the scale to further drive that level of growth,” he further said.

As it relates to the industries that are expected to drive growth going forward, he cited manufacturing now strengthened by increased investments, retooling, automation and technology, as well as logistics among those most poised to make meaningful contributions.

“As we move forward we’re looking as well on those in the knowledge economy, especially now as we up the value chain from call centres to data analytics. We also see some potential in our creative industries. It can be seen where we have been building but it continues to take some time before we can start to see that push to higher and more sustained levels of growth,” Morris said.

“Investment in human capital to ensure that persons can attain the necessary skills needed to function in some of the newer industries is also vital in achieving this growth,” added Rochelle Whyte, senior technical advisor to the director general of PIOJ.

PIOJ, in its latest report on the preliminary estimates of GDP performance during the last fiscal year, said that a 2.1 per cent increase in both the goods-producing and services industries, coupled with increased demand among other factors, were responsible for the 2 per cent yearly out-turn. This, following commendable output from the mining industry, up 60.9 per cent; hotels and restaurants, up 7.6 per cent; and electricity & water supply, up 6.2 per cent.

For the January-March quarter, or last quarter of the 2023/24 fiscal year, the economy also continued to register positive growth, increasing 1.9 per cent during that period.

“This represents 12 consecutive quarters of growth. The performance largely reflected the impact of increased external demand which was facilitated by continued growth in the economies of Jamaica’s main trading partner, higher levels of consumer confidence, increased agricultural output, and the continued expansion in capacity utilisation at alumina refineries which resulted in higher productions,” said James Stewart, senior director in charge of economic planning and research at the PIOJ.

The PIOJ, in banking on the continuation of a positive growth momentum in all industries, has in its outlook targeted growth within the range of 1.5-2.5 per cent for the current April-June quarter and 1-3 per cent for the full fiscal year (FY 2024/25).

“All industries are forecasted to record growth as greater focus is placed on entrenching macroeconomic stability to facilitate higher levels of economic activities in this new growth phase, which refers to the fact that the country has fully recovered from the shock of COVID-19 and is achieving output levels above the pre-COVID highs in 2019.

“Growth is expected to be led by hotels and restaurants, other services, transport, storage and communication, agriculture and the manufacturing industries,” James said.

The PIOJ director, in also providing update on the integration of its new Inclusive Growth Index Framework (IGIF) tool, launched earlier this year in a bid to map growth differently, said it is now being tested with plans to have full implementation in short order.

“We have not started to use the tool as we are still in the process of reviewing and fine-tuning data collection etc. We intend to give further update by the end of this year as to the findings from the tool,” Stewart told the Business Observer.

Developed over a six-year period, the IGIF, which seeks to capture a deeper understanding of the economy as it zooms in on more areas often overlooked by the traditional GDP measurement which has been used for decades, is built around seven welfare pillars and more than 40 outcomes which seek to provide a bird’s-eye- , data-driven view of the economy.