JIS News

Despite the effects of Hurricane Ivan, the country experienced growth of between 1 to 2 per cent last year and is projected to grow by 2 to 3 per cent in 2005, Finance and Planning Minister, Dr. Omar Davies has said.
The Finance Minister, who was speaking to members of the diplomatic corps at a meeting at Jamaica House on Tuesday (Jan. 25), said that the economy was on course for 3 per cent growth before the hurricane hit the island last September, with Gross Domestic Product (GDP) figures for January to March and April to June recorded at 2.6 per cent and 2.8 per cent respectively.
He credited the strong six-month figures to robust performances in manufacturing, mining and quarrying, construction and installation, the distributive trade and tourism.
In the area of tourism, Minister Davies noted that last year was the best ever in terms of the number of visitors and expenditure within the sector. “Last year surpassed 2003 and 2003 was our best year before. We would have been another 5 or 6 per cent up were it not for Ivan. It’s not just the damage to facilities but tourists just don’t go to a place that was just hit by a storm,” he pointed out.
He noted however, that the sector has rebounded since the hurricane and the “prospects are significant.” Spain, he told the diplomats, has rediscovered Jamaica and “the range of investments that are taking place is unprecedented. There are also Jamaican investments that are taking place. The prospects in tourism are amazing.”
Turning to bauxite/alumina, Minister Davies said that the sector continued to register record levels prior to Hurricane Ivan, with both Jamalco and Alpart investing some US$159 million in expansion efforts during 2003/04, which saw capacity increasing by 400,000 tonnes.
Increased demand for metal especially in China, and the added plant capacity, drove growth in the sector to 10.8 per cent from January to March and 8.5 per cent for April to June. The effects of Hurricane Ivan however, led to a 7.5 per cent decline during the three-month period July to September.
Production should rebound during this year, however, with Alcoa doubling its Clarendon plant, “which will then significantly raise our production capacity as well as our foreign exchange earning capacity,” Dr. Davies informed. Over 2,500 people will be employed during the construction phase, he informed.
Meanwhile, the Finance Minister told the diplomats that inflation should be in the single digits this year, with the figures for the first three months of 2005 at zero or close to zero.
He said that the government had targeted single digit inflation for 2004 and was on course to achieve the target with inflation at 6.8 per cent for the first six months of the year. However, the effects of the hurricane pushed the figure to 6 per cent between October and November.
“In December, we were back on track but it certainly busted our target and created a problem in terms of discussions with the unions because we had committed ourselves to single digit,” he noted.
In terms of interest rates, the Minister said the figures were still too high but were expected to decrease.
“In fact during the immediate period after Ivan, we were on a track for further reduction but since we did not know the impact of Ivan on the economy and on foreign exchange earning, we decided to hold for a period in terms of the reduction in interest rate, but the Central Bank has assured me that we are returning to a track of further reduction in interest rate,” he stated.
He informed further, that the balance of payment was improving, the reserves were comfortably above benchmark but oil prices remained a great concern.
Meanwhile, he said that revenue and grants receipts for 2005 were projected at $175 billion, which is 31 per cent of GDP and 0.3 per cent below original budget, but 16 per cent above last year’s outrun.
He further informed that the Tax Policy Review study now being examined with a view to making changes to the present tax system would be included in the 2005/06 budget.

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