Jamaica’s unbroken run of 20 consecutive quarters without economic contraction has come to an end.
As the coronavirus (COVID-19) pandemic continues to wreak havoc on economies globally, Jamaica has seen its gross domestic product (GDP) shrink by 1.7 per cent for the March 2020 quarter, ending its five-year run which saw 19 quarters of growth and one which remained flat.
The news was shared by Director General of the Planning Institute of Jamaica (PIOJ), Dr Wayne Henry, during its digital quarterly briefing yesterday (May 27).
“The performance of these industries was negatively impacted by the measures implemented globally and locally to manage the COVID-19 pandemic.”– Director General of the Planning Institute of Jamaica, Dr Wayne Henry
According to Henry, the virus has had a significant impact on lives and livelihoods, “with multiplier effects already being experienced in all aspects of society”.
The results, which will need to be ratified by the Statistical Institute of Jamaica, largely reflect the impact of measures taken to stem the spread of COVID-19 in mid-March, Henry said. These include the closure of international borders, which halted travel and tourist-related activities; the implementation of curfews which restricted business hours, the closure of all schools, and the implementation of orders to stay at home and work from home.
What’s more, the temporary closure of the island’s largest alumina refinery, JISCo Alpart, in September 2019 resulted in lower capacity which affected the Mining and Quarrying industry. Overall, the sector was down by 37 per cent as alumina production slid 39.9 per cent from the Alpart closure and crude bauxite production dropped 23.4 per cent from a decline in third party demand.
Relatedly, Construction declined two per cent due to a slowing of related activities with the end of major road infrastructure projects and a general slowdown of new projects and construction activities also impacted the GDP contraction.
The Services Industry saw a contraction of 1.5 per cent, reflecting a downturn in Transportation, Storage and Communication; Hotels and Restaurants; and Other Services industries. “The performance of these industries was negatively impacted by the measures implemented globally and locally to manage the COVID-19 pandemic,” Henry said.
On the other hand, some sectors performed well over the quarter, with Agriculture, Forestry and Fisheries grew 7.8 per cent, as favourable weather conditions aided increases in hectares reaped and output.
Additionally, Manufacturing improved 2.7 per cent spurred by growth in Food, Beverages and Tobacco and Other Manufacturing, which includes petroleum products.
The outlook for the current period, which ends in June 2020, is generally negative with the ongoing COVID-19 pandemic. Henry said the severe impact of the virus on its main trading partners, the United States, Brazil, Russia and the United Kingdom, will have an adverse influence on the demand for the island’s goods and services.
As such, the economy is projected to contract between 12 and 14 per cent for the April to June quarter, Henry said, noting that the projection is based on information and expectations to date, which may change as new information becomes available.