Review of Jamaica’s Economic Performance April- June 2020

September 09, 2020

The PIOJ presented the preliminary estimates on economic performance for quarter the April to June 2020 quarter. The following were noted:

Overview of Real Industry Developments 

  • For April to June 2020, real GDP fell by an estimated 18.0% relative to the corresponding quarter of 2019. The Goods Producing and Services Industries contracted by 7.0% and 20.6% respectively.
  • Within the Goods Producing Industry, there were decreases in output for the Mining & Quarrying (down 25.2%), Construction (down 3.0%), Agriculture, Forestry & Fishing (down 8.5%) and Manufacturing (down 2.9%).
  • All industries within the Services Industry recorded a fall in real value added for the second quarter 2020, excluding Producers of Government Services which remained flat. The industries estimated to have registered the largest contraction were Electricity &Water (-8.8%), Transport, Storage & Communication (-29.6%), Finance & Insurance Services (-3.0%), Wholesale & Retail Trade; Repair & Installation of Machinery (-20.0%) and Hotels & Restaurants (-87%).
  • For the first six months of 2020, real GDP is estimated to have decreased by 10.2%. The Service’s Industry was estimated to contract by 11.5% while the Goods Producing Industry was estimated to contract 4.4%. The industries estimated to have recorded the largest decreases in real value added during the period January to June 2020 were: Hotels & Restaurants (-50.0%), Mining & Quarrying (-30.5%), and Other Services (-23.1%).

Production Performance by industry

The Agriculture, Forestry & Fishing industry’s output was estimated to have decreased 8.5%. Performance for the quarter was attributed to an estimated decline of 6.8% for Other Agricultural Crops. Of the nine crops, seven exhibited lower production. Legumes decreased by 8.3%; Yams, declined by 13.4%; and Vegetables fell by 13.2%. Further declines were also recorded for the Traditional Export crops, which fell by 11.9%. This reflected declines in all four export crop groups, namely: Sugar Cane, down 20.3%; Banana, down 6.9%; Coffee, down 40.9%; and Cocoa, down 43.7%. Notably, “Sugar Cane production was impacted by the non-operation of a major sugar factory and the logistical challenges faced by farmers to transport the cane to other factories. Coffee and Cocoa production was negatively impacted by the closure of the hotel industry as the marketing of these products to hotels, in-bond shops and other tourism outlets was curtailed due to the COVID-19 containment measures” according to PIOJ.

Real value added for Mining & Quarrying industry fell by 25.2%. This down-turn reflected lower Alumina production, which outweighed an increase in Crude Bauxite production. Alumina production decreased by 29.8%. The decrease was due to a fall in the alumina capacity utilization rate to 47.7%, down 20.1 percentage points relative to the corresponding quarter of 2019. Crude bauxite production reflected an 18.1% increase attributable to higher demand from third party customers, with associated increase in the average bauxite utilization rate to 68.2%, from 57.8%.

The Manufacturing industry registered a decrease of 2.9%. This drop resulted from both the Food, Beverages & Tobacco and Other Manufacturing sub-industries. With respect to Food, Beverages and Tobacco, lower levels of output were observed for Animal Feed down 17.4%; Poultry meat, down 16.5%; Dairy Products down 12.9%; and Edible Fats, down 11.1%. Whereas, in the Other Manufacturing category, lower output stemmed from an estimated decline in both the Chemical & Chemical Products and Petroleum Products categories. Lower petroleum production was recorded for: Gasoline, down 17.8%; LPG, down 10.9%; Turbo Fuel, down 66.0%; and Fuel Oil, down 70.0%.

Real value added for the Construction industry fell by an estimated 3.0%. This was due to lower activity in the Building Construction and Other Construction components. The decline in activity in the Building Construction component stemmed from lower Residential and Non-Residential Construction activities reflecting; NHT Housing starts (down 65.0% to 350 units) and an estimated downturn in non-residential building activities, including hotel and commercial building construction. The Other Construction component was as a result of reduced capital expenditure on civil engineering activities reflecting lower expenditure from the National Work Agency and Jamaica Public Service.

A decrease in the Transport & Storage component resulted in a contraction in real value added for the Transport, Storage and Communications industry of an estimated 29.6%. This decline was driven by a decrease in maritime transport and a contraction in the air transport subcomponent, largely reflecting decreased passenger movements, down 97.7% due to Departures (down 97.3%) and Arrivals (down 98.0%).

Reduced electricity and water consumption resulted in a contraction in real value added for the Electricity & Water Supply industry by 8.8%. Electricity consumption decreased by 10.1% resulting from lower levels of output in five of the six electricity customer categories with General Service (small businesses using less than 25 kilo volt ampere (kVa), down 15.7%; Power Service (large businesses using more than 25 kVa but less than 500 kVa), down 12.7%; Large Power (businesses using more than 500 kVa), down 21.8%; Largest Power (single location, with peak demand of 2000 kVa), down 35.2%, and Street Lighting & Other, down 39.1%. There was an estimated decline of 3.5% in water consumption due to a falloff in Western division, of 13.8% which outweighed an increase in the Eastern division of 2.3%.

The impact of measures implemented to limit the spread of the COVID-19 pandemic on economic activities and return to investment led to an estimated decline in real value added in the Finance & Insurance Service industry by 3.0%.

Real Value Added in the Wholesale & Retail Trade; Repair and Installation of Machinery (WRTRIM) fell by an estimated 20.0% and was due to an estimated contraction in Agriculture, Manufacturing and Construction, and measures associated with the management of the COVID-19 pandemic which reduced operational hours and restricted the movement of people. Reduced sales were recorded for seven of the eight categories, with the largest declines recorded in Textiles, Clothing, Shoes & Jewellery (down 44.7%), Minerals, Fuels & Lubricants (down 39.9%) and Motor Vehicles, Auto Repairs & Accessories (down 33.0%).

Real value added for the Hotels and Restaurants industry decreased by 87.5%, reflecting a sharp decline in visitor arrivals and the number of persons utilizing restaurant services due to the closure of borders to passenger traffic for two of the three months during the quarter. Stop-over arrival decreased by 98.9% to 7,188 visitors. Furthermore, visitor expenditure was US$16.2 million, decreasing by 98.1% when compared to the corresponding quarter of 2019.


Furthermore, the PIOJ projects that, “For July–September 2020, a decline in output within the range of 8.0% to 10.0% is anticipated. This projection is based on expected contraction in all industries, with the exception of the Producers of Government Services.”

In addition, PIOJ expects that, “all quarters of FY2020/21 will record a contraction in output.  Consequently, the PIOJ’s projection for output is for a contraction within the range of 8.0%–10.0% for the full fiscal year. Growth in output is expected to resume during FY2021/22 given the cycling-out of the impact of the closure of the Alpart refinery, as well as an expected reduction in the impact of the Covid-19 pandemic on economic activities.  However, GDP levels are not anticipated to recover until two years after the pandemic.”

Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

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.