Minister of Finance and Planning, Dr. the Hon. Peter Phillips, says despite the challenges, the Government expects real Gross Domestic Product (GDP) growth for the July to September 2012 quarter.
"This growth will be supported by a tempering in the rate of decline for transport and communication, as the impact of the sale of Air Jamaica cycles out," Dr. Phillips said.
The Minister was delivering a Statement on the state of the economy in the House of Representatives, on September 11.
Dr. Phillips pointed out that growth for the July to September quarter will be supported by continued growth in the Telecommunications sub sector, as the volume of minutes sold is expected to grow due to intensified competition among the providers.
He also cited continued growth in tourism, due to expected increase in arrivals and visitor expenditure associated with Jamaica 50 celebrations, and continued growth in the agriculture, forestry and fishing sectors that will contribute to GDP growth.
"Major investment infrastructures which will help stimulate the economy include: North South Highway Link; the expansion of port facilities aimed at positioning Jamaica as a major logistics hub, due to the expansion of the Panama Canal; the establishment of the Barrett Hall Lifestyle village in St. James and the creation of a technology park in Portmore," Dr. Phillips said.
In the meantime, the Finance Minister informed that for the period April to September 2012, Jamaica's current account deficit is estimated to have declined by US$226.5 million to US$797.3 million (5.1 per cent of GDP) relative to the comparable period of the previous fiscal year.
"This decline primarily reflects an improvement on the goods sub account associated with an estimated contraction of US$171.9 million," Dr. Phillips said.
Preliminary data to August 2012 show that revenue and grants were 1.3 per cent below target with tax revenue 1.0 per cent short of target. Expenditure is estimated to be $5.4 billion (3.1 per cent) less than budgeted, with interest payments ($2.7 billion less) being the main contributor to the lower expenditure outturn.
The stock of Net International Reserves (NIR) is expected to be at US$1,323.1 million at the end of September 2012. The Bank of Jamaica’s gross international reserves are expected to amount to US2,167.8 million, representing 14.4 weeks of projected imports of goods and services at the end of September, the Minister informed.
"With the conclusion of an agreement with the International Monetary Fund (IMF), we expect that official flows from international financial institutions and bilateral sources will significantly increase. This will not only cause an improvement in our NIR but should have a positive impact on the people’s expectations and ensure greater stability in the exchange which came under pressure in recent weeks," Dr. Phillips said.
In addition, the Government is expecting that inflation in the September quarter will be similar to the outturn in the June quarter, in the range of 1.0 per cent to 2.0 per cent.