Recession holds firm grip on Jamaica
Published:Friday | August 27, 2010 | 12:00 AM
Correction
In today's article 'Recession holds firm grip on Jamaica', it was reported that Caribbean Cement company had shut down manufacturing operations for four months. The shutdown is actually for 40 days, dated from mid-August, to clear build-up of inventory, reported at the time of the plant closure to amount to some four months of supplies.
We regret the error.
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The Jamaican economy continued to contract into the second quarter, with the Planning Institute of Jamaica (PIOJ) reporting an even more dismal performance of the real sector in the April-June period when output in all sectors, with the exclusion of mining, lost value.
Agriculture, which had shown signs of vibrancy in the first quarter, contracted 3.5 per cent in the second, relative to its 2009 position.
This sector, the PIOJ said, was the biggest loser in the goods-producing industry, manufacture fell 1.6 per cent, and construction by 1.5 per cent, bad news for Caribbean Cement Company which this month was forced to ramp down its plant for 40 days because of lack of demand from builders, and to sell off inventory built up at its warehouses at Rockfort.
The new economic data were presented Wednesday by Director General Dr Gladstone Hutchinson and his team.
Mining, however, grew by 4.3 per cent, because of increased capacity utilisation which rose to 98.9 per cent, relative to last year's 48.3 per cent, and is likely to continue in that direction into the third quarter, given the ramping up in July of Windalco and early signs of increased bauxite production, which was up 49 per cent in July.
Gross domestic product contracted overall by 0.8 per cent - resulting from a 1.6 per cent decline in the goods segment, and a 0.9 per cent decline in services, a segment that before now was counted on to temper fallouts from the goods side.
GDP for the half-year, January to June, declined by 0.9 per cent, relative to HY 2009.
The PIOJ said that all of the services subcategories lost value, which would include one of Jamaica's top foreign-exchange earners, tourism, and finance and insurance services, whose income streams and bottom lines are currently challenged by the prevailing recession as well lower yields resulting from the Government's bond swap, Jamaica Debt Exchange, and the continuing fall in interest rates that it precipitated.
Finance/insurance posted the largest decline, 2.0 per cent, of the services sectors.
Hotels and restaurants contracted 1.6 per cent in the third quarter, because of a 5.4 per cent decline in tourist arrivals, but in the wider half-year period has held on to some level of growth, as have transport and agriculture.
Electricity and water also declined by 1.5 per cent.
In his look ahead to the September quarter, Hutchinson noted some green shoots in July: airport and cruise passenger arrivals were up in the month, by 3.4 per cent and 15.7 per cent, respectively; crude bauxite exports grew 109 per cent, and though alumina sales overseas were down 23.6 per cent, the overall picture was a 40 per cent improvement in the bauxite/alumina export category.
Hutchinson, who was appointed head of PIOJ in June, has brought a slightly different format to the economic briefing to include updates on the indicators on which Jamaica is measuring its progress towards developed status.
Under education, literacy levels, for example, which is now at 86.8 per cent, is targeted to reach 98.3 per cent under the Vision 2030 plan.
The other seven indicators are economic growth, employment, health, labour force quality, national security, justice, and environmental stewardship.
Richard Lumsden, programme manager in the Plan Development Unit, said new data was unlikely to be available in all categories on a quarterly basis.