November 24, 2021
- For the July– September 2021 quarter, real GDP is estimated to have grown by 6.3%, relative to the corresponding quarter of 2020.
- The estimated out-turn was influenced by the following: 1. The relaxation of COVID-19 containment measures globally, which facilitated increased domestic and external demand, resulting in a general uptick in economic activities 2. Increased operating hours for businesses, which facilitated higher capacity utilization rates and production levels 3. Higher levels of employment, as firms either resumed or ramped up operations and 4. Increased Business confidence, associated with the prospects for strengthened economic out-turn in the short to medium term.
- The Goods Producing Industry is estimated to have increased by 2.8%, due to an improved performance in three of the four industries, namely Agriculture, Manufacturing and Construction.
- The Services Industry was estimated to have grown by 7.3%, relative to the corresponding quarter of the previous year, reflecting higher Real Value Added for all Industries.
- For the first nine months of 2021, real GDP was estimated to have increased by 4.0%. This reflected higher Real Value Added for both the Goods Producing Industry, up 5.8% and the Services Industry, up 3.4%. All industries recorded growth in output, with the exception of the Mining & Quarrying and Electricity & Water Supply industries. Growth for the nine-month period was led by Hotels & Restaurants, up 23.7%.
Production Performance by industry
Real Value Added for the Hotels & Restaurants industry was estimated to have grown by 114.7%. Stopover visitor arrivals for the months of July and August 2021 increased by 293.3%. The performance of the industry benefitted from increased vaccination in Jamaica’s main source markets and initiatives such as the establishment of a resilient corridor, and the drive by tourism stakeholders to get their workers vaccinated to prepare for visitors. Cruise passenger arrivals which resumed visits to the island in August 2021, totalled 8 379 from 5 ships for the months of August and September, relative to none during the corresponding period of 2020. Visitor Expenditure was estimated to have increased by 186.3% to US$463.4 million for the months of July and August 2021.
Real Value Added for the Mining & Quarrying industry contracted by an estimated 31.0%, due to declines in both alumina and crude bauxite production. Alumina production decreased by 34.8%, largely due to lower production from the JAMALCO refinery, which was impacted by a fire at the powerhouse, resulting in a cessation of operations during the quarter. The refinery is expected to re-open in 2022. The capacity utilization rate at alumina refineries decreased to 29.3%, down 15.6 percentage points. Crude Bauxite production fell by 8.0%, reflecting the impact of lower demand from overseas purchasers. Consequently, the bauxite capacity utilization rate decreased to 47.7%, down 4.2 percentage points.
Real Value Added for the Agriculture, Forestry & Fishing industry, was estimated to have grown by 7.2%. This improvement reflected the impact of increased demand, particularly from the Tourism sector, which grew consequent on the relaxation of previously implemented COVID-19 measures. Also positively impacting the industry was the continuation of the Productivity Incentive Programme, which provided fertilizer and seedlings that assisted farmers to rebound following Tropical Storms Elsa and Grace. Growth was also facilitated by a 6.5% increase in hectares of domestic crops reaped. Performance was driven by higher output in all sub-components of the industry. Other Agricultural Crops was estimated to have grown by 5.5% reflecting higher production in six of the nine crop groups. The most significant increases were recorded for Potatoes, up 20.8%; Yams, up 17.3%; Legumes, 17.2% and Vegetables, up 4.5%. Output of Traditional Export Crops, increased by 9.5%, largely reflecting growth in the production of banana (up 4.4%), coffee (up 50.9%) and cocoa, which increased from 13 tonnes to 81 tonnes. Animal farming is estimated to have increased by 13.9%, due to higher broiler meat production, up 20.4%; and egg production, up 2.8% to 55.4 million eggs.
Real Value Added for the Manufacturing industry is estimated to have grown by 8.5%, due to increased output in the Food, Beverages & Tobacco and the Other Manufacturing sub-industries. The growth in the Food, Beverages & Tobacco sub-industry reflected higher production for Edible Fats, up 28.6%; Edible Oils, up 15.6%; Poultry Meat, up 21.9%; and Animal Feed, up 12.8%. These increases were sufficient to outweigh declines in the production of Rum & Alcohol, down 11.1% and Dairy Products, down 25.0%. Other Manufacturing grew, reflecting higher production in the Petroleum Products and the Chemicals & Chemical Products components. All Petroleum Products surveyed with the exception of Liquid Petroleum Gas (LPG) grew. Further growth in the other Manufacturing subindustry was tempered by lower cement and clinker production by 28.0% and 23.3%, respectively.
