Tue | Oct 23, 2018

Big growth for Jamaica - Economy sees strongest performance over single quarter in 14 years

Published:Wednesday | November 2, 2016 | 12:00 AMJovan Johnson
Dennis Chung

Jamaica's economic growth projections for the fiscal year stand to be revised upwards over the strongest growth in a single quarter in 14 years.

Stakeholders, including the Private Sector Organisation of Jamaica (PSOJ), say they are not surprised and forecast that the growth rate should continue.

Finance Minister Audley Shaw, to the delight of government members, yesterday told the House of Representatives that the economy over the July to September quarter grew by 2.3 per cent, the highest single quarter growth since 2002.

"We are well on our way to five in four," he said, referencing the Government's aim to get five per cent gross domestic growth by the 2020-2021 fiscal year.

The Planning Institute of Jamaica (PIOJ) had reported 1.1 per cent growth for the April to June quarter. The institute, which has projected real GDP growth for this fiscal year of between one and two per cent, is expected to present more detailed analyses later this month.

Dennis Chung, PSOJ chief executive officer, said Shaw's disclosure was not unexpected, suggesting that stronger focus on crime and public-sector reform could trigger a bigger upswing in upcoming quarters.

"I'm not surprised, for two reasons. The year before, we had a significant problem because of the whole drought situation, but also we've been seeing a lot more people going into agriculture, even on large scale, and even at the micro, small and medium-sized enterprises. The PSOJ has been saying [since] two years ago that we expected that the economy was going to improve. I think it's going to continue based on the trend we have."

Shaw said much of the growth last quarter came from the agriculture sector, which grew by 28.8 per cent, twice the figure recorded for April to June.

Norman Grant, president of the Jamaica Agricultural Society, said the latest figures show how important farmers are to the economy and give an indication of the possibilities if roads and irrigation systems are upgraded.

"Over the past two years, we have been having very bad drought. This year, the weather has been good, and it is remarkable in terms of the performance of the agriculture sector," he said.

President of the Micro, Small and Medium-Sized Enterprises Alliance, Donovan Wignal, said the growth figures show why it was important to continue with the economic reform programme. "The fundamentals to get this sort of growth would have been work in progress that this administration has so wisely continued."

"It's good news for the country. It will do a lot to bolster investor confidence and consumer confidence. They are paying significant attention," he added.

Meanwhile, Shaw yesterday announced that a group of stakeholders has been set up to work with the Bank of Jamaica (BOJ) to address issues with the sliding dollar. That working group is to have its first meeting with the BOJ on Friday.

Pointing to improvements in the economy, the more than US$3 billion in foreign-exchange reserves, and the assurance of continued International Monetary Fund support, Shaw said he couldn't understand the basis for the depreciation.

"There is no objective basis except for carelessness, greed and speculation that can cause our exchange rate to continue to devalue," he argued.

"We, as a country, can come together around this and keep our exchange rate stable. We need to do it for our citizens, our families [and] our schoolchildren."

Opposition Senator Lambert Brown and Kingston Central Member of Parliament Ronald Thwaites have emerged recently as voices demanding action from the authorities on stemming the slide in the local currency, which has lost more than six per cent of its value since April, despite repeated BOJ interventions.

"I don't want the minister of finance to be accused of staying away from what is very, very important for this country," he said.

The local currency was at $129.05 to US$1 at the end of trading Tuesday.