JIS News

Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wesley Hughes, has said that while prospects for the economy remained challenging, “fairly modest growth” was expected in the forthcoming months.
“This performance will be supported by growth, which we expect to see (resulting from) a recovery from the devastation of last year, when we had Hurricane Dean. So, assuming that we don’t have a similar occurrence, we will be seeing some recovery relative to the low period of last year,” said the Director General, who was addressing the PIOJ’s quarterly press conference today (Aug.19), at his Oxford Road offices in Kingston.
He was also optimistic of a fall in the prices of oils and other commodities globally, which, he said, should have a positive impact on the local economy.
Dr. Hughes said that while the international economic environment remained challenging, with the lingering effects of the United States subprime mortgage financial crisis impacting on the stock market, the volatility of various exchange rates and commodity prices, “in recent times, there has been a trend downwards, and we hope that this continues.”
He projected that the economy will grow by approximately.09 to one per cent during the July to September quarter.
Turning to the performance of the economy for the April to June 2008 quarter, Dr. Hughes said that construction, financial services, tourism, and distributive trade, were the main growth areas, even as the country’s Gross Domestic Product (GDP), for the period fell by approximately 0.2 per cent.
He said the construction sector grew by three per cent, due primarily to activities associated with Highway 2000, and Segment III of the North Coast Development Project; capital works at the Norman Manley and Sangster international airports; continued growth in the construction of hotels and general renovations. He pointed out, however, that residential construction activities were either flat, or experienced a slight decline.
The PIOJ head said the finance and insurance sector grew by approximately 1.2 per cent. “This was due to an expansion in loan and investment portfolios, as well as an increase in fee and commission income, associated with increased activities in the sector,” Dr. Hughes outlined.
In the tourism sector, real GDP in hotels, restaurants, and clubs increased by 1.3 per cent, the Director General informed. In terms of tourist arrivals, he disclosed that stopovers increased by 3.7 per cent, but that cruise ship passenger arrivals declined by approximately 17.8 per cent. “Visitor expenditure amounted to about US$466.4 million, an increase of about 0.2 per cent, relative to the same quarter in 2007,” he stated.
With regards to the distributive trade, which Dr. Hughes pointed out, was the largest segment of the economy, he told journalists that this area grew by approximately 0.8 per cent. “There were increased sales of textiles, clothing, shoes, automobiles, commercial and transport equipment, along with food and beverages. Activities in this sector were facilitated by increased loans and advances, and there was a higher level of remittances and higher levels of imports in the previous quarter, which fed into the quarter we are assessing,” the Director General explained.
In the meantime, agricultural output fell across the board by 6.8 per cent, due largely to a decline in sugar cane and banana production, as well as limited banana exports during the review quarter.
Mining and quarrying also declined by 1.5 percent, Dr. Hughes informed, which he attributed to a fall in alumina production, even as crude bauxite production increased over the period. “The decline in alumina production is still reflecting some residual effects of Hurricane Dean,” he noted.
Manufacturing, which fell by 0.8 per cent, saw declines in output for food and beverage, and tobacco, as well as for chemicals and chemical products, and petroleum products.
In the services sector, areas recording declines were: electricity and water – 1.9 per cent; and transport, storage, and communications – 2.3 per cent.
For the period, January to June 2008, Dr. Hughes said that the estimated growth was flat, with the services sector increasing by .8 per cent, and the goods producing sector declining by approximately 1.5 per cent. He explained that the overall economic outturn took place against the background of nominal depreciation of the exchange rate of some.7 per cent, which, he said, translates into real depreciation of 2.7 per cent.
In terms of the fiscal performance for the review quarter, Dr. Hughes told journalists that the fiscal deficit of $8.6 billion was about $4.1 billion less than programmed. During the quarter, revenues were 1.2 per cent higher than programmed, while expenditure was 4.2 per cent lower than programmed.
Inflation for the April to June quarter was approximately six per cent, reflecting increases in all major categories of consumption, with the overall inflation rate for January to June, being 11.6 per cent.
Regarding Jamaica’s external trade balance, Dr. Hughes said this deteriorated by 39.2 per cent between January and April, recording a deficit US$1.7 billion. Imports, he informed, increased by 28.2 per cent to US$2.5 billion, while exports increased by 10.4 per cent to US$.8 billion.