Electricity & Water Supply recorded estimated growth of 0.6%, reflecting higher electricity and water consumption. Electricity consumption grew by 0.2% due to higher consumption in two of the six categories. Higher sales were recorded for: Largest Power (Rate 70), up 27.5%. Power Service (large businesses using more than 25 kVa but less than 500 kVa), up 0.1% Declines were, however, recorded for: Residential, down 2.2% General Service (small businesses using less than 25 kVa), down 4.2% Large Power (Businesses using more than 500kVa), down 0.2%, and Street Lighting plus Other, down 3.0%. The decline in sales to the Residential category may be attributed to an increase in the number of persons who have resumed work activities outside the home. Nine of the 14 parishes recorded increased electricity sales, led by Trelawny, up 23.9%, Westmoreland, up 14.9% and Hanover, up 14.9%. These increases may be attributed to higher tourism-related activities. Water consumption grew by 2.0%, reflecting increases in 9 of the 14 Parishes, led by Hanover, up 34.6%, Trelawny 9.7% and Westmoreland 9.4%. Similarly, these increases may be attributed to higher tourism-related activities in these parishes.
Real Value Added for the Transport, Storage & Communication industry grew by an estimated 9.0% mainly due to higher levels of activities in both the Transport & Storage and Communication components. The out-turn was driven by: 1. An improvement in the air transport component, largely reflecting growth in passenger movement up 263.9%, due to Departures (up 269.0%); and Arrivals (up 256.5%). 2. Increased maritime transport activities reflecting a 6.0% increase in cargo handled at the heavier weighted Port of Kingston. Outports, declined by 7.2%. 3. The estimated growth in the Communication component was driven by the reopening of businesses, particularly in the tourism sector.
Real Value Added for the Finance & Insurance Services industry was estimated to have grown by 3.0%. During the quarter, widespread economic recovery resulted in an increased demand for working capital to upgrade equipment and purchase inventory, to satisfy higher demand from customers. Specifically, Finance & Insurance providers recorded : higher net interest income on the stock of loans at deposit taking institutions; as well as higher Fee and Commission income.
Real Value Added in the Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM) industry is estimated to have grown by 3.9% due to increased demand stemming from: 1. Increased employment of 93,400 persons 2. Increased net remittance inflows by 7.4% to US$ 835.4 million 3. Growth in the related Manufacture, Construction and Agriculture, Forestry & Fishing industries, and the 4. Relaxation of COVID-19 containment measures. Higher sales were recorded for six of the eight categories in real terms, including: Other Wholesale and Retail Sale of Goods and Services in Specialized & Non-specialized Stores, up 9.3% Minerals, Fuels, Lubricants & Petroleum Products, up 16.5% Agriculture, Food, Beverages & Tobacco, up 8.1%, and Hardware, Building Supplies, Electrical Goods & Machinery, up 5.0%.
Outlook
The PIOJ noted that “Economic growth is anticipated for the remainder of this calendar and fiscal year. For October to December 2021, it is projected that the economy will grow within a range of 5.0% to 8.0%, resulting in a calendar year growth (i.e. January to December 2021) in the range of 3.0% to 6.0%. For Fiscal Year 2021/22, the projection is for growth within the range of 6.0% to 9.0%.”
Furthermore “The main downside to this positive outlook is the possibility of a fourth wave of COVID-19 infections given the relatively low rate of vaccination in the country, as well as a spike in COVID-19 cases in Jamaica’s main source markets, which would have implications for the re-imposition of more restrictive Public Health & Safety Measures. There is also the potential for a negative effect on economic activities from supply chain disruptions. Additionally, the continued closure of the Jamalco refinery will result in continued contractions for the Mining & Quarrying industry for the short-term,” as indicated by the PIOJ.
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