June 02, 2021
Overview
- For January to March 2021, real GDP is estimated to have fallen by 5.7%, relative to the corresponding quarter of 2020. The Goods Producing Industry grew by 3.0% while the Services Industries fell by 8.1%. Notably, there is a gradual tempering of the rate of contraction as indicated by the preliminary outturn for the quarter. If this materializes it would represent the lowest rate of decline since the April to June 2020 quarter.
- The out-turn for January to March 2021 largely reflected the impact of: An increase in the COVID-19 confirmed cases to 39,543 at the end of March 31, 2021, relative to 12,915 confirmed cases in December 2020. This represented the largest quarterly increase in COVID-19 cases (quarter over quarter). Secondly, the implementation of measures globally and locally to manage the COVID-19 pandemic relative to the corresponding quarter of 2020 when the economy operated normally for the first two months. Lastly, the lagged impact of adverse weather conditions in the previous quarter which destroyed crops and delayed replanting activities during that period.
- The contraction in the economy was partially tempered by a relatively strong increase in construction activities as well as increased capacity utilization in the Mining & Quarrying Industry following the cycling out of the impact of the closure of the Alpart refinery which caused a drag on growth during the first nine months of 2020. It should be noted that the Construction Industry was largely exempt from the COVID-19 containment measures and is the only Goods Producing industry to have recorded three consecutive quarters of economic growth.
- Within the Goods Producing Industry grew by an estimated 3.0%, there were decreases in output for Manufacturing (1.4%) and Agriculture, Forestry & Fishing (2.0%). Whereas Construction and Mining & Quarrying increased by 12.6% and 6.2% respectively.
- The Services Industry was estimated to have contracted by 8.1%, largely reflecting downturns in Hotels & Restaurants (56.2%); Other Services (17.6%); Electricity & Water Supply (7.1%) and Transportation, Storage & Communication industries (6.6%).
- For FY2020/21, real GDP is estimated to have contracted by 10.8%, reflecting declines in all industries with the exception of Construction and Producers of Government Services. The heavier weighted Services Industry was estimated to have declined by 12.4%, and the Goods Producing Industry, by 3.3%. The industries which recorded the largest contractions during the fiscal year were Hotels & Restaurants, down 65.7%; Other Services, down 27.2%; and Transport, Storage & Communication, down 13.3%.
Production Performance by industry
Real value added for Construction and Mining & Quarrying industry rose by 12.6% and 6.2% respectively. This uptick reflected the impact of increased capacity utilization in the Mining Sub Industry and an uptick in building construction activities. PIOJ noted that “These improved performances outweighed contractions recorded for Agriculture and Manufacturing.” The real Value added for the Construction industry reflected a 32.8% increase in preliminary sales data of construction inputs and was attributed to increased activities in both the Building Construction and Other Construction components. The Building Construction component was driven by a 25.8% increase in Total Housing Starts and a 36.4% increase in the total value of Mortgages disbursed. The increase in the Other Construction component stemming from an uptick in civil engineering activities, reflected in higher capital expenditure by the Jamaica Public Service, National Road Operating & Construction Company (NROCC), and The UDC. As it relates to Mining & Quarrying, there was a higher level of production for both Alumina and Crude Bauxite. Alumina production grew by 4.5% due to higher output levels at the Jamalco Plant, this was reflected in an increase of 2.3 percentage points to 44.2% in the capacity utilization rate at Alumina refineries. Production of crude bauxite increased by 9.6%, the bauxite capacity utilization rate increased by 4.7 percentage points to 50%.
The output for the Agriculture, Forestry & Fishing Industry fell by an estimated 2.0%. The performance of the industry partly reflected the impact of flood conditions in the previous quarter which adversely impacted planting activities. Additionally, there was a decrease in output per hectare in domestic crop production. The Other Agricultural Crops group is estimated to have declined by 2.1%, there were decreases in six of the nine crop groups including Other Tubers, down 16.8%; Cereals, down 14.4%; Condiments, down 11.9%; and Legumes, down 5.5%. Tempering the decline in output were increases for Yams of 6.9% and fruits up 6.1%. Animal farming was estimated to have decreased reflecting lower production of broiler meat down 8.7%. The decline was however tempered by an increase in egg production up 7.2%. Increases were also recorded for Post-Harvest activities and Traditional Export Crops, largely reflecting higher production of sugarcane and cocoa.
