Jamaican economy shrinks 9.4%
The Jamaican economy contracted by 9.4 per cent in the December quarter, dragged down by the services sector.
While the goods sector declined by a marginal 0.6 per cent, services shrank by 11.5 per cent in the October-December 2020 period, amid continued weakness in the tourism and travel markets.
The PIOJ stated that the economy suffered from weakened business and consumer confidence associated with uncertainties regarding the duration and impact of the pandemic; and weakened demand associated with lower disposable income due to job losses and reduced work hours.
“The prevalence of COVID-19 cases globally and locally which has negatively impacted economic activities through reduced demand and a slowing in the pace of reopening. There were renewed restrictions and logistical challenges of COVID-19 vaccination programmes in some economies,” said director general Dr Wayne Henry during his quarterly economic briefing on Tuesday.
The tourism sector was the worst performer, contracting 53 per cent. In the goods sector, mining and quarrying rallied to 6 per cent expansion as orders rose on the international market, while construction did even better with growth at 6.2 per cent. But their gains were erased by a 3.4 per cent contraction in manufacturing and a 6.1 per cent decline in the agricultural sector.
The outlook for Jamaica remains negative with the Planning Institute of Jamaica expecting a contraction of 7 to 9 per cent in the January-March quarter. It also expects that the recovery will take time to gather pace.
“The current projection is that Jamaica will return to its pre-COVID-19 level of output in three years, that is by fiscal year 2023/24,” the PIOJ head said.
The planning agency reports on the preliminary performance of the economy, but the final pronouncement on growth will come later from the Statistical Institute of Jamaica.
The PIOJ is projecting a contraction in the Jamaican economy in the order of 10.5 to 12.5 per cent for the fiscal year ending March 2021. It would encapsulate one year of the coronavirus’ impact. The contraction this year is expected to be followed by a partial recovery within a range of 4 to 8 per cent growth in fiscal year ending March 2022, but it will take two more years after that, to March 2024, for the country’s output to get back to pre-COVID-19 levels, PIOJ estimates.
The planning agency’s growth forecast tracks with the outlook of the central bank, which is buoyed by plans to roll out a COVID-19 vaccination programme soon, but also says the size of the recovery will be determined by how swiftly the tourism sector gets back on its feet.
“Jamaica is facing unprecedented and very challenging times in all spheres of life, brought about by the global pandemic currently impacting us. Overcoming these challenges, particularly as a small island developing state, will demand the efforts of all of us,” said Henry.
“Let me therefore take this opportunity to encourage us all, stakeholders in Jamaica, to maintain the dialogue and continue the collaboration, as we sustain our commitment to make Jamaica the place of choice to live, work, raise families and do business,” he said.