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The agricultural sector recorded the most growth in the final quarter of 2008, Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wesley Hughes has disclosed.
Dr. Hughes said that the 7.5% increase in real value added in agriculture, forestry and fishing, October-November 2008, was due largely to the lowering of some input prices and favourable weather conditions.
He said that although the hotels and restaurants industry declined by 1.3 per cent, reflecting a decline in total arrivals of 2.3 per cent and even while stop-over arrivals were down by 1.1 per cent and cruise ship passenger arrivals by 3.9 per cent, this reflected a good promotional performance by the government.
“These modest declines in the hotel and restaurant sector suggest that Jamaica is performing slightly better than other destinations in the region, reflecting the very strong efforts on (the part of) those responsible for promoting local tourism,” he noted.
The period also had the lowest quarterly rate of inflation since October-December,2000.However, he said that during the quarter, real GDP fell by an estimated 0.7% compared with the corresponding period of 2007, as the economy continued to be impacted by the global financial downturn resulting in higher than programmed fiscal deficit, and subdued prices in the local market.
Mr. Hughes was briefing the media on the PIOJ’s Review of Economic Performance for the quarter, October-December ,2008, this morning at the institute’s office, Oxford Road, Kingston.
He said that Gross Domestic Product(GDP) performance for January to December 2008 showed that there was a modest decline of 0.4%, with the goods producing industries declining by 2.8%, while the services industries grew by 0.4%.
The economic outturn took place against the background of a nominal depreciation of the exchange rate, of some six per cent. Inflation for the quarter was flat.
“This was the lowest quarterly rate of inflation since October to December 2000. Inflation outturn was due mainly to increased demand for food, resulting in food and non-alcoholic beverages up 4.2 per cent and relatively lower commodities prices all around, particularly due to oil price decline,” he stated.
The fiscal deficit was $32. 8 billion, $13.9 billion more than budgeted, due to an $11.7 billion lower than programmed revenue flow, and expenditure of $2.2 billion more than budgeted, he added.
Speaking to the short term prospects for the economy, he said that it was expected that it will continue to face a very challenging environment, as the global situation deteriorates.
“This will continue to impact on demand for our exports, which we expect to continue to decline, in relation to bauxite and alumina and other services.
There will be a continued tightness in the credit and financial markets, globally. This however, will be tempered by the continued decline in international commodity prices, and oil and other foods that we import. So there are positives and negatives there,” Dr. Hughes said.
He said that other agricultural crop production grew by 12.3% and animal farming increased by 4.1%, but traditional export crop production declined by 13.1%, reflecting a 51.5% decline in sugar production, while no banana was exported.
Mining and quarrying recorded 3% growth, with alumina output increasing by 4.7% and crude bauxite by almost one percent.
The manufacturing sector grew by 0.1%, food, beverages and tobacco grew by 0.7%, while the other manufacture component declined by 0.5%, impacted on by a reduction in cement production.
Finance and insurance services grew by 1.3 per cent, due to higher volume of activities at deposit-taking institutions, growth in the investment portfolio of fund managers and higher fees and commission income.
Within the services industries, electricity and water grew by 1.6%, reflecting an output increase of electricity, with generation increasing by two per cent, due to increased output from Jamaica Public Service Company(JPS) sources. The non-JPS sources declined by 6.7 per cent,” he added.
“Water production was down by 1.6 per cent, while real value added in the transport, storage and communications sector declined by .5%, mainly influenced by reduced levels of activities at the country’s airports, Dr. Hughes saidReal GDP for Construction declined by 11 per cent during the quarter. This reduction was due to reduced levels of activities in both residential and non-residential components. This was due mainly to the impact of the global economic recession on the domestic economy, which was reflected in a slowdown in several public and private sector projects.
“The decline in residential components was due to lower levels of housing starts, and completion. Performance within the non-residential component reflected the downturn in both civil engineering and the winding down of the Northern Jamaica Development Road Project,” Dr. Hughes explained.
The wholesale and retail trade, repair and installation of machinery sector (formerly the distributive trade), recorded a decline in real value added of .5 per cent.
“The performance of the industry was negatively affected by the general deterioration of economic conditions in the global economy, which manifested itself in a decline in remittance flows,” the Director General said.