Minister of Finance and the Public Service Dr Nigel Clarke has indicated that, as it struggles to withstand the shocks associated with the COVID-19 pandemic, Jamaica is currently enduring the worst economic contraction in the nation’s history.

Outlining the crisis facing the nation as he opened the 2021-2022 Budget Debate this afternoon, Clarke noted that the Planning Institute of Jamaica (PIOJ) expects the economy to contract by approximately 12 per cent this fiscal year ending March 31.

“No economic decline comes even close,” Clarke said as he addressed the House of Representatives.

“For calendar year 2020, that is, January to December 2020, the economy is expected to contract by 10 per cent as compared with the prior period of January to December 2019.”

He added: “The closest comparisons were the decline of 6.5 per cent in 1975, 5.7 per cent in 1980, 4.6 per cent in 1985, 3.9 per cent in 1974 and 3.2 per cent in 2009.”

Clarke stressed that none of these was remotely close to the economic contraction the country lived through in 2020.

The finance minister said the economic decline in 2020-21 was driven by a massive contraction in tourism industry, which resulted in Jamaica’s foreign exchange inflows from tourism projected to fall by 74 per cent, or US$2.5 billion.

“In 2019-20 we earned US$3.4 billion from tourism but in 2020-21 we are expected to earn only US$874 million or approximately one quarter of 2019-20 earnings,” Clarke outlined.

“The last time our foreign exchange inflows were this low was approximately 30 years ago in 1992-93.

“We will have no choice, than to recover our foreign exchange inflows
such that we surpass levels attained previously. Again, that is our goal and our mission as our goal is to recover faster and stronger.”

The finance minister noted that there was a “silver lining”, however, as Jamaica’s diaspora sent US$600 million more to their family members and friends in Jamaica, which is 23 per cent more than the previous year.

“I have reviewed 30 years of remittance data, and never before have
remittances increased by US$600 million in a single year, nor by 23 per cent in a single year.”

CONSTRUCTION SECTOR SEES MODEST GROWTH

Clarke also noted that, with the exception of the construction sector, which the PIOJ expects to show modest growth for 2020-21, all sectors of the economy have declined during the 2020-21 fiscal year.

During April to June 2020, construction declined by 14.5 per cent but grew by seven per cent in the July to September 2020 quarter, and is forecasted by the PIOJ to grow by 6.2 per cent in the October to December 2020 quarter.

“Yes, the construction sector is growing despite the COVID-19 pandemic. This growth is a reflection of the belief of those builders and developers that this, too, shall pass, and that there is a brighter future ahead for Jamaica.”