Mon | Jul 16, 2018

Jamaican economy grows 1.1% in June quarter

Published:Friday | August 26, 2016 | 12:00 AMMcPherse Thompson
Dr Wayne Henry, newly appointed director general of the Planning Insitute of Jamaica.

Favourable weather and the strengthening of the global economy are among the main factors that contributed to an estimated 1.1 per cent expansion in the Jamaican economy for the quarter to June 2016, according to the Planning Institute of Jamaica (PIOJ).

Director General of the PIOJ Dr Wayne Henry said the out-turn largely reflected good weather conditions relative to the same period last year, which positively impacted the performance of the agriculture, forestry and fishing sector, and the electricity and water supply industries.

Cumulative rainfall for the first six months of 2016 was 105 per cent of the 30-year mean, compared with 67 per cent of the 30-year mean recorded in the same period last year, he said.

The level of growth was also a manifestation of the positive impact of continued strengthening of the global economy on industries, such as hotels and restaurants, as well as an improvement in domestic demand resulting from the strengthening of both business and consumer confidence, Dr Henry said at a press briefing at the PIOJ's New Kingston office on Wednesday, his first as director general.

The hotels and restaurants industry expanded by 1.6 per cent, reflecting a 1.8 per cent increase in stopover arrivals, and a 5.5 per cent rise in cruise passenger arrivals, he said.

The economy's performance during the review period also reflected higher levels of construction activities associated with new hotel construction and expansion works, increased residential building activities, as well as new office space to facilitate the expansion of the business process outsourcing sector.

Third quarter outlook

The PIOJ is projecting real gross domestic product growth within the range of 0.5 per cent to 1.5 per cent for the July to September 2016 quarter.

During the April to June quarter, the goods producing industry grew by 2.3 per cent and was mainly attributed to a seven per cent increase in agriculture, forestry and fishing; manufacture, which expanded by 0.7 per cent, and the construction industry, which grew 0.4 per cent.

Growth in agriculture, forestry and fishing was attributed to an expansion in the other agricultural crops, up 13.5 per cent; and animal farming, up 6.7 per cent, pushed by broiler meat production, up 7.2 per cent, and egg production, up 22.1 per cent.

However, traditional export crops declined by 7.7 per cent, mainly reflecting a 28.6 per cent contraction in the production of sugarcane. This resulted from increased factory downtime due to excessive rainfall, as well as the non-operation of the Appleton Estate plant and the late start of processing activities at the Everglades plant.

The increase in output for other agricultural crops reflected growth in six of the nine crop groups led by legumes, up 36.6 per cent; fruits, up 31.6 per cent; vegetables, up 21.2 per cent; and condiments, up 16 per cent.

Growth in the manufacture industry resulted from an increase in the other manufacturing subcategory, primarily due to higher production for cement, up 19 per cent; clinker, up 0.6 per cent; gasolene, up 21.3 per cent; and fuel oil, up 22.4 per cent.

Real value added for mining and quarrying contracted by 1.3 per cent, reflecting a 5.5 per cent decline in total bauxite production.

There was a downturn in crude bauxite production of 10.9 per cent, mirroring the impact of the Chapter 11 bankruptcy filed by two United States-based producers of Jamaica's crude bauxite, Noranda and Sherwin Alumina processing plants, Dr Henry said.

The transport, storage and communication industry grew by 0.9 per cent; the wholesale and retail trade, repair and installation of machinery industry by 0.5 per cent, and the finance and insurance services sector by an estimated one per cent.

For July 2016, total electricity consumption increased by five per cent, and electricity generation by 3.9 per cent, while provisional data show that airport arrivals increased by 3.6 per cent.

Inflation of 0.5 per cent was recorded for July 2016, reflecting mainly the higher index of 2.7 per cent for the housing, water, electricity, gas and other fuels division.

This followed a 0.7 per cent inflation rate recorded during the April to June quarter, emanating primarily from higher prices in the transport division.

The PIOJ said inflation during the quarter was due mainly to an increase in world oil prices, implementation of the government's revenue enhancement measures, and depreciation of the Jamaican dollar against the United States dollar.