Signs Of Incremental Improvement In Economy Emerging

Bank of Jamaica (BOJ) Governor, Richard Byles, says signs of incremental improvement in the economy are beginning to emerge.

These, he said, are evidenced in the indicators related to employment and growth, among other areas impacted by the coronavirus (COVID-19) pandemic.

Speaking during the BOJ’s digital quarterly briefing on Friday (May 21), Mr. Byles said the latest data released by the Statistical Institute of Jamaica (STATIN) indicated an unemployment rate of 8.9 per cent as at January 2021, up 1.5 percentage points compared to the corresponding period 12 months earlier.

He noted, however, that this represents an improvement, relative to the 10.7 per cent recorded at October 2020.

“When account is taken of the seasonal patterns in employment, these statistics suggest that more than 25,000 jobs were restored between October 2020 and January 2021, following the approximately 40,000 jobs that were added between July and October last year,” the Governor pointed out.

Mr. Byles said the same pattern of improvement continues to be evident in the growth figures.

He said STATIN’s most recent growth data showed that domestic economic activity contracted by 8.3 per cent for the October to December 2020 quarter.

“Using the quarter over quarter change in the seasonally adjusted real gross domestic product (GDP), as reported by STATIN, the out-turn for the December quarter relative to the September quarter reflected a growth of 0.9 per cent,” he explained.

Mr. Byles said despite the out-turn showing some improvement, the Bank continues to project that growth for the fiscal year 2020/21 fiscal year will contract in the range 10-12 per cent.

“We then expect a partial rebound of at least five per cent in economic activity to commence in fiscal year 2021/22, and could possibly be as high as eight per cent, if there is strong recovery in tourism and tourism-related activities,” he added.

Mr. Byles said it is likely that growth could trend towards the top end of this forecast range, given the higher than anticipated pace of inoculations, the anticipated release of pent-up vacation demand from this development and the impact of the significant fiscal and monetary stimuli in Jamaica’s major trading partner – the United States of America (USA).

He pointed out that the main downside risk to this projection relates to the domestic spread of the COVID-19 virus and efforts to control it.

“If Jamaica’s stringency measures have to be enhanced and protracted, retrenchment in travel and disruptions in the production and distribution of goods could occur,” Mr. Byles indicated.