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Economy expected to register growth by first quarter of this year – PIOJ

The Planning Institute of Jamaica (PIOJ) says it is expecting the economy to return to growth during the first quarter or the April to June period of this year.

This projection comes after some four quarters of contractions in gross domestic product (GDP) levels, with much of the impact largely attributed to the adverse effects of the ongoing novel coronavirus pandemic.

“We have forecast growth to commence as at the April to June 2021 quarter. All industries are expected to grow during that period, and this is expected to continue throughout the year with all quarters [expecting] to see growth for fiscal year 2021/22,” said James Stewart, senior director for the institute’s Economic Planning, Research and Policy Logistics Division during a quarterly press briefing held yesterday.

Director General of the PIOJ Dr Wayne Henry said that the declining rates of contractions, quarterly, and since the virus outbreak last March was an indication that the economy could return to some semblance of normality with economic activities expected to pick up.

“The economy is expected to grow during fiscal year 2021/22 as the demand and output for goods and services increases over FY202o/21 levels. An increase in the number of tourist arrivals, as well as a gradual return to normalcy, given the sharp level of decline of economic activity in the [almost completed fiscal year], will be the main drivers of the expansion.

“The current projection is that the economy will grow within the range of 4 to 8 per cent with all industries forecast to record growth. It should be noted that these projections are fluid, given the uncertainties that currently prevail regarding the pandemic, but there are some positive signs which provide optimism,” Henry added.

He cited the gradual resumption of some activities and the commencement of an aggressive vaccination programme by Government as the catalyst for these projections.

In its preliminary estimates provided for the third quarter, the PIOJ said that the economy declined by 9.4 per for October to December. During the review period, most of the major sectors recorded declines. The goods producing industry reflected an overall decline of 0.6 per cent as agriculture decreased by 6.1 per cent due to low outputs and adverse weather conditions, and manufacturing by 3.4 per cent due to lower demand. Mining, however, went up by 6 per cent due to increased external demands and construction by 6.2 per cent due to a slew of civil engineering projects and road repairs by the National Works Agency (NWA).

In the services industry, which decreased by an overall 11.5 per cent, large contributors such as hotels and tourism went down by 52.8 per cent due to the continued impact of the pandemic on the arrival of tourists. The wholesale and retail sector went down by 15.2 per cent; electricity and water supply by 9.2 per cent; finance and insurance services by 5 per cent; transport storage and communication by 15.2 per cent; real estate, renting and business services by 2 per cent; and other services by 20 per cent. The only sector that recorded growth within this industry was government services which increased by a mere 0.1 per cent.

According to the PIOJ, the outputs from this quarter, along with those preceding, bring real GDP out-turns for calender year (CY) 2020 to -10.2 per cent and represents the first annual contraction since 2012.

“For fiscal year 2020/2021 the economy is projected to contract within a range of 10.5 per cent to 12.5 per cent, reflecting expected declines in all five quarters,” Henry said, further noting in his outlook that the current January to March quarter is expected to contract within the range of 7 to 9 per cent.