PIOJ now sees growth as ‘an imperative’, economy too fragile
The continued lagged impact of the drought which prevailed last summer has been blamed for the poor performance of the Jamaican economy during fiscal year 2014-15, with the Planning Institute of Jamaica (PIOJ) estimating expansion of a mere 0.1 per cent.
The performance was largely driven by a decline in agriculture, which contracted by 0.4 per cent for the full year and fell by 0.5 per cent during the period January to March 2015.
In the half-year period before the drought in June and July, agriculture had expanded by 17 per cent.
PIOJ Director General Colin Bullock said the disappointing performance relative to expectations in the past fiscal year means that there is now an imperative to address the fragility of the country's growth.
"The process is fragile. In other words, we are in a situation where we were expecting 1.4 per cent growth and because of drought we are ending up close to zero," said Bullock, during his quarterly briefing on Jamaica's economic performance on Wednesday.
"It is fragile on two counts," he said. "Had the baseline been higher, if we had started with a baseline of three per cent or four per cent, the drought wouldn't have taken us so close to zero," he said.
"You want your agriculture and production processes to be more resilient, such that if there is drought it does not affect your growth numbers as significantly," he added.
Bullock suggested that major infrastructure projects have to be advanced both to enhance growth and to ensure that adverse shocks do not as easily make growth approximate zero per cent.
"In this vein, also, the coordination of agricultural and irrigation policy, with the rehabilitation of farm roads, are necessary to enhance growth and the resilience of growth relative to the possibility of shocks," the director general said.
Bullock reported that for the period January to March, real gross domestic product (GDP) was estimated to have grown by 0.3 per cent.
Agriculture, forestry and fishing fell by 0.5 per cent, largely reflecting an 11.6 per cent decline in traditional export crops. However, other agricultural crops such as sugar cane were estimated to have increased by 3.5 per cent.
Real value added for the mining and quarrying industry rose by 0.2 per cent, supported by higher production of alumina and crude bauxite of 0.2 per cent and 8.2 per cent, respectively. The enhanced performance of the industry was attributed to increased global demand for aluminum, of which alumina is an input.
The transport, storage and communications industry registered growth of 0.1 per cent. The upturn in transport and storage was due to increases in air passenger movement, up 8.2 per cent, which outweighed a 3.9 per cent decline in the volume of cargo handled.
The telecommunications segment was estimated to have grown due to increased competition among the main providers.
The finance and insurance services sector grew by 0.3 per cent, due mainly to the combined effect of a real increase in the value of total assets and higher net interest income on loan stock at deposit-taking institutions.
The wholesale and retail trade, repair and installation of machinery also grew by 0.3 per cent. This was associated with higher levels of domestic demand, reflected in an increase in business and consumer confidence, higher volume and value of banking machines and point-of-sale transactions, and a real increase in remittance inflows for January 2015.
Real value added in the hotels and restaurants industry rose four per cent and was reflected in a five per cent increase in stopover arrivals and a 15.9 per cent increase in cruise passenger arrivals.
The manufacture industry fell by 3.1 per cent due to reductions in the food, beverages and tobacco, as well as the other manufacture subcategories.
The electricity and water supply industry declined by 2.8 per cent because of lower levels of electricity consumption and a fall in water production, the PIOJ reported.