Apr 2014 Financial News

BOJ expects at least double 2013 growth as dollar depreciates

Apr 30, 2014

THE Bank of Jamaica (BOJ) expects growth in 2014 to at least double that of last year, based in part on increased competitiveness — a euphemism used for devaluation. “In many respects the outlook for the Jamaican economy is positive,” wrote Governor Brian Wynter in his forward to annual report.

“Growth in real GDP is expected to accelerate in 2014, given continued improvements in Jamaica's external competitiveness and an expected strengthening of global output. The stronger growth is expected to be driven primarily by increased external demand as domestic demand conditions are anticipated to remain relatively weak.” The country expects to grow at a rate of 0.5 to 1.5 per cent in 2014 compared with 0.2 per cent in 2013, stated the BOJ report.

However, the island will still severely trail the 3.7 per cent growth expected for the world economy in 2014 according to International Monetary Fund (IMF) data. The major contributors to output growth are expected to be mining and quarrying, agriculture, forestry and fishing, construction, hotels and restaurants, stated the BOJ.

“Growth in Mining and quarrying should reflect increased capacity utilisation within the alumina industry following production problems experienced during 2013,” said the report.

“Agriculture, Forestry and fishing is expected to benefit from increased cultivation under the Government’s Agro Parks initiative as well as more favourable weather conditions relative to 2013. Construction is expected to be buoyed primarily by ongoing infrastructural projects. For hotels and restaurants, the expansion is premised on an anticipated increase in stopover arrivals largely associated with continued economic recovery in major source markets.”

The main risks to the forecast include adverse weather, slower than anticipated global growth, delays in key infrastructural projects and lower than expected consumer and business confidence, stated the BOJ. During the period ,the Jamaican dollar, which trades at just over $110 to US$1, lost some 15 per cent of its value since 2013.

The currency movement is an implicit conditionality of the IMF loan agreement. The Government entered into a 48-month Extended Fund Facility (EFF) with the IMF last year valued at some US$1.25 billion. The loan came with a number of quantitative and qualitative conditionalities.

“During 2013, the primary factors influencing the Bank’s operations were ongoing fiscal consolidation, the implementation of a national debt exchange and the approval of a medium-term economic programme supported by a four-year Extended Fund Facility (EFF) from the IMF.

Public uncertainty surrounding the approval of the EFF and the ability of the authorities to meet the quantitative targets and structural benchmarks served to challenge the conduct of monetary policy,” said the BOJ.


Source:
Jamaica Observer
Wednesday April 30, 2014

http://www.jamaicaobserver.com/business/BOJ-expects-at-least-double-2013-growth-as-dollar-depreciates