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PIOJ predicts up to 2% growth for fiscal year

Published:Wednesday | June 1, 2016 | 12:00 AMMcPherse Thompson
Colin Bullock, director general of the Planning Insitute of Jamaica.

Growth prospects for the economy during the quarter ending June are generally positive based on the anticipated strengthening of the performance of most industries relative to the similar quarter of 2015, according to the Planning Institute of Jamaica (PIOJ).

Growth is expected to be in the range of 0.5 per cent to 1.5 per cent in the June quarter, supported by expansions across various sectors. For the fiscal year ending March 2017, PIOJ expects real GDP to expand by 1.0 per cent to 2.0 per cent.

For agriculture, that sector's performance is expected to reflect continued recovery from drought and expansion in output, facilitated by increased access to irrigation infrastructure, as well as increased usage of agro parks and agro economic zones.

PIOJ also predicts higher demand for electricity and water supply due to increased economic activity and improved rainfall, PIOJ Director General Colin Bullock told a media briefing in New Kingston on Wednesday.

Growth is also predicted for the construction sector due to anticipated increase in housing starts backed by the National Housing Trust, as well as hotel development and office space for business process outsourcing operators, he said.

Additions to the room stock through expansions of existing properties and new hotels are also expected to drive growth in tourism.

The hotels and restaurant sector is also expected to support growth, facilitated by increased room stock as a result of the expansion of existing properties and the construction of new hotels.

Bullock said the fiscal baseline forecast is predicated on the combined effect of global growth; strengthened investor confidence, assuming the continued robust imple-mentation of the International Monetary Fund-backed reform programme; favourable weather conditions; business environment reforms; and implementation of strategic investment projects.

"However, this baseline forecast may be exceeded if major projects which are not included in the baseline are implemented," the director general said.

That was a reference to expected major projects in tourism, port development, in particular the Kingston Container Terminal expansion; the build out of additional office space; and more agro parks.

PIOJ's prediction for growth follows its preliminary estimate that the Jamaican economy grew by 0.9 per cent in the March quarter.

Emerging from uncertainty

Bullock said the estimated out-turn for January to March 2016 and the positive expectation for April to June 2016, following four quarters of positive growth, suggest that Jamaica may well be emerging from its twilight of uncertainty and unpredictable fluctuations.

"It is worthy of note that the goods-producing industry has been demonstrating more buoyancy than services, and that manufacture, often assumed to be unable to compete, is emerging as a leading sector," he said.

"It has long been recognised that growth needs to be stronger and in this regard, we read the message from maturing industries for example, sugar and bauxite-alumina that as we provide essential life support, there is an imperative to discover and facilitate emerging and new avenues of production, including in agriculture," said the PIOJ director general.

"In this context, a strong and creative private sector is essential to the process of discovery of Jamaica's productive potential," he added.

Bullock said that "while we pursue the major projects in a thrust to realise our upside potential for stronger growth, it is imperative to arrest the downside risks which have undermined the realisation of our potential".

He added that as the country takes comfort in the progress made in diversifying energy sources and reducing the cost of power, "our confrontation of issues relating to irrigation, flooding and sea level rise remain as work in progress. Enhanced educational outcomes and labour market reform are also essential in building human capital and enhancing productivity".