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JIS News

Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wesley Hughes, has said that the country’s economic performance for the October to December quarter was very positive, with the economy showing significant recovery from the devastation of Hurricane Ivan, over the corresponding periodin 2004.
Dr. Hughes, who was providing an update on last quarter performance at the Institute’s quarterly press briefing held at its Grenada Way offices in Kingston yesterday (Feb. 16), informed that the economy had recovered across almost all sectors, reflecting an estimated real Gross Domestic Product (GDP) growth of 4.1 per cent.
Meanwhile, he said the 0.9 per cent inflation rate for the review period was “a far better outcome than we were expecting at the start of the quarter”. Inflation for January 2006 is at 0.1 per cent.
The Director General noted that the main growth sector was agriculture, which showed significant turnaround from the previous quarters, which recorded double digit declines. During the corresponding quarter of 2004, the sector declined sharply by nearly 30 per cent, due to the impact of Hurricane Ivan, he noted. This carried over into the first two quarters of 2005, but the sector bounced back to grow by 28.3 per cent during the review quarter and contributed 1.3 percentage points to overall growth.
Detailing the activities in the sector, Dr. Hughes informed that domestic crop production grew by 28.5 per cent while exports went up by 79 per cent. He noted that after Hurricane Ivan, there was no export of bananas and the sugar industry was also significantly affected. During the review quarter however, bananas were exported and there was also an increase in livestock production, which is up by 7.6 per cent.
Meanwhile, the manufacturing sector grew by 1.5 per cent, with “other manufacturing” up three per cent due to increased levels of production in petroleum products. Poultry production increased by 16.6 per cent, animal feeds by 21 per cent, and sugar production by over 52.4 per cent.
In addition, the goods producing sector grew by some 4.3 per cent, the services sector by 3.7 per cent, and the miscellaneous services sector grew by 13.2 per cent, of which tourism grew by 17.9 per cent.
Total arrivals increased by 11.8 per cent and stopover arrivals were up 17.9 per cent. Cruise ship arrivals went up by 5.2 per cent and visitor expenditure increased by 24.6 per cent. “In general, it was one of the better quarters that we have had for tourism,” Dr. Hughes remarked. Electricity generation went up 4.5 per cent and water by 3.9 per cent. The PIOJ Head attributed the growth in electricity to the fact that the Bogue generating plant had returned to service during September 2005, after being out of production for one year.
Meanwhile, water production was boosted by the Great River/Lucea Supply System, which came on stream late 2004 with the full impact of this felt in 2005.
The transport, storage and communication sector grew by 6.4 per cent and construction by 2.5 per cent. Dr. Hughes said that the transport and communications sector has been a “star” performer over the last 10 years, with increased expansion in the communication sub-sectors.
“The growth in the October to December quarter was driven largely by sea and airport activities with increased vessel visits and cargo volume up by 18.4 and 15.6 per cent respectively,” he informed, adding that there was an increase in the movement of passengers by eight per cent.
Meanwhile, he pointed to a decline in the mining sector, with heavy rainfall associated with Hurricane Wilma and significant power outage in the last quarter of the year, resulting in 11,000 tonnes of production being lost at the JAMALCO bauxite plant. “There was a decline of almost 9.9 per cent in alumina production,” he said, noting that crude bauxite production went up by 160 per cent.
Further, construction grew by 2.5 per cent. “This is explained by increased activities in both the residential and non-residential construction. The Northern Coastal Highway Project, the recovery from the hurricane..all are components of construction and installation activities in the country,” Dr. Hughes said.
The distributive trade sector, which he pointed out, was very important, recorded growth of some 1.3 per cent, reflecting the impact of higher levels of sale during the quarter for chemicals, pharmaceuticals, food and beverages and tobacco and the petroleum.
There was also an increase in the levels of loans and advances to the sector. “It is important to note that while the beverage sub-sector declined because of production, in the distributive sector, there was an increase, because of higher levels of imports,” he clarified.
In addition, the financial services sector grew marginally by some 0.8 per cent with growth in the banking component and increased activities within the building societies. “The growth performance in the sector was tempered by relatively high operational expenses and the lowering of interest rates over the period, so the level of income has been falling,” Dr. Hughes said, noting that the moratorium on mortgage payments granted after Hurricane Ivan, had significantly impacted the building societies.
Dr. Hughes told journalists that the positive trends in the last quarter were expected to continue, barring any unforeseen circumstances as it related particularly to weather conditions.
“Short term prospects are fairly positive. We expect interest rates to continue a downward trend, given the lower inflation expectation. The growth in the goods-producing and the services sectors during January to March, we expect to be positive, with tourism expected to grow by about 10 per cent, and agriculture by 15 per cent during the quarter,” he informed.
Dr. Hughes cautioned that the main area of risk would still be associated with higher oil prices as this was a “volatile market”.
“There is also the problem of commodity prices globally increasing in response to the very significant growth in demand by China, so Jamaica has to face those realities,” he said, adding, “we have the positive of higher metal prices impacting positively on our alumina exports”.