Feb 2006 Financial News

Jamaica's GDP up 1.9% in 2005

Feb 20, 2006

The Jamaican economy grew by 1.9 per cent for the 2005 calendar year, the economy having recovered during the December quarter, from the effects of hurricane Ivan that negatively impacted the comparative quarter in 2004.

The Planning Institute of Jamaica (PIOJ), which last week released its economic review of the October to December 2005 quarter, said there was "robust growth, due to the recovery of some sectors from the impact of hurricane Ivan (during the quarter)."

The chief planning agency estimated the growth in gross domestic product for the last three months of 2005, at 4.1 per cent when compared to the corresponding three months in 2004.

Information obtained from the Statistical Institute of Jamaica revealed that:
* real GDP grew by 0.1 per cent between January and March;
* 0.3 per cent between April and June, and
* 2.9 per cent between July and September.

If the PIOJ's estimate of 4.1 per cent fourth quarter growth holds, the result would be a calendar year GDP increase of 1.9 per cent.

PIOJ estimated that output from the goods producing sector increased by 4.3 per cent during the quarter, when compared to the corresponding period the year prior. This would translate to 1.8 per cent growth for this sector for the full calendar year .

PIOJ director-general, Dr Wesley Hughes, outlined the main areas that contributed to the growth at a press statement on Thursday: "Within the goods producing sector the main areas of growth during the quarter were agriculture, forestry and fishing with 28.3 per cent growth, construction and installation, 2.5 per cent growth, and manufacturing, which increased by 1.5 per cent."

The growth in construction and installation was fuelled by several factors, particularly increased activities in non-residential construction, including northern coastal highway. Reconstruction following an early hurricane season, and torrential rains in the latter part of last year, was another factor.

Agriculture, forestry and fishing -perhaps the industries that have suffered the most from the adverse weather conditions of the last two quarters -recorded 2.5 per cent growth in real GDP during the July-September quarter. Hughes said that this was the first time the sector had recorded any growth since April-June 2004.

The preliminary data issued by the PIOJ indicated that the services industry grew by 3.7 per cent between October and December, when compared with the corresponding period of 2004. This would result in services growth of 1.9 per cent for the full year.

"The performance was due primarily to an increase in miscellaneous services (up 13.2 per cent, and transport storage and communication (up 6.4 per cent)," said Hughes in the press statement.

He also noted that increased activities by building societies as well as the banking sub-sector, contributed to the 0.8 per cent growth in the finance and insurance sector.

Hughes said that the results had to be viewed within "the context of the impact of hurricane Ivan on levels of output in the corresponding quarter of 2004, alongside 0.9 per cent inflation during the quarter and a $10.6 billion deficit racked up over the three-month period".

In the December quarter in 2004 the economy shrank by 0.9 per cent compared to the corresponding period the year before, following comparative decline of 0.1 per cent during the September quarter.

Hughes projects growth of 3.1 per cent during the January to March quarter this year, with 4.4 per cent comparative growth in the goods producing sector, and 2.3 per cent in the services sector.

Camilo Thame
The Barbados Advocate
Sunday, February 19, 2006
http://www.jamaicaobserver.com/magazines/Business/html/20060218T170000-0500_98985_OBS_GDP_UP______IN______.asp