May 2006 Financial News

Jamaica's Economy grows by 1.4 per cent

May 17, 2006

The Jamaican economy grew by 1.4 per cent for the January to March quarter, over the same period in 2005 - a growth rate that was less than half the 3.1 per cent that finance minister, Dr Omar Davies had promised.

The Planning Institute of Jamaica (PIOJ), which disclosed the growth rate on Monday said that agriculture, transport, storage and communication were the primary drivers.

The output between January 1 and March 31 meant that the Jamaican economy grew by 1.8 per cent for fiscal 2005/06 which runs from April 1, 2005 to March 31, 2006. A rate of over three per cent had been programmed for the fiscal year.

For this calendar year that ends December 31, 2006, the government has targeted growth of 3.3 per cent. The first quarter growth rate is therefore well below the annual target.

On Monday, the director general of the Planning Institute of Jamaica Dr. Wesley Hughes told journalists that agriculture, forestry and fisheries grew by some 24.7 per cent during the quarter - reflecting a combination of 18.6 per cent for domestic crop, and 65.2 per cent for export crop production.

"Within the Goods-producing sector, the main area of growth during the quarter was agriculture which recorded an increase of 24.7," said hughes. "However, the construction and installation industry declined by 6.3 per cent as did mining and quarrying and manufacturing which registered declines of 2.2 per cent and 2.1per cent respectively."

The pace of growth, according to Hughes, reflected recovery following the 26.1 per cent decline in the corresponding quarter of last year, when production was affected by drought and hurricane conditions.

With output from most areas of industry increasing, the GDP was reduced by the problems in the construction industry that was triggered during the latter third of the quarter with revelations that Caribbean Cement Company had in error, placed inferior cement on the market.

Hughes revealed that this sector had declined by 6.3 per cent during the quarter.

The other bright spots included:

. Transport, storage and communication, up 1.3 per cent - driven by activities at sea and air ports - as reflected by 5.1 per cent increase in the volume of maritime cargo and 8.5 per cent and 3.3 per cent increases in air passenger movement at the Norman Manley International Airport and Sangster International Airport, respectively.

. Miscellaneous services, up 6.6 per cent, with hotels, clubs and restaurants increasing by some eight per cent, and financial and insurance services by 1.2 per cent.

. The distributive sector up 0.5 per cent, with the stock of loans and advances to the sector also increasing.

. Electricity services up 3.2 per cent, with generation adding 4.5 per cent due mainly to non-Jamaica Public Service Company (JPSCo.) sources.
Those areas that declined:

. Livestock production, by some 0.8 per cent.

. Mining and quarrying sectors, by 2.2 per cent, reflecting the combined 4.7 per cent increase in crude bauxite output and 3.5 per cent decline in alumina due to strike at the alumina plants that led to the loss of production of 19,800 tonnes of alumina.

. Manufacturing, by 2.1 per cent, dragged down by the 5.7 per cent fall off in food, beverages, and tobacco components of this sector. At the same time, the other manufacturing component is estimated to have grown by 2.8 per cent, due to the rise in production of petroleum products.

The PIOJ expects GDP to grow by 1.4 per cent during the period April to June 2006, over to the corresponding period last year. This will be driven by 1.9 per cent increase in output from services, and 0.2 per cent from the goods-producing sector.


The Jamaica Observer
Wednesday, 17th May, 2006.
http://www.jamaicaobserver.com/magazines/Business/html/20060516T230000-0500_104753_OBS_ECONOMY_GROWS_BY_____PER_CENT_.asp