Despite projected growth of up to 1.5 per cent for the next financial year, Jamaica’s economic performance could be impacted by the novel coronavirus resulting in weakened demand.
That according to the Planning Institute of Jamaica (PIOJ), which recently hosted its quarterly media briefing to share preliminary findings of the country’s economic performance.
Director General of the PIOJ, Dr Wayne Henry, said given the significant ties between Jamaica and China, where the virus originated, it is possible that weakened external and domestic demand could impact the local economy as the effects continue to play out in the Asian nation.
“Jamaica also imports capital goods from China that are essential for the industrial sectors such as Manufacturing, Mining and Quarrying and Construction.”– Director-General of the PIOJ, Dr Wayne Henry
The weakened external demand would be due to a slowing in the Chinese economy and the associated downturn in global trade Dr Henry said while “weakened domestic demand associated with a possible slowing in new investment from China and the expected impact on output and employment levels, as well as the indirect impact on business and consumer confidence locally.”
Further, adverse impact to the Chinese would affect Jamaica’s trade and financial flows, Dr Henry said, due to travel restrictions which have been implemented to stem the spread of the virus. Additionally, any slowdown in the Chinese economy will impact global trade and investment flows.
Dr Henry said a protracted fallout in trade with China will cause reduced export earnings and weakened production performance.
“With respect to trade, Jamaica’s imports from China include intermediate goods, consumer goods and capital goods,” he said. “Consumer goods imports from China include final produce such as clothing and appliances, which drive activities in wholesale and retail trade.
“Jamaica also imports capital goods from China that are essential for the industrial sectors such as Manufacturing, Mining and Quarrying and Construction,” Henry noted, adding that demand from China is “critical” to Mining and Quarrying “as a major purchaser of Jamaica’s crude bauxite and alumina.”
What’s more, given China’s role as a “major development partner”, the impact of the coronavirus could affect Jamaica’s foreign direct investments from China including acquisitions and private construction services.
Jamaica recorded growth of 0.1 per cent for the quarter ended December 2019 with real GDP growth for the calendar year closing at 0.9 per cent.
The coronavirus has spread to 61 countries, infecting more than 84,000 people and killing approximately 2,900.