Real value added for the Manufacturing industry registered a decrease of 1.4%. This contraction resulted from the lower output in both the Food, Beverages & Tobacco and Other Manufacturing sub-industries. With respect to Food, Beverages & Tobacco lower level of output were recorded in the Food Processing component including Poultry Meat down 8.7%, Animal Feeds down 2.6% Edible Oils down 7.6%, and Cornmeal down 4.1%. A further decline was tempered by increases in Edible Fats up 13.2%, Sugar up 15%, and Molasses up 32.7%. In the Beverages and Tobacco component higher levels of production were recorded for Rum and Alcohol up 20.8% and Carbonated Beverages up 0.7%. In the Other Manufacturing category lower output stemmed largely from decreases in the Petroleum Products category, reductions were recorded for liquid Petroleum Gas (LPG) down 56.5%, Turbo Fuel down 67.7%, and Fuel Oil down 17.2%. An increase was however estimated for the non-metallic Minerals category which was pushed by increases in Cement of 35.2% and Clinker up 34.7%.
Electricity & Water Supply recorded an estimated contraction of 7.1% in Real Value Added, due to decreases in both electricity and water consumption. Electricity consumption declined by 8.0% reflecting lower levels of consumption in all six categories: Residential, down 0.5%; General Service, down 12.6%; Power Service, down 10.4%; Large Power, down 12.4%; Street Lighting & Other including power interchange customers, down 8.8% and Largest Power, down 3.9%. Water consumption decreased by 3.0%, reflecting lower consumption in the Western division, down 12.1%, which outweighed increases in consumption in the Eastern division, of 1.8%.
Real Value Added for the Transport, Storage & Communication industry contracted by an estimated 6.6%. This resulted from a decrease in the Transport & Storage component, which outweighed increased activities in the Communication component. The downturn in Transport & Storage was due to a decline in the Air transport component, reflecting decreased passenger movements, down 72.1%, Departures, down 71.5% and Arrivals, down 72.1%. Maritime transport activities grew, reflecting increased cargo movement at the Port of Kingston, up 5.6%; and Outports, up 0.9%.
Real Value Added for the Finance & Insurance Services industry was estimated to have contracted by 1.0% during the review quarter, reflecting decreases in the net interest income on the stock of loans and advances, and fees and commission income. Real Value Added in the Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM) industry was estimated to have declined by 3.2%. This performance was influenced by estimated contractions in the related Agriculture and Manufacturing industries, a decline in employment by 74 300 persons in January 2021 relative to January 2020 which curtailed domestic demand and measures associated with the management of the COVID-19 pandemic which reduced operational hours and restricted the movement of people.
Real Value Added for the Hotels & Restaurants industry contracted by an estimated 56.2%, largely reflecting an estimated decline in Stopover Arrivals by 71.9%. There were no Cruise Passenger Arrivals during the period reflecting the continuation of COVID-19 containment measures. Preliminary data on tourist expenditure indicate a US$520.7 million decline to US$254.4 million, largely reflecting the decrease in the number of stopover arrivals and no cruise passenger arrivals during the review quarter.
Outlook
The PIOJ noted that “growth prospects for the economy are generally positive for April–June 2021. It is projected, that the economy will grow within the range of 7.0% to 9.0% during April–June 2021 based on: the commencement of the recovery process relative to the low output levels recorded in the corresponding period of 2020, the relaxation of some COVID-19 containment measures relative to the lockdown which occurred in the corresponding quarter of 2020 and increased domestic demand due to an expected expansion in employment levels.”
Preliminary data for the April to June 2021 quarter has indicated some positive movements which support this projection. Airport arrivals for April 2021 totalled approximately 83, 000 visitors compared to none recorded in April 2020. Water Consumption for April 2021 grew by 2.2% relative to April 2020. The projection for FY2021/22 is for growth within the range of 4.0%–8.0%. In addition to the factors expected to influence the April-June 2021 quarter, the performance of the fiscal year will be influenced by the gradual relaxation of measures globally that restrict the movement of persons, as countries seek to attain herd immunity through the continued roll-out of vaccination programmes. This augurs well for the world economy and a strengthening of external demand for Jamaica’s goods and services.
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