Economic rebound continues as construction holds firm
Published:Thursday | June 3, 2021 | 12:07 AMSteven Jackson/Senior Business Reporter
The Jamaican economy is expected to grow by between 7.0 per cent and 9.0 per cent for the April-June 2021 quarter, the Planning Institute of Jamaica (PIOJ) has projected.
The positive outlook reflects recovery from heavy declines a year ago when the nation started locking down to stem the spread of COVID-19.
The favourable forecast is supported by construction growth but also increased tourism arrivals at 83,000 compared to virtually none a year earlier. Jamaica’s borders were closed to inbound passenger traffic from March 24 to early June in 2020.
“We have seen consecutive quarters of growth in the construction industry, even as other industries have been affected negatively in the context of the pandemic,” said PIOJ Director General Dr Wayne Henry.
“We anticipate positive out-turns for the construction sector going forward.”
Henry said that the overall positive outlook was based on the commencement of the recovery compared with low output recorded in the corresponding period of 2020.
The relaxation of COVID-19 containment measures has sparked a change in fortunes for businesses, with domestic demand and employment levels expanding rapidly in the rebound after the crushing lockdowns of 2020.
POTENTIAL UPSIDE
Henry said that a potential upside to June quarter forecast was the reduction of COVID-19 measures world and the pick-up in the pace of vaccination drives, although Jamaica has inoculated less than eight per cent of its population.
The economy contracted by an estimated 5.7 per cent in the January to March 2021 quarter compared with the corresponding quarter of 2020.
During the March quarter, the goods-producing sectors increased 3.0 per cent while services decreased 8.1 per cent.
Hotels and restaurants suffered the heaviest services decline, down 56.2 per cent, while agriculture suffered the worst for the goods-producing sector, slipping 2.0 per cent in the March quarter. The construction sector, however, grew the most, up 12.6 per cent.
The resilience of the construction industry continues to interest experts, as it reflects heavy investments during a downturn. Henry theorised that developers expect the economy to improve in time for the completion of their projects.
“You could anticipate that as the industry continues to expand, then you could see more employment,” he added.
Construction suffered declines during the previous recession in 2008 and 2009, which was spawned by the US financial fallout.
“During the 2008 recession, construction was down; only tourism was up,” Henry said.
The Jamaican economy should grow between 4.0 per cent and 8.0 per cent for fiscal year ending 2022. The increase in economic activities will also support the strengthening of employment levels with some industries expected to get closer to their pre-crisis levels.
“Despite the relatively strong economic performance anticipated for this fiscal year, it should be noted that a full recovery to pre-crisis levels of GDP output is not anticipated until fiscal year 2023-2024, while employment levels are expected to recover to pre-crisis levels in fiscal year 2022-2023 due to reduction in COVID-19 measures,” he concluded.