Fri | Jun 22, 2018

Growth driven almost entirely by agriculture

Published:Friday | January 26, 2018 | 12:00 AM


It seems that agriculture explains just about all the variation in GDP that has occurred in the last four years, and in fact, before.

This has been acknowledged, to some extent, but two graphs from PIOJ's April-June 2017 Economic Update & Outlook for 2013-17 match almost exactly (most recent GDP growth figure adjusted in line with STATIN's correction of PIOJ's figure - down to 0.1% from +0.3%).

Since agriculture accounts for 7% of Jamaica's GDP, the effect of agriculture on GDP can be calculated by multiplying the changes in agricultural output by 0.07. This works out very closely.

For July-Sept 2016 (highest growth point), agriculture grew by 30%. Multiplying by 0.07 gives the 2.1% GDP growth rate shown on the other graph. The low points also correspond: 23% contraction in agriculture, multiplied by 0.07 give minus 1.6% as its effect on GDP - the GDP graph shows 1.5%.

So except when agriculture does well, thanks to favourable weather, we are perhaps not reaching very far. The last graph shows that since 1993, Jamaica has had a very lumpy growth rate, with the trend not much above zero.