The Local Economy Expands by 0.8% in Q2

The Local Economy Expands by 0.8% in Q2

According to the Planning Institute of Jamaica (PIOJ), the Jamaican economy expanded by 0.8% in the April to June 2015 quarter compared with the corresponding quarter of 2014.  The outturn for the period reflected the positive impact that the continued strengthening of the global economy has had on some of the major industries such Hotels & Restaurants, Transport, and Mining & Quarrying. Improvements in both business and consumer confidence also contributed to domestic demand. The Goods-Producing Industry grew by 0.7% relative to the corresponding quarter of the previous year with the Agriculture, Forestry & Fishing, Mining & Quarrying and the Construction industries registering growth in real value added during the review quarter.  Expansion in the construction industry was driven by road rehabilitation and repair works and highway construction (Phase 1 and Phase 3 of the North-South link of Highway 2000) and hotel construction and expansion works. However residential construction declined, with housing starts down by 56.1% and the volume of mortgages down by 3.1%. The Manufacture industry is estimated to have contracted by 0.5% largely due to the fall-off in petroleum production. This decline was largely attributed to an unscheduled one month closure of the Petroleum Refinery for maintenance resulting in a 23 percentage points decline in its average capacity utilization.

The services industry grew by 0.7% relative to the corresponding period last year reflecting higher real value added in all Industries except Producers of Government Services.

For the first half of the calendar year, real GDP is estimated to have increased by 0.6% relative to the corresponding period of the previous year due to growth of 0.1% in the Goods Producing Industry and 0.7% in the Services Industry. The PIOJ projects that growth for the July to September quarter will be within the range of 1% to 2%, driven by favourable performance from most industries. Ongoing road rehabilitation work and hotel expansion should continue to impact the construction industry favourably. Heightened confidence levels following successive passing of IMF tests, stable consumer prices and the recent lowering of BOJ benchmark rates should provide the right condition for growth. That said, there is the risk that drought conditions will not only weigh on activity in the Agricultural sector but will affect other business activity as well. In recent times, a number of businesses have lost valuable production hours as a result of the drought and the effect of this could be seen in subsequent reports.