May 22, 2018
Mr. Wayne Henry, Director General for PIOJ, started the press briefing by providing the main highlights of the macroeconomic performance for the January to March 2018 quarter. The following were noted:
Overview of Real Industry Developments
- For January-March 2018, real GDP grew up an estimated 1.12 per cent relative to the corresponding quarter of 2017. The Goods Producing and Services Industries were estimated to have grown by 3 per cent and 0.7 per cent respectively.
- Within the Goods Producing Industry, increases in real value added for the Mining & Quarrying (up 25.5 per cent), Construction (up 1.5 per cent), Agriculture, Forestry & Fishing (up 0.5 per cent) and Manufacture (up 1 per cent).
- All industries within the Services Industry recorded growth for first quarter 2018. The industries estimated to have registered the largest growth rates were Hotels & Restaurants (1.6 per cent) , finance & Insurance Services (1.0 per cent) and construction (1.5 per cent).
- For FY 2017/2018, real GDP was estimated to have increased by 0.8 per cent. The Service’s Industry was estimated to have grown by 0.9 per cent while the Goods Producing Industry expanded by 0.3 per cent. The industries estimated to have recorded the largest increases in real value added during FY 2017/2018 were: Mining & Quarrying (4.7 per cent); Hotels and Restaurants (4.0 per cent); and Construction (1.2 per cent).
Other Macroeconomic Highlights
- For the reported period (January-March 2018), the Jamaican economy experienced deflation of 0.2 per cent, which emanated primarily from a decrease in prices for the Food & Non-Alcoholic Beverages division (down 11.7 per cent). There was a rebound in domestic food supply due to favourable weather condition relative to heavy rains and flooding experience in 2017.
- As of January 2018, the employed labour force increased by 22, 600 persons to 1,206,600 persons versus 2017 figure of 1,184,000 persons. As a result, the unemployment rate for January 2018 was 9.6 per cent, the lowest since October 2017 when the unemployment rate was 9.3 per cent.
Production Performance by industry
Real value added for Agriculture, Forestry & Fishing increased by 0.5 per cent. Performance for the quarter was attributed largely to improved weather conditions relative to the corresponding quarter of 2017. Traditional Export Crops increased by 2.2 per cent, driven primarily by a 13.5 per cent increase in banana production which outweighed contractions in the output of sugar, coffee and cocoa. Of the other agricultural crop, four of the nine crop groups recorded increase output: Fruits (up 11.1 per cent), Vegetables (up 3.9 per cent), Plantains (up 13.3 per cent) and Other Tubers (up 5.2 per cent).
Real value added for Mining & Quarrying industry grew by 25.5 per cent. This up-turn reflected higher crude bauxite and alumina production of 27.7 per cent and 27.1 per cent, respectively. The increase in aluminium production reflected mainly the resumption of operations at the Alpart alumina refinery.
The Manufacturing industry registered an increase of 1.0 per cent. This rise resulted from Other Manufacturing sub-industry. Increase in Petroleum Products (up 54.2 per cent) and Plastic Product (up 8.7 per cent) were enough to off-set a 1.0 per cent decline in Food, Beverages & Tobacco sub-industry.
Real value added for the Construction industry grew by 1.5 per cent. The higher value added was due to the increased activities in the Building Construction and Other Construction components.. Growth in the Building Construction component stemmed from both Residential and Non-residential Construction. There was an increase of 1,132 units in Housing Starts. The growth in the Other construction component was driven by increased capital expenditure by : National Works Agency,(from $2.2 billion to $3.0 billion); Jamaica Pulic Servic (from $0.9 billion to $1.7 billion); Port Authority of Jamaica (from $0.6 billion to $1.1 billion).
Improvements in the Transport & Storage component resulted in real value added for the Transport, Storage and Communications industry of 0.8 per cent. Growth resulted from increased activities as the island’s sea and air ports. Total maritime cargo movement increased by 12.1 per cent while total air passenger movements increased by 6.0 per cent.
Higher levels of water production (up 4.3 per cent) outweighed a decline in electricity consumption (down 0.1 per cent) resulted in real value added for the Electricity & Water Supply industry by 0.4 per cent. The growth in water production reflected increased in the Western Division and Eastern Division which were up 10.2 per cent and 0.8 per cent respectively.
The combined effect of an increase in the value of net interest income on the stock of Loans & Advances at deposit-taking institutions, as well as, an increase in fees and commission income drove real value added in the Finance & Insurance Service industry by 1.0 per cent.
Real value added for the Hotels and Restaurants industry increased by 1.6 per cent, reflecting increase Foreign Nationals arrival (up 6.1 per cent to 589,158 persons) from the USA. However, arrivals from Europe and Canada declined. Cruise passenger arrival also increased by 6.5 per cent to 673,672 persons.
Prospect for growth for the short term remains positive. However, achieving our near term target will depend on our willingness to remain focus on maintaining macroeconomic stability, continued implementation of strategic growth project ( including projects that strengthen disaster resilience) and strengthening inter-sectorial linkages within the economy as well as strengthening crime reduction efforts. April to June 2018 base-line economic growth is expected to be within the range of 1.5-2.5 per cent, while growth projection for FY 2018/2019 is expected within the range of 2 and 3 per cent.
Downside Risk to Forecast
Downside risk to the short term growth prospect are as follows:
- Weather related shocks that may adversely impact productive activity
- Plant down times associated with relatively aged equipment
- Slower than expected growth with Jamaica’s main trading partners
- Crime and violence a potential deterrent to investment and productivity
- The implication for the mining and Quarring industry due to U.S. sanction on selected Russian oligarchs
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