Jamaica’s economy shrank by 0.3 per cent in the 2014 fourth quarter, but should see a recovery of up to 1.5 per cent over the January to March 2015 period, said the Planning Institute of Jamaica (PIOJ).
The economy contracted, reflecting declines in agriculture, forestry and fishing, manufacturing, mining and quarrying, electricity and water supply industries. The decline was due to an estimated dip of 3.7 per cent in the goods producing industry. Meanwhile, the services industry was projected to have increased by 0.7 per cent, according to PIOJ statistics.
“This performance represents the second consecutive quarter decline and largely reflects the lower value added for the goods producing industry due to the impact of drought conditions on the agricultural and electricity and water industries,” director general of the PIOJ, Colin Bullock stated.
He added that Jamaica must move with urgency to reduce its dependence on rainfall, an important segment of agriculture and stated that PIOJ hopes to provide more detail on the matter in future presentations.
“Lower than anticipated alumina production due to technical challenges at oil refineries, longer than anticipated closure of the Petrojam oil refinery and fewer than anticipated implementation of construction projects also resulted in the decline,” he said.
Within the goods producing industry, all industries recorded declines except construction which increased by 1.2 per cent. Lower real value added was estimated for agriculture, forestry and fishing which fell by 11 per cent, mining and quarrying at 2.2 per cent and the manufacturing industry at 2.5 per cent.
“In the review quarter other agricultural crops fell 15.2 per cent with lower output recorded for all nine crop groups, with the most significant declines being recorded for cereals, condiments, vegetables, fruits and potatoes,” Bullock told the audience.
Six of the eight industries within the services industry grew. The industries with the largest increases were hotels and restaurants which grew 5.4 per cent, transport, storage and communication also grew by 1.6 per cent, while other services increased by 1.5 per cent.
“The increase in real value added for the hotels and restaurants reflected an increase in stopover arrivals of 7.0 per cent. Additionally, cruise passengers arrivals rose by 18.2 per cent, which contributed to an increase of 11.8 per cent in total visitor arrivals,” the director general stated.
Producers of government services and electricity and water supply registered declines of 0.2 per cent and 2.7 per cent respectively, according to the Institution’s statistics.
Last year, real value added was projected to have increased by 0.4 per cent. The growth for 2014 reflected an improved performance of 1.7 per cent for the first six months of the year, which outweighed a decline of 0.9 per cent recorded for the latter half of last year.
Jamaica also recorded a decline of 0.8 per cent in the consumer price index for the review quarter. Deflationary pressures emanated primarily from reduced prices in the division of food and non-acoholic beverages, housing, water, electricity, gas and other fuels and transportation.
“Lower prices for the severe drought conditions during June and July of 2014 and the pass through effect of lower global crude oil prices,” Bullock said.
For the first three quarters of the fiscal year 2014/15 (April — December 2014), capital expenditure amounted to $18.3 billion which was $8.3 billion or 31.1 per cent less than budgeted.
The short-term prospects for Jamaica seeing up 1.5 per cent in the economy are based on the continued strengthening of productive activities particularly in the goods producing industries.
The agriculture and manufacture industries are expected to return to normal levels, while continued strengthening is projected for the construction Industry. The services Industry is also expected to record growth, according to Bullock.
“Preliminary data on tourism indicates that airport arrivals and cruise-passenger arrivals for January 2015 grew by 7.0 per cent and 11.5 per cent, respectively. The anticipated strengthening of confidence levels and greater stability in the macroeconomic environment. Both business and consumer confidence levels have been increasing for the last four consecutive quarters,” he stated.
Bullock added that greater stability in the economy has been reflected in deflation of 0.5 per cent for January 2015. He stated that the main drivers of deflation during January were the result of lower international crude oil prices on domestic energy and transportation costs, and the impact of increased supply of vegetables in the food division of the consumer price index.
“These growth inducing factors have been partially counteracted by public sector capital expenditure contraction,” he said.
Source: Jamaica Observer