Nov 2014 Financial News

J'can economy contracts 0.8% as agriculture falters

Nov 21, 2014

A 21 per cent decline in agricultural output attributed to drought, which curtailed planting activities and lowered crop yields, was mainly responsible for a 0.8 per cent contraction in the Jamaican economy during the quarter to September. It is the first period of contraction since the second quarter of 2013.

Within the goods-producing industry, the downturn was also driven by reductions in mining and quarrying, as well as manufacture, said director general of the Planning Institute of Jamaica, Colin Bullock, in his quarterly review of Jamaica's economic performance on Wednesday.

Asked whether there was an over-reliance on agriculture to drive economic growth, given the emphasis on drought as cause for the contraction, Bullock said that was not the case because the agriculture sector contributes just seven per cent to GDP.

A two per cent reduction in mining and quarrying reflected the lower output of alumina at the Jamalco and Windalco plants, located in Clarendon and St Catherine, respectively. However, crude bauxite production rose by 2.2 per cent owing to increased demand by overseas refineries, Bullock said.

Manufacture fell by 0.2 per cent due to a decline in the component 'other manufacture', attributed to lower production of petroleum products because of the closure of the Petrojam refinery in August and September for maintenance.

Bullock said construction grew by 1.2 per cent, reflecting increased capital expenditure on road works, particularly by the National Road Operating and Construction Company, up $7.4 billion to $8.6 billion.

The building construction component also grew due to an increase in hotel projects and build out of space for the business process outsourcing industry.

The transport, storage and communications industry increased by 1.3 per cent, the director general said, noting that increased communications activities were associated with an estimated increase in the volume of minutes sold by mobile telephone operators and increased marketing as a result of the intensification of competition.

Cargo volume handled at the island's seaports grew by 2.3 per cent to 3.9 million tonnes, while total air passenger movements increased by 6.4 per cent.

The electricity and water industry recorded a decline of 0.8 per cent, due mainly to lower levels of electricity consumption and water production.

The financial and insurance service sector grew by 0.3 per cent, reflected in increased net interest income at deposit-taking institutions and gains on foreign exchange transactions.

The wholesale and retail trade, repair and installation of machinery industry registered an increase of 0.2 per cent, supported by an improvement in construction industries as well as higher volume and value of automated banking machines and point-of-sale transactions.

The industry with the largest increase was hotels and restaurants, up by an estimated 3.9 per cent, reflecting an increase of five per cent in the number of stopover arrivals to 499,249 persons. In addition, the number of cruise passenger arrivals grew by 27.3 per cent to 262,922 persons, resulting in total visitor arrivals increasing by 11.8 per cent to 762,171 persons.

Bullock, referring to post-quarter developments and prospects, said total electricity consumption decreased by 0.5 per cent to 256.1 million kilowatt hours for October.

Data for October also show that stopover arrivals grew by 9.8 per cent to 135,730 persons, while cruise passenger arrivals increased by 18.8 per cent to 106,813 persons.

Inflation for October was 0.1 per cent, reflecting the net effect of an increase of 0.2 per cent in the food and non-alcoholic beverages division, and a decline of 0.8 per cent in the transport division.

For the December quarter, gross domestic product is projected to grow within the range of 0.5 to 1.5 per cent.

Source:
McPherse Thompson, Asistant Editor - Business
mcpherse.thompson@gleanerjm.com
Jamaica Gleaner
Friday November 21, 2014

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