Prospects for January-March quarter positive

Durrant Pate/Contributor

The Jamaican economy is roaring back to pre-pandemic levels with 3.4 per cent growth for the October to December quarter and a projected continuing of growth into the January to March 2023 quarter.

The Planning Institute of Jamaica (PIOJ) detailed the country’s economic performance over the past quarter and its prospects for the current March 2023 quarter during its quarterly news briefing yesterday.

PIOJ Director General Dr Wayne Henry explained that the positive performance of the December quarter took place against the background of quarterly inflation rate for the period October–December of 1.8 per cent, a fiscal deficit of J$4.5 billion and real depreciation of the exchange rate.

Jamaica’s fiscal surplus for the period was J$18.2 million for the quarter, which was J$3.4 billion better than budgeted due to a J$19.6 billion (11.1%) higher than programmed revenue a J$16.1 billion (9.0%) higher than programmed expenditure. Revenue and grants totalled J$195.613 billion in October–December 2022 while expenditure amounted to J$195.595 billion.

Short-term prospects, January–March 2023

Real Gross Domestic Product (GDP) is projected to grow within the range of 3.0 per cent to 5.0 per cent during January– March 2023 vis-à-vis January–March 2022. As a result, GDP for the current 2022/23 fiscal year, which ends March 31, 2023, is expected to grow within a range of 4.0 per cent to 6.0 per cent.

The PIOJ advised “prospects for the overall economy in the short term are positive based on improved optimism about future prospects among firms, higher demand stemming from increased economic activities, as all industries are forecast to grow with the exception of construction, continued recovery in the economies of Jamaica’s trading partners, which augurs well for increased external demand e.g. for tourism services. The main risk factors identified include the impact of plant down-time due to relatively aged plant equipment in major industries, adverse weather conditions u slower than anticipated growth in the global economy and rising geopolitical tensions between Russia and the Ukraine.”

Deflation of 0.6 per cent was recorded for January 2023 and largely reflected lower prices for housing, water, electricity, gas and other Fuels, down 2.4 per cent, due to a decline in electricity rates. Food and non-alcoholic beverages went down 0.9 per cent, due to an increase in the supply of agricultural produce. Inflation for the fiscal year-to-date (April 2022–January 2023) was 5.6 per cent.

Sectoral performance

There was growth in hotels and restaurants sector during January 2023 with provisional data indicating that airport arrivals increased by 63.8 per cent to 215,799 passengers. Real value added for hotels and restaurants grew by 24.3 per cent in the December quarter with total stopover arrivals surging by 92.6 per cent to 584,272 persons during October and November.

Cruise passenger arrivals amounted to 195,135 passengers relative to 32,719 in the corresponding period of 2021. Total Visitor Expenditure rose by 46.3 per cent to US$543.7 million. For the mining and quarrying sector in January 2023, total bauxite production increased, reflecting the combined impact of alumina going up 125.7 per cent while crude Bauxite went down 26.1 per ent.

CONSTRUCTION INDUSTRY

Real Value Added for Construction decreased by 4.7 per cent, reflecting an estimated contraction the Building Construction component which hindered the impact of growth in the Other Construction component. This was reflected in a 12.3 per cent real decrease in the sales of construction related inputs. 

– The decline in Building Construction component was influenced by: Total Housing Starts by the NHT, down 8.4 per cent to 349 units 

– A 24.3 per cent decrease in the number of Mortgages disbursed by the NHT

– A 5.0 per cent decline in the value of Mortgages disbursed by the NHT. 

– Growth in the Other Construction component was due to increased capital expenditure on civil engineering activities reflecting: 

– NROCC, up $2.1 billion to $2.2 billion 

– JPS, up $1.0 billion to $4.9 billion

FINANCE & INSURANCE SERVICES

Real value added in the Finance & Insurance industry increased by 1.0 per cent. The performance was influenced by: 

– increased profitability of deposit taking institutions reflecting a rise in economic activities, and growth in business and consumer confidence; and 

– higher fees and commission income.

LABOUR MARKET UPDATE

Note that the labour force was expected to fully recovery to pre-COVID levels within this fiscal fear. However, no labour market survey was conducted for October 2022 and January 2023, given that STATIN is currently focused on conducting the National Census.

Therefore, full recovery will not be confirmed until the next Labour Market Survey is available.