Growth steady, says BOJ

Wednesday, February 22, 2012

THE Bank of Jamaica (BOJ) expects economic growth levels measured during the last three months in 2011 to continue on to March.

Yesterday, BOJ governor Brian Wynter said that real GDP grew within the range of one per cent to two per cent during the October to December 2011 quarter, when compared to the same period in 2010, primarily reflecting "strong expansion in agriculture, forestry and fishing, and mining and quarrying".

"The domestic economy is projected to expand in the range of one to two per cent for the March 2012 quarter," he said. "This is predicated on projected expansions in electricity and water supply, hotels and restaurants, construction and agriculture, forestry and fishing."

This will bring economic growth for the fiscal year, which ends March 31, to a range of one to two per cent.

The performance of the agricultural sector was derived from early data, which showed domestic crop production growing by 25 per cent during the last three months of 2011 when compared to the same period the year before due to more favourable weather conditions, according to the BOJ's quarterly monetary policy report published yesterday.

At the same time, export agriculture declined, reflecting a decline in citrus exports which offset increases of 92.3 per cent and 190 per cent in sugar cane milled and coffee production respectively.

The decline in citrus production reflected the continued adverse impact of the greening disease.

On the other hand, the expansion in sugar cane milled was attributed to the rehabilitation of fields and factories within the industry while coffee production reflected partial normalisation relative to depressed levels a year earlier attributed to reduced external demand from Europe.

Mining and quarrying continued to expand in the review period, due to higher capacity utilisation in the alumina and bauxite industries which rose to 42.6 per cent and 95.6 per cent respectively from 40 per cent and 76.7 per cent in the December 2010 quarter.

The increased utilisation, mostly normalisation, in activity relative to the December 2010 quarter, which was adversely affected by loss of working hours due to the passage of Tropical Storm Nicole.

Economic activities associated with electricity and water supply, manufacturing and construction were also estimated to have grown towards the end of last year.

However, the tourism sector took a hit during the review quarter.

Hotels and restaurants is estimated to have marginally expanded in the last three months of 2011 due largely to growth in restaurants associated with an improvement in real income.

Hotels, on the other hand, experienced lower stop-over visitor arrivals to Jamaica and reduced visitor expenditure by 0.5 per cent and 0.7 per cent respectively, relative to the comparative quarter in 2010. The contraction in stop-over visitor arrivals was mainly attributed to reduced airlift to Jamaica and warmer winter conditions in the main source markets relative to the corresponding period of 2010. In addition, a slower pace of growth in world income and world travel contributed to the decline of the sub-industry.

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