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Jamaica buys less foreign food, cars but still addicted to oil

Published:Friday | July 30, 2010 | 12:00 AM

The savings were relatively small at less than five per cent, but in the first calendar quarter Jamaica's reduced demand for imports cut its spending bill on foreign goods by US$59.5 million, Statin has reported.

Jamaica bought fewer chemicals and capital equipment and a lot less food from overseas in the March quarter, but some of those savings were offset by a bigger energy bill that rose 29 per cent relative to the March 2009 quarter.

The current account as reported on by the Bank of Jamaica emerged from a deficit in February to post a surplus of US$37 million, on the back of recovered remittances that rose above US$155 million that month, as well as a positive US$98 million balance in service trade.

Under Statin's quarterly estimate of total imports, excluding free zone activity, dropped 4.86 per cent to US$1.166 billion from US$1.225 billion in the three-month period. When free zone activity, estimated at US$42 million, is added, the import bill rises to US$1.177 billion.

Consumer goods imports, including motor vehicles, fell by 7.8 per cent, but still accounted for just above a third of all imports.

Auto dealers brought in US$24.9 million worth of vehicles, a one-sixth decline from the 2009 quarter's US$29.7 million - evidence that the auto market is still struggling to regain business under a recession that has entered its third year.

Riding the market

Companies like Issa Transport Group have retreated, but others such as ATL Automotives and Stewart's Auto Sales have been expanding to ride the market when economic circumstances change.

The food bill, which amounted to one-sixth of total spend in the quarter, cost US$181.5 million - a saving of US$44 million compared to the 2009 period as the agriculture ministry enforced new policy on food security, underpinned by a 'eat what you grow' strategy.

Concomitantly, food exports were down in the quarter to US$7 million, from US$39 million in Q1 2009.

Agriculture Minister Christopher Tufton aims, eventually, to cut 80 per cent off the food import bill which has an annual US$800-million price tag.

Jamaica is yet to see similar movements on energy security.

Oil, at US$393 million, was not only up nominally by US$88 million in the quarter, but proportionately the bill rose from 25 per cent of total imports in the 2009 period to 34 per cent - marked by a return to volatility in world prices that, in the past few weeks, have swung between US$71 and US$78 per barrel.

Jamaica's exports, after a promising two years of solid growth, slipped 50 per cent from US$2.6 billion in calendar 2008 to US$1.3 billion in 2009.

Imports triple exports

This year's first quarter began with a modest 5.9 per cent increase in exports to US$352 million, but not enough to set the stage for a recovery to the 2008 high.

Additionally, the spend on foreign-made goods continues to outpace the trade done by Jamaican companies overseas by a factor of more than three to one.

The trade gap for the quarter amounted to US$813.2 million.

The leading exports were bauxite and alumina, J$10 billion; mineral fuels, J$8 billion; and ethanol, rum and other alcoholic beverages, and sugar which were more than J$2 billion each.

More than half of first-quarter exports, 56.4 per cent, landed in the United States, Jamaica's main trading partner; while just under 39 per cent of all imports originated from there. Imports from CARICOM were one-third the US' at 13.8 per cent of the three-month period a three-point decline year on year.

Total exports to the region for the January to March 2010 period was down by 9.6 per cent or US$1.5 million to US$13.8 million.

Jamaica ran a trade deficit of US$147.6 million with its CARICOM partners in the March quarter, an improvement of 2.7 per cent on the US$151.7-million goods gap in the 2009 period.