October 1, 2021
According to the Statistical Institute of Jamaica (STATIN), the total value added in the second quarter of 2021 grew by 14.2% when compared to the similar quarter of 2020. This performance should be viewed in the context of the significant fall of 18.4% in economic activity during the second quarter of 2020 when the Government implemented a number of measures to curtail the spread of the novel Coronavirus (COVID-19). In 2021, both the Services and Goods Producing industries increased by 14.8% and 12.7% respectively in the review period. There was a relaxation of some of the COVID-19 measures including reduced curfews hours and the easing of travel restrictions, which positively impacted commerce and tourism related activities. The Agriculture, Forestry & Fishing industry was impacted by favourable weather conditions and the Flood Relief programme for farmers aimed at increasing agricultural production.
All industries within the Services Industries grew: Hotels & Restaurants (334.6%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (19.3%), Transport, Storage & Communication (13.9%), Other Services (23.2%), Real Estate, Renting & Business Activities (5.2%), Finance & Insurance Services (2.8%), Electricity & Water Supply (4.0%) and Producers of Government Services (0.4%). The growth in the Goods Producing Industries was due to increased activities in Agriculture, Forestry & Fishing (15.0%), Construction (17.4%) and Manufacturing (12.9%). However, the Mining & Quarrying industry fell by 9.2%.
The Agriculture, Forestry & Fishing industry’s growth was largely attributed to favourable weather conditions and programmes initiated by the Government to increase crop production, including the Flood Relief programme. The Flood Relief programme provided material inputs, such as seeds, fertilizers, pesticides and other chemicals to farmers who suffered losses due to the heavy rainfall in October and November of 2020. Additionally, the industry benefitted from increased demand largely due to the reopening of some hotels and restaurants.
The Mining & Quarrying industry declined due to declines in production of alumina and crude bauxite. The volume of alumina produced declined by 11.3% to 389.1 thousand tonnes in 2021, moving from 438.5 thousand tonnes in 2020. Crude bauxite production fell by 31.8% to 618.9 thousand tonnes in 2021, largely due to restrictions on shipment to China. The fall in crude bauxite production was reflected in exports of crude bauxite which declined by 32.8% in 2021.
The Manufacturing industry’s growth was attributed to higher output levels in both sub-industries, Food, Beverages & Tobacco and Other Manufacturing which increased by 9.3% and 18.6%, respectively. The growth in the Food, Beverages & Tobacco sub-industry was primarily due to higher production of meat & meat products, processing & preservation of fruit and vegetables, dairy products, vegetable & animal oils and fats, bakery products and beverages. Contributing to the growth in the Other Manufacturing sub-industry were refined petroleum products, non-metallic mineral products and chemicals & chemical products. The growth in non-metallic mineral products mainly resulted from an increase in the manufacture of cement. This was due to higher domestic demand, primarily influenced by increased construction activity.
Within the Construction industry, growth was recorded for all groups: building construction, civil engineering and building installation. The performance of building construction was largely due to increased activities in both residential and non-residential construction.
The Electricity & Water rose due to increases in both electricity consumption (4.3%) and water consumption (2.9%). Electricity consumption increased to 769,701 MWh in 2021 from 737,986 MWh in 2020. This was primarily due to higher consumption by commercial entities. Water consumption increased to 4,653.4 million gallons in 2021 from 4,522.2 million gallons in 2020. The increase in water consumption was mainly attributed to increased rainfall and the reopening of establishments which were closed due to COVID-19 control measures.
The Hotels & Restaurants industry’s growth was due to improved performance in the groups hotels & other short-stay accommodation and restaurants, bars & canteens. Hotels & other short-stay accommodation was impacted by a 6,075.1 per cent increase in foreign national arrivals to 343,954 in 2021, from a total of 5,570 in 2020. This increase was due to the relaxation of restrictions on global travel in comparison to 2020, when the island’s borders were closed to incoming visitors between March 21 and June 14, to limit the risk of imported COVID-19 cases.
Value added for the Transport, Storage and Communication industry grew as a result of increases in the transport and post & telecommunications sub-industries. The performance of the transport sub-industry was largely attributed to the relaxation of some of the COVID-19 control measures as well as the easing of global travel restrictions. The Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment industry growth was impacted by higher output levels in the Agriculture, Manufacturing and Construction industries as well as the relaxation in curfew hours.
The Real Estate, Renting & Business Activities industry resulted from increases in both the real estate and business activities sub-industries. The main areas of growth within the business activities sub-industry were renting of other machinery & equipment, accounting, book-keeping and auditing activities; tax consultancy, renting of land transport equipment without operator and investigation & security activities. The renting of land transport equipment without operator was positively impacted by increased tourist arrivals. The growth in renting of other machinery & equipment was influenced by the increase in construction activities.
Value added for the Finance & Insurance Services industry’s growth was due to growth in monetary intermediation as both insurance services and other financial intermediation fell during the period. The increase in monetary intermediation was mainly influenced by the growth in commercial banks. The performance of commercial banks was positively impacted by an increase in non-interest income. The decline in insurance services was largely due to the reduced performance in non-life insurance activities.
The Other Services industry increased by 23.2%. This was due to growth in the subindustries, recreational, cultural & sporting activities and other services. The increase in the recreational, cultural & sporting activities sub-industry was mainly attributed to growth in betting & gaming activities, tourist related activities and radio & television broadcasting. However, other entertainment activities recorded a decline. The group tourist related activities was positively impacted by the increase in stopover arrivals to the island, which moved from 7,188 in 2020 to 371,270 in 2021. This increase in stopover arrivals reflected the relaxation of restrictions on global travel in contrast to 2020. However, the cruise ship piers remained closed during the review period.
According to STATIN, “When compared to the first quarter of 2021, total value added grew by 2.4%. This was a reflection of the gradual improvement in economic activity since the second quarter of 2020 when the COVID-19 containment measures had a significant impact on the economy.”
Disclaimer
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however, its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution, or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.