THE local economy barely expanded during the April-June quarter after it registered flat growth of 0.1 per cent but, based on preliminary estimates presented by the Planning Institute of Jamaica (PIOJ) on Wednesday, this, along with the fall-outs from Hurricane Beryl may not be enough to temper economic declines expected to come for the current July-September quarter.

PIOJ Director General Dr Wayne Henry, in sharing a negative short-term outlook for the economy during a quarterly press briefing held yesterday, largely attributed the latest projection to the adverse impacts of Hurricane Beryl on production activities. Against this background, the forecast he said is for the economy to contract within the range of -0.1 per cent to -1.0 per cent for the July-September 2024 quarter.

If materialised, this potential contraction could reverse some 12 quarters of consecutive growth seen since 2021 when the economy was first resuscitated from the deleterious effects of the COVID-19 pandemic.

“A downturn in output levels is projected for some industries, including agriculture, forestry & fishing; mining & quarrying; electricity & water supply; as well as hotels & restaurants industries,” Henry said.

Hurricane Beryl, which hit Jamaica as a powerful category 4 storm on July 3, caused extensive damage across several parts of the island, mainly along the southern coast, where it left significant damage to homes, crops and infrastructure.

The agriculture sector, which is said to have been one of those most impacted by the hurricane in its aftermath, saw significant damage suffered by farmers along the southern belt, particularly those in the parishes of St Elizabeth, Clarendon, Manchester and Westmoreland — the four of which accounted for more than half or almost 55 per cent of total hectares reaped for domestic crop during the previous April-June quarter. The Ministry of Agriculture has so far reported preliminary estimate of damages valued at $10 billion for the industry.

Pending a detailed assessment, which remains underway as most of the recovery work has just been completed, the PIOJ in its report, which highlighted damage in other sectors, further said it is also anticipated that the electricity and water supply industry will record significant damage and loss as a result of the destruction to infrastructure assets caused by Beryl. With many parts of the island left without power in the immediate aftermath of the hurricane, coupled with the difficulty in restoring electricity to a large number of communities weeks and even months after, the projection, the entity said, is for there to be negative implications for production across various industries and not only for electricity and water.

Turning to the mining and quarrying industry, where damage to the Rocky Point port in Clarendon caused some interruption with alumina export, which had to be diverted to an alternate port following the hurricane, the director general said this, too, will negatively impact the quarter’s performance. Additionally, strong outturns from the usual dominant hotels and restaurant industry, he said, will also be impacted as a result of flight cancellations and the diversion of visitors to alternative destinations seen during the passage of the hurricane.

“The forecast is for a downturn in foreign national arrivals during the quarter,” Henry stated, noting provisional data which already reflects an almost eight per cent dip in airport arrivals during the July-Sept quarter.

Other projections supported by preliminary information received by the PIOJ shows decreases in both electricity and water consumption which fell by 13.8 per cent and 1.9 per cent, respectively, during the month of July. In the same month reduced output from mining activities also saw alumina production falling 23.4 per cent and that for crude bauxite by 7.6 per cent.

However, Henry, in noting that the drag on growth arising from these developments could be partially tempered by upside potential factors, said these could come as a result of improved business and consumer confidence, which would help to push domestic demand, stronger than expected growth in the global economy which positively impacts local activities, as well as large upticks in construction-related activities associated with the post-hurricane recovery and rebuilding efforts.

The PIOJ, in further sharing an uncertain outlook for fiscal year 2024/25, has also forecasted growth within the range of -1.0 per cent to 1.0 per cent, with much of the economic outcomes tied to the pace of recovery from the hurricane.

The uncertainties which are negatively driven by extensive fallouts in critical industries such as agriculture, mining and an associated fallout in wholesale & retail trade; repair & installation of machinery (WRTRIM), which stands as one of the largest single industry. Henry, however, hopes it will be positively countered by a short-lived contraction and a quick return of the economy to positive performance as early as the October-December or last quarter of 2024.

“Despite the challenges that abound, we remain optimistic as we continue to closely monitor and assess these developments,” Henry said.