The Planning Institute of Jamaica (PIOJ) is optimistic that the economy will return to positive growth in the last quarter of the fiscal year, despite a decline in earlier quarters.
“We are forecasting a return to Gross Domestic Product (GDP) growth by the January/March quarter of 2011,” said Director General of the PIOJ, Dr. Gladstone Hutchinson.
He was addressing a press conference on Monday, November 22 at the Institute in Kingston, where he reported that the economy had contacted by 0.5 per cent for the July to September quarter.
Acting Director of the Economic Planning and Research Division (EPRD) at the Planning Institute of Jamaica (PIOJ), James Stewart (right) consults with Economist in the Division, Jodian Aris (centre), and Programme Manager for the Planning Development Unit, Richard Lumsden, moments before the start of the quarterly press briefing on Monday November 22 at the PIOJ in Kingston.
He noted however that this performance “represents a slowing in the pace of decline in the economy, which contracted by 1.5 per cent in the first half of 2010.”
While there were areas of growth in the goods-producing industry, with mining and quarrying increasing by a whopping 31.1 per cent, and agriculture, forestry and fishing by 6.0 per cent, the gains were eroded by declines in electricity and water supply of 6.3 per cent; finance and insurance, 2.8 per cent; and transport, storage and communication, 2.5 per cent.
There were also declines of 3.6 per cent and 1.0 per cent in the manufacturing and construction industries, respectively.
Dr. Hutchinson attributed the falloff to the unrest in West Kingston, the adverse effects of Tropical Storm Nicole and the overall reduction in the services industries. Except for hotel and restaurant, which grew by 2.2 per cent, all other sectors within the service industry declined.
Director General, Planning Institute of Jamaica (PIOJ), Dr. Gladstone Hutchinson (centre) examines his notes with Programme Manager for the Planning Development Unit, Richard Lumsden (right), and Acting Director of the Economic Planning and Research Division, James Stewart, before the start of the quarterly press briefing on Monday November 22 at the PIOJ in Kingston.
The PIOJ noted also that the country’s economic performance continued to be affected by the lagged effects of the global recession.
The Director General informed however that throughout the period of downturn in the global economy the agriculture and tourism sectors continued to perform credibly. “Enterprises in these sectors have been engaged in retooling and generally adapting productive productivity enhancing measures, the result of which was that even within the worst recession of over four decades, these sectors remained competitive and grew,” he said.
In contrast, Dr. Hutchinson said the PIOJ has determined that the constraints to growth are primarily on the production and productivity sides, and these must be addressed if the economy is to achieve sustainably higher and job recreating rates of economic growth, when the world economy recovers from its contraction.
Turning to the other macro-economic highlights of the July to September 2010 quarter, Dr. Hutchinson informed that inflation was 1.3 per cent, with the inflationary pressures emanating primarily from increased prices in the categories of food and non-alcoholic beverages, which went up 2.0 per cent, and miscellaneous goods and services, up by 1.9 per cent.
There was a fiscal deficit of $33.7 billion during the review quarter; $0.6 billion higher than budgeted. Dr. Hutchinson said the deficit was due to revenue being $6.4 billion lower than programmed and expenditure, $5.8 billion lower than budgeted.
The exchange rate at the end of September 2010 was $86.25 per US$1.00, representing a nominal depreciation of 0.3 per cent and a real appreciation of 0.8 per cent.