Mon | Jun 14, 2021

Oil punches deeper hole in trade gap

Published:Wednesday | May 9, 2012 | 12:00 AM

A dramatic rise in the oil bill alongside flat tourism inflows caused Jamaica's current account deficit to more than double last year.

The trade gap with overseas partners also yawned wider at the end of 2011, with imports of goods valued at US$5.9 billion outpacing goods exports of US$1.7 billion by 256 per cent or US$4.26 billion.

Balance of payments (BOP) data released by the Bank of Jamaica (BOJ) indicate that the current account deficit worsened to US$2.07 billion, compared to US$934 million in 2010.

"In particular, mineral fuel imports expanded by US$856.3 million, partly reflecting a 19.6 per cent increase in the average price of oil for the period," said the BOJ in its December 2011 BOP report.

The spike in the oil bill also wiped out gains in the bauxite sector.

The services sector, which includes transport and travel, was hurt by increased sea freight charges amid narrow movement in inflows from tourism, which inched up 1.3 per cent to US$1.8 billion.

Some positive signs

Private remittances also recovered slightly by US$106 million to US$1.92 billion, while total remittances were reported at US$2.04 billion.

Improved earnings from crude materials — of which alumina and bauxite account for 94 per cent — as well as goods procured in Jamaican ports and mineral fuel exports "partly offset the impact of the expansion in imports on the goods balance," the report said.

BOJ said the impact of the higher freight charges was partly offset by an expansion of US$24.4 million in net travel receipts, "principally attributed to respective increases of 23.7 per cent and 1.6 per cent in cruise and stopover visitor arrivals".

Contextually, visitor arrivals by air and sea hit a record 3.07 million in 2011, up 8.4 per cent year-on-year, which beat the previous record set six years ago according to Jamaica Tourist Board data.

Arrivals last surpassed three million in 2006 when 3.01 million tourist visits were recorded.

The recently constructed Falmouth Cruise Pier accounted for the bulk of new growth on total cruise passengers, up by one-quarter to 1.12 million, while stopover arrivals increased marginally by 1.6 per cent to 1.95 million.

Jamaica now ranks as the fastest growing cruise destination in the Caribbean based on the pull of the Falmouth Pier, launched a year ago.

Jamaica received its highest number of cruise visitors in four years at some 1.14 million passengers for 2011, or one-quarter more than 2010, according to Port Authority of Jamaica data.

The BOJ added that lower inflows associated with compensation to employees and an increase in interest payments on reserve liabilities by the BOJ resulted in the widening of the deficit on the income sub-account.