Nov 2006 Financial News

Jamaican economy grows by 2.7 per cent - PIOJ

Nov 16, 2006

The Planning Institute of Jamaica's (PIOJ) review of the period July to September 2006 indicates that the economy continues to register growth, with strong performances in the Agricultural, transport, storage & Communication and tourism sectors. However, declines were recorded in the Manufacturing and Construction & Installation sectors. Inflationary pressures resulted primarily from increases in food prices and housing-related costs.

In terms of real Gross Domestic Product (GDP), preliminary data revealed an estimated 2.7 per cent growth relative to the corresponding period of 2005. Goods production increased by 0.4 per cent, while the Services sector went up by 3.7 per cent.

Speaking at PIOJ's quarterly press briefing yesterday, Dr Wesley Hughes, director-general of the PIOJ, stated that, "within the Goods-producing sector, the main areas of growth were Agriculture, Forestry & Fishing which registered an increase of 9.6 per cent and Mining & Quarrying, which grew by 0.7 per cent. However, both the Construction & Installation and Manufacturing industries registered declines by 0.2 per cent and 2.6 per cent respectively."

According to the director- general, the positive performance within the Agricultural sector was largerly reflected by an increase in export crop production (up 146.9 per cent). This was driven, said Hughes, by a surge in the output of coffee, banana and cocoa. Coffee production was the highest 3rd quarterly output in eight years and banana production improved significantly, by 159.6 per cent. Domestic crop production also registered growth, up 6.8 per cent and livestock production, increased by 5.1 per cent. In addressing the decline in other sectors, Dr Hughes pointed out that Construction & Installation declined marginally, despite an increase in the availability of cement during the quarter. This, explained Hughes, was due to the arrival of 94.0 per cent of the imported cement, during the last month of the quarter.
The Manufacturing sector also registered a decrease in Food, Beverages & Tobacco production (down 4.2 per cent), as did Manufacturing, which declined by 1.0 per cent primarily due to the downturn in Chemicals & Chemical Products.

The Services sector continued to experience positive growth which was due primarily to an increase in Miscellaneous Services (up 12.4 per cent), largerly impacted, says Hughes, by increased tourism activities. Real GDP of Hotels, Restaurants & Clubs (which captures most of the tourism sector) grew by 16.1 per cent. Total Visitor Arrivals increased by 21.7 per cent, while stopover arrivals and cruise ship passengers increased by 17.5 per cent and 28.6 per cent, respectively.

In outlining the performance of the macroeconomy for the quarter, Dr Hughes stated that this should be seen within the context of the relative stability in the exchange rate and a quarterly inflation rate of 2.4 per cent.

Post Quarter Prospects

PIOJ's assessment of the overall economy for the up-coming October - December quarter continues to remain positive. GDP is expected to grow by 3.2 per cent during the next three-month period, relative to the corresponding period last year. The Goods-producing sector is expected to show continued growth, increasing by 3.9 per cent. This projection is predicated on the steady improvement in the Agriculture and Tourism sectors. An upturn in the Construction sector is also anticipated. The institute further projects that the positive performance within the Services sector should continue, with an estimated increase of 2.7 per cent.

Observer Reporter
The Jamaica Observer
Thursday, November 16, 2006.
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