The economy saw big declines

January 2020 would have opened with some amount of optimism about the Jamaican economy. At that time, the economy would have completed 19 consecutive quarters of growth before registering a flat three months to December 2019, as the country’s economic planning authority, the Planning Institute of Jamaica, PIOJ, underscored.

Aggregate production was about to nosedive on the back of the unfolding coronavirus pandemic, at that time, still on the cusp of sweeping across the globe.

In the first quarter of 2020, gross domestic product, GDP, declined by 2.3 per cent when compared to the similar quarter of 2019, after an initial minus 1.7 per cent projection. Statin, the country’s statistical agency, says this was the result of declines in both the services and goods-producing industries of 2.5 per cent and 1.9 per cent, respectively. Mining and quarrying registered a significant fall-off of 37 per cent, with the closure of the JISCo alumina plant and lower production at Jamalco sending alumina production down by nearly 40 per cent. Crude bauxite production fell by 23.4 per cent.

There were a few bright spots: fuels output grew more than 100 per cent. There was also a positive out-turn in agriculture in the early months of the year, with output up nearly eight per cent; as was the story in manufacturing, which recorded growth of 2.7 per cent.

The year saw the central bank taking concerted action to zero in on its monetary policy objectives of low and stable inflation, as well as currency stability. The Bank of Jamaica, BOJ recorded a foreign exchange rate of J$137.80:US$1 at the start of 2020. The Jamaican currency depreciated to J$140.73 by February, strengthened to J$136.05 in March, followed by more depreciation in April, ending up at J$145.62 in May. On the final day of foreign currency trading for the year, the USD was selling at $142.65. This came after the selling rate peaked at a high of J$150.08 in August.

On the inflation side, the year opened with a monthly rate of minus 1.1 per cent, according to Statin.

March was the height of border closures, when airports and seaports were shuttered as the virus was detected in Jamaica. Lockdowns and nightly curfews became the order of the day, and there was a curtailment of activities that involved large gatherings, with entertainment events coming to a halt. At the same time, the government instituted a raft of policy measures, including direct payments and grants to laid-off workers, waiving of duties on certain imports and removing taxes on alcohol needed for the manufacture of hand sanitisers.

The spirits industry was also hit hard. Border closure and stay-at-home orders shuttered airport shops, a key source of alcohol sales, and emptied hotels, a heavy alcohol consumption outlet. At the peak of the containment measures, non-national arrivals came to a standstill. Community bars and sports lounges were ordered shut, creating further sales headaches for makers and traders of spirits and other alcoholic drinks.

For second-quarter 2020, April-June, the Jamaican economy declined by 18.4 per cent when compared to the similar quarter of 2019. Agricultural production fell by 8.5 per cent, and manufacturing was down nearly 12 per cent. Manufacturing, together with mining and quarrying, fell 11 per cent, and traditional exports were impaired by more than 46 per cent. Tourism arrivals were wiped out at a 99 per cent recorded decline, construction fell 14.5 per cent, services overall declined more than 20 per cent, with a decline of nearly 13 per cent in the goods-producing sectors.

In relation to the impact on unemployment, by July the economy recorded 135,800 fewer working persons and persons available for work when compared to July 2019. At that point the unemployment rate was 12.6 per cent, 4.8 percentage points higher than in July 2019.

For the quarter, inflation remained within the BOJ’s target range of four per cent to 6.5 per cent, as it was for much of the year.

The Bank of Jamaica puts point-to-point inflation, October 2019 to September 2020, at 4.88 per cent.

According to Statin, in the third quarter to September, the Jamaican economy declined by 10.7 per cent when compared to the similar quarter of 2019. This was due to declines in both the services and goods-producing industries of 13.1 per cent and 3.5 per cent, respectively.

Figures for the final quarter are not yet published.

neville.graham@gleanerjm.com