Tue | Jul 23, 2019

Economy grows 1.5% in March quarter

Published:Friday | May 24, 2019 | 12:19 AM
Dr Wayne Henry, director general of the Planning Institute of Jamaica.

The mining and quarrying industry contributed the lion’s share of the 1.9 per cent expansion in the Jamaican economy during fiscal year 2018-19, having growth by 28.5 per cent, driven mainly by production at the Alpart alumina plant in St Elizabeth, according to the Planning Institute of Jamaica, PIOJ.

That industry also provided the largest share, 10 per cent, of the 1.5 per cent growth in gross domestic product (GDP) for the January to March 2019 quarter, boosted by increased alumina production as crude bauxite declined.

PIOJ Director General Dr Wayne Henry said the positive outturn for the quarter to March largely reflected the impact of increased external demand from Jamaica’s main trading partners which supported increased exports of some goods and services, particularly tourism and alumina.

“It also reflected increased domestic demand pushed by an increase in employment as well as business and consumer confidence,” he said, in reviewing Jamaica’s economic performance at the PIOJ offices in New Kingston on Wednesday.

The increase in external and domestic demand was facilitated by an expansion in hotel room stock, air seat capacity and flight frequency, which facilitated growth in stopover visitor arrivals, higher capacity utilisation, especially in the mining and quarrying industry, an uptick in loans and advances to the private sector, and major infrastructure works, including road rehabilitation and expansion projects, construction and renovation of hotels as well as residential and commercial buildings.

For the review quarter, the goods-producing industry grew by an estimated 1.8 per cent with all industries, with the exception of manufacturing, registering growth. That performance largely reflected the impact of increased demand, improved weather conditions and increased capacity utilisation, Henry said.

The agriculture, forestry and fishing industry grew by an estimated 0.2 per cent, facilitated by improved performance of ‘other agricultural crops’ which increased by 2.7 per cent. There were increases in seven of the nine crop groups including condiments, up 8.6 per cent; potatoes, up 7.2 per cent; legumes, up 4.2 per cent; yams, up 3.9 per cent; and fruits, up 3.6 per cent.

Henry said further growth was constrained by a contraction in traditional export crops, down 8.8 per cent. This reflected declines in three of four crops groups, namely sugar cane, down 12.9 per cent; banana, down 7.1 per cent, and coffee, down 21.2 per cent.

Sugar cane production was impacted by illicit cane fires, a shortage of cane cutters and haulage equipment which, combined, resulted in inadequate throughput of sugar cane which caused factory downtime, the director general said. Factory operation was also impacted by mechanical issues.

Coffee production continued to be negatively impacted by the leaf rust disease and market uncertainty, while lower banana production reflected the impact of dry weather conditions during the review quarter.

During the quarter, alumina production was 12.7 per cent higher stemming from increased capacity utilisation. That was reflected in an increase in the average capacity utilisation rate at alumina refineries by 7.8 per cent to 69.7 per cent. Crude bauxite production declined by seven per cent due to a contraction in demand from third-party customers. The average bauxite capacity utilisation rate decreased by 4.5 per cent to 59.6 per cent. The capacity utilisation rate measures the proportion of potential economic output that is actually realised.

The manufacturing industry is estimated to have contracted by 0.8 per cent, reflecting a downturn in the ‘other manufacturing’ component, which outweighed an estimated growth in the food, beverages and tobacco component. Lower output in the ‘other manufacturing’ category reflected a decline in chemical, chemical products and petroleum categories.

The construction industry grew by 3.5 per cent, driven by higher road and building activities; hotels and restaurants grew by 7.0 per cent, spurred by growth in tourism arrivals; electricity and water supply, up 2.1 per cent, sparked by increased consumption; while transport, storage and communication grew by 1.5 per cent.

For fiscal year 2018-19, the agriculture, forestry and fishing industry grew by an estimated 4.1 per cent, supported by favourable weather conditions and improved productivity; construction grew by 3.5 per cent, pushed by higher civil engineering projects across the island; and the hotels and restaurant industry expanded by 3.1 per cent, propelled by increased tourist visits.

The PIOJ is projecting GDP growth in the range of 1.0 to 2.0 per cent for the April to June 2019 quarter.

mcpherse.thompson@gleanerjm.com