February 21, 2019

The Planning Institute of Jamaica (PIOJ) Quarterly Press Briefing for October-December 2018.

Mr. Wayne Henry, Director General for PIOJ, started the press briefing by providing the main highlights of the macroeconomic performance for the October-December 2018 quarter. The following were noted:

 

Overview of Real Industry Developments

• For October-December 2018, real GDP grew up an estimated 1.7 per cent relative to the corresponding quarter of 2017. The Goods Producing and Services Industries were estimated to have grown by 4.2 per cent and 0.8 per cent respectively.
• Within the Goods Producing Industry, all sub-industries registered growth in real value. The increases as follows: Mining & Quarrying (up 22.9 percent), Construction (up 3.5 per cent), Agriculture, Forestry & Fishing (up 2.6 per cent) and Manufacturing (up 1 per cent).
• Within the Services Industry, all sub-industries also recorded growth in real value  with the exception of Producers of Government Services. The industries estimated to have registered the largest growth rates were Hotels & Restaurants (2.5 per cent) and Transportation, Storage and communication (1.6 percent)
• For  the calendar year 2018, real GDP was estimated to have increased by 1.8 percent, strongest annual growth in 12 years. The Service’s Industry was estimated to have grown by 0.8 per cent while the Goods Producing Industry expanded by 4.8 per cent. The industries estimated to have recorded the largest increases in real value added during 2018 were: Mining & Quarrying (32.5per cent); agriculture, forestry & fishing (4.1 per cent); and Construction (2.8 per cent).

Other Macroeconomic Highlights 

• For the reported period (October-December 2018), the Jamaican economy experienced deflation of 0.3 per cent, which emanated primarily from a decrease in prices for the Housing, water, electricity, gas and other fuels (by  3.4 per cent); transport (by 1.7 per cent). These divisions were primarily impacted by lower international crude oil prices. There was an increase for non-alcoholic beverages (up .04 per cent) which reflected higher prices for starchy foods.
• As of October 2018, the total labour force decreased by 10,700  persons to 1,335,300 while the employed labour force increased by 14,400 person to 1,219,700 persons relative to October 2017. The unemployment rate for October 2018 was 8.7 per cent relative to an unemployment rate of 10.5 per cent for October 2017.

 

Production Performance by industry

• Real value added for Agriculture, Forestry & Fishing increased by 2.6 per cent. Performance for the quarter was attributed largely to improved weather conditions relative to the corresponding quarter of 2017.Increased output was recorded for Animal Farming (up 3.9 per cent) and Other Agriculture Crops (up 7.1 per cent). This resulted from increases for all six crop groups. There was a decrease in export crops which constrained further growth.
• Real value added for Mining & Quarrying industry grew by 22.9 per cent. This increase reflected higher alumina production of 30.8 per cent which resulted from a 16.3 per cent increase in the capacity utilization rate to 69.2 percent. Crude bauxite production contracted by 19.4 per cent
• The Manufacturing industry registered an increase of 1.0 per cent. This rise resulted from the expansion in the Food, Beverage & Tobacco and Other Manufacturing sub-industries. The increase for the  Food Beverage and Tobacco industry was attributable to the rise in  Poultry Meat (up 5.9 per cent;). Edible fats  (up 16.4 per cent) and Dairy products (up 5.7 per cent) and Carbonated beverages (up 6.4 per cent). The sub categories Chemicals and Chemical Products and Petroleum Products drove the improved performance of the Other Manufacturing sub-industry.
• Real value added for the Construction industry grew by 3.5 per cent. This real value added growth was due to the increased activities in the Building Construction and Other Construction components. Growth in the Building Construction stemmed from both Housing Starts and Housing Completions while higher capital expenditure on civil engineering activities led to the growth in the Other Construction Component.
• Real value added for Transport & Storage Component grew by 1.6 per cent, mainly attributable to increased activities in the Transport & Storage component. This was supported by Maritime cargo movement, up 21.2 per cent and Air Passenger movement, up 3.5 per cent to 1,486,360.
• Real value added for Electricity and Water Supply industry grew by 0.1 per cent. This was as a result of higher levels of water production (up 0.8 per cent) and higher levels of electricity production (up 0.1 per cent). The growth in electric production reflected consumption for Residential; General services; Power Service and Larger Power. Water production was driven by growth in the western division (by 2.0 per cent) as production contracted in the Eastern Division (by .01 per cent)
• The combined effect of an increase in the value of net interest income on the stock of loans, as well as an increase in fees and commission income drove real value added in the Finance & Insurance Service industry up by 0.9 per cent.
• Real value added for the Hotels and Restaurants industry increased by 2.5 per cent, reflecting increase in Total Stopover Arrivals by  (up 4.0 per cent). The increase was attributable to an increase in Foreign National arrivals, up by 3.7 per cent. Total visitor expenditure also increased by 11.6 per cent to US840.4 million

 

Forward Prospects

• Prospect for growth for the short term and long term remain positive. However, achieving our near term target will depend on our willingness to remain focus on maintaining macroeconomic stability, continued  implementation of strategic growth project ( including projects that strengthen disaster resilience)  and strengthening inter-sectoral linkages within the economy as well as strengthening crime reduction efforts. The main driver for growth in the upcoming year are expected to be; Mining and Quarrying, construction, agriculture and hotels & restaurant industries. Growth projection for FY 2018/2019 is expected within the range of 1.5 and 2 per cent.

 

Upside consideration to Forecast

• Stronger domestic demand associated with decrease in unemployment
• Stronger external demand impacting Mining, Quarrying and Hotels & Restaurants industries
• Higher than expected capacity utilization at production plants.

 

Downside Risk to Forecast

Downside risk to the short term growth prospect are as follows:

• Weather related shocks that may adversely impact productive activity
• Plant down times associated with relatively aged equipment
• Slower than expected growth with Jamaica’s main trading partners