Economy Records Modest Growth for July to September

Bank of Jamaica (BOJ) Governor, Brian Wynter, is projecting modest economic growth of one per cent growth for the July to September quarter.

This forecast, he says, is based on several factors, which were outlined to journalists during the Central Bank’s quarterly media briefing at the BOJ’s downtown Kingston offices on Wednesday, August 21.

These factors, Mr. Wynter said, include: improved investor confidence in Jamaica; continued global economic recovery, despite at a slow pace; and more robust growth in credit to the private sector. The latter, he explained, will take place in the context of the reduced demand for credit “that has normally, in the past, been imposed by the public sector.”

“That reduced demand, as you would appreciate, comes from the fiscal consolidation that is the central point of the fiscal aspect of the (government’s economic reform) programme. So government is spending less than in the past as it tackles the overarching challenge of debt reduction,” he added.

Mr. Wynter said Gross Domestic Product (GDP) growth for the April to June quarter contracted, “albeit at a slower rate than the contraction (recorded) in the (January to) March quarter”. He pointed out that both the tradable and non-tradable sectors are estimated to have declined.

The main sectors contracting were agriculture, forestry and fishing; hotels and restaurants; and electricity and water supplies.

“The contraction reflected the impact of drought conditions, continued weak domestic demand as well as the slow recovery in the global economy, which contributed to lower remittance inflows and relatively low demand for Jamaica’s goods and services,” the Governor explained.

Mr. Wynter said the BOJ is projecting improvements for the remaining quarter of the 2013/14 fiscal year.

This forecast, he explains, largely reflects an expected recovery, relative to the outturn for the corresponding period of 2012/13 when the economy was negatively impacted by Hurricane Sandy, and subsequent drought conditions, as well as a “high level of investor uncertainty” consequent on the then perceived delays in the government concluding a new agreement with the International Monetary Fund (IMF).

He said based on subsequent developments, including signing of the new US$932.3 million four-year Extended Fund Facility (EFF) with the IMF, “we expect to have recovery.”