Increased Imports Point to more Investments

Figures from the Statistical Institute of Jamaica (STATIN) show that Jamaica’s import bill for the first three months of 2007 rose by almost US$93 million or nearly seven per cent over the similar period in 2006.
This increase resulted in a rise in the country’s trade deficit during the period since export earnings for January to March this year grew by the smaller figure of US$38 million. The trade deficit is determined by subtracting the value of imports from the value of exports during a particular period.
While the jump in imports relative to export earnings appears to be negative at first glance, closer examination of the statistics point to a positive underlying situation. The positive aspect of the data has to do with the fact that of the total US$93 million in additional imports in the January to March 2007 period, US$68.3 million was money used for the importation of machinery and transport equipment.
This category of imports grew by 26.5 per cent this year over the first three months in 2006. This category does not include imports of motor cars, which are accounted for under the broad heading of ‘Other Imports’.
Therefore, three quarters (75 per cent) of the increase in imports between January and March this year is accounted for by the purchase of machinery and other equipment. This US$68.3 million in machinery and equipment imports points to the importation of more capital goods, which suggests increased levels of investments and generally heightened economic activity in Jamaica.
This positive underlying economic picture is further enhanced by the fact that US$5.7 million in additional imports came through the purchase of crude or raw materials during the three-month period. Over the period raw material imports grew by nearly 37 per cent. Crude or raw material imports are triggered by increased investments or greater levels of economic activity.
Of the US$93 million in increased importation during the January to March 2007 period therefore, a total of US$74 million or close to 80 per cent of the additional imports is explained by additional equipment purchases or more raw materials bought from overseas – both factors that speak to increased investment and increased general economic activity.
Imports by CategoryJanuary – March 2007
Category 2007 2006 Change