JAMAICA’S economic expansion continued into a seventh-consecutive quarter with estimates that growth touched six per cent in the first quarter of this year, despite contractions across some key sectors, particularly mining.

The Planning Institute of Jamaica (PIOJ) providing preliminary estimates on economic performance for the January to March quarter said that goods production overall declined by 2.1 per cent and was largely affected by significant contractions in the mining and quarry industry. For the fiscal year which ran from April 1, 2021 to March 31, 2022, the mining sector contracted by an estimated 40 per cent.

“Alumina production fell by 74.3 per cent, mainly as a result of no production at the JAMALCO alumina plant, which closed in August 2021 due to a fire at the facility. Consequently, the alumina capacity utilisation rate was 11.4 per cent, down 32.8 percentage points compared with the corresponding quarter of 2021. Crude bauxite production also declined by 2.9 per cent, resulting from lower demand and the average bauxite capacity utilisation rate fell by 1.4 percentage points to 48.6 per cent,” said Dr Wayne Henry, director general of the PIOJ, in his review of the quarter on Wednesday.

Since the partial closure of the plant, the country has been losing millions in revenues as a result of downtime activities. The plant is expected to return to full production later in this fiscal year.

The manufacturing sector also declined by 0.7 per cent following a decrease in the other manufacturing sub-industry,which outweighed an increase in the food, beverages & tobacco sub-industry.

The performance of the goods-producing industries was, however, tempered by positive outturns in agriculture which went up 8.6 per cent owing to increased harvest and more favourable weather conditions during the period. Real value added from construction also grew by one per cent as the number of mortgages disbursed by the National Housing Trust and the sale of construction inputs continued to trend upward.

The heavier weighted services sector led by the hotel and restaurant subsector was responsible for the bulk of the growth seen for the quarter. The services industry grew 8.9 per cent led by growth in all industries especially hotel and restaurants whose value added increased by 105.7 per cent after benefitting from significant tourism activities as a result of increased travel and the relaxation of previously implemented COVID-19 containment measures.

Projecting growth within the range of 2-4 per cent for the April-June quarter, Henry said the forecast could be impacted by a few downside risks including the continued threat of COVID-19 on the island as well as global supply chain restrictions, the war in Europe and its associated impact on commodity prices and inflationary pressures in many country.

Crediting the strength of the recovery process seen so far, the director general, however, indicated that there were no immediate impacts to growth as a result of a series of interest rate hikes by the Bank of Jamaica (BOJ) which in recent times has been tightening monetary policy to curtail runaway inflation. Up to April, point-to-point inflation was 11.8 per cent forcing the central bank to further increase interest rates to five per cent last month.

Addressing concerns of a looming recession, Henry coalescing with previous projections by the BOJ maintained that despite continued uncertainties and prolonged economic challenges in the current environment, there were no real signs of a recession.

“The risks are evident but we are not seeing it in terms of projections for a recession to happen. We are still projecting growth,” he said underscoring FY2022/23 estimates for growth within the range of two to five per cent.