Jamaican economy dipped 0.7 per cent in March quarter – PIOJ

JAMAICA’S economy contracted by 0.7 per cent over the first quarter of 2013, with declines in the country’s major foreign exchange earners, says the Planning Institute of Jamaica (PIOJ).

The estimated performance over the January to March period would represent the fifth consecutive quarter of decline for the domestic economy. The Bank of Jamaica had earlier projected economic decline of up to 1.2 per cent during the same three months.

The PIOJ’s newly appointed Director General, Colin Bullock, said at the institute’s quarterly press briefing last week that the out-turn for the January to March 2013 period largely reflected the impact of a weak global economic environment, particularly in Europe, on Jamaica’s main export industries (hotels & restaurants and mining & quarrying); adverse weather-related conditions; and sharp declines in business (23 per cent) and consumer (38 per cent) confidence.

Against this background, agriculture recorded the largest decline within the Goods Producing Industry, down 10 per cent, along with mining & quarrying, down 6.8 per cent, the PIOJ said.

According to Bullock, the downturn in agriculture reflected “the lingering impact of Hurricane Sandy on crops having longer gestation periods; and drought conditions which prevailed during January to March 2013, as rainfall during the period was on average 61 per cent below the 30 year mean rainfall over the period.”

During the review quarter, output of traditional export crops fell by 30.6 per cent, while other agricultural crops declined by 9.9 per cent and post-harvest activities were down 27.1 per cent, projected the PIOJ.

Within the Traditional Export crops component lower output was recorded for bananas (down 67.3 per cent), cocoa (down 86.7 per cent) and coffee (down 3.0 per cent), but sugarcane production increased by 1.4 per cent. All nine crop groups within the other agricultural crop groups recorded declines, with plantains down 57.6 per cent, legumes down 10.8 per cent) and vegetables down 7.7 per cent.

The performance recorded by mining & quarrying partially reflected developments in the Euro zone, which resulted in the downward revision in the forecast for global growth in industrial activities, Bullock said.

Total bauxite production decreased by 1.3 per cent, reflecting a 10.4 per cent decline in alumina production, he said, noting that average capacity utilisation rate at alumina refineries fell to 38.9 per cent, which was 4.2 percentage points lower than in the corresponding period of 2012.

“However, crude bauxite production increased by seven per cent due to a six percentage points increase in the bauxite capacity utilisation rate to 95.5 per cent,” said Bullock.

There was better news for construction and manufacturing, which grew by two per cent and 0.5 per cent respectively.

The PIOJ said the performance of the contruction industry reflected increased activities in all three major components of the industry. Building construction is estimated to have increased, with housing starts up 11.1 per cent; housing completions up 793.2 per cent and the volume of mortgages up three per cent

Additionally, the planning agency said that ‘other construction’ activities grew, reflecting higher capital expenditure by the National Works Agency, up 145.3 per cent to $2.2 billion; Jamaica Public Service, up 62.6 per cent to $1.6 billion and National Water Commission, up 272.0 per cent to $4.7 billion.

For the manufacturing sector, there was a 0.1 per cent growth in the food, beverages and tobacco sub-sector.

Within the Services Industry, the hotels & restaurants sector fell by 1.8 per cent influenced mainly by the impact of the prolonged debt crisis on the European market, the PIOJ said.

According to the planning agency, total arrivals declined by 3.9 per cent, including stopover arrivals decreasing by 2.5 per cent and cruise passenger arrivals dropping by 5.5 per cent. Visitor expenditure is estimated to have declined by 1.4 per cent to US$607.2 million.

The electricity & water industry recorded a decline in real value added of 1.3 per cent, reflecting lower electricity generation and water production. However, the PIOJ did estimate improvements in the wholesale & retail trade, repair & installation of machinery industry (0.3 per cent); transport, storage & communication (0.5 per cent) and the finance & insurance services industries (0.4 per cent).

The PIOJ expects flat performance for the April to June 2013 quarter. While the agency anticipates continued contractions for the agriculture and hotels & restaurants industries, it says that this should be mitigated by growth in the mining & quarrying, construction, and transport, storage & communication industries.

“The improvement in the mining sector is predicated on increased capacity utilisation by a major producer, while construction would be supported by increased capital outlay on major infrastructure development works,” Bullock said.

“However, growth in the domestic economy will be challenged by continued weak global economic performance.”

– BO

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