Weak 0.1% growth for Jamaican economy
Published:Wednesday | February 26, 2020 | 12:14 AM
A steep decline in the mining and quarrying industry due to the continued closure of the Alpart aluminium plant in St Elizabeth, and a slowdown in construction activities have been cited as the main contributors to the anaemic 0.1 per cent growth in the economy for the quarter ending December 2019.
In light of that, the Planning Institute of Jamaica, PIOJ, is projecting gross domestic product, or GDP, to grow with the range of zero to one per cent for the January to March 2020 quarter and within the same range for fiscal year 2019/20.
Director General of the PIOJ Dr Wayne Henry said the out-turn for the December 2019 quarter reflected the combined impact of increased external demand from Jamaica’s main trading partners, which supported increased exports of some goods and services.
It also reflected increased hotel room and air seat capacity, which facilitated growth in stopover visitor arrivals, relatively more favourable weather conditions which resulted in more output per hectare for some domestic crops in the agriculture, forestry and fishing industry as well as increased water production, and increased use of financial services facilitated by lower interest rates and a relatively stable macro-economic environment.
However, further growth was stymied by the winding down of major construction projects and the slow rollout of new strategic investment projects, as well as plant downtime due to aged equipment in several industries, said the Director General, in reviewing the economic performance for the quarter at a press briefing at the PIOJ’s offices in New Kingston on Tuesday.
During the review period, the goods producing industry contracted by an estimated 3.8 per cent as a result of declines in two of the four industries, namely mining and quarrying and construction, Henry said. Mining and quarrying contracted by as much as 38.7 per cent.
Agriculture, forestry and fishing grew by an estimated 3.0 per cent, largely reflecting the positive out-turn in the other agricultural crops component due to more favourable weather conditions, which facilitated greater crop yields. The most significant increases were recorded for fruits, up 44.1 per cent.
Real value added for the mining and quarrying industry declined by 38.7 per cent, reflecting a downturn in the production of alumina and crude bauxite. Alumina production fell by 44.9 per cent, largely driven by a cessation of production at the Alpart refinery. Crude bauxite production remained relatively flat, down 0.1 per cent.
The manufacturing industry grew by 0.4 per cent; electricity and water supply, up 2.7 per cent; transport, storage and communication, grew 0.9 per cent; finance and insurance services, up 3.4 per cent; wholesale and retail trade, repair and installation of machinery grew 0.7 per cent, while the hotels and restaurants industry expanded by 3.5 per cent.
However, the construction industry declined by 2.0 per cent due to reduced capital expenditure on civil engineering activities by the National Works Agency as a result of the winding down of several major infrastructure projects as well as delays in the start up of new projects scheduled to come on stream this year, the PIOJ Director General said.
The decline was also attributed to reduced expenditure on engineering activities by the Jamaica Public Service Company and the Port Authority of Jamaica.
Preliminary data for airport arrivals showed that there was a 4.0 per cent increase for January 2020, and for the same month there was an increase of 3.5 per cent in electricity consumption and respective decreases of 39.1 per cent and 48.2 per cent in bauxite and alumina production.
Dr. Henry said growth is expected to be stymied by a continued decline in the mining and quarrying industry because of the closure of Alpart for the next 15 to 21 months.