Gradual Recovery In Economic Activity To Improve Current Account Deficit
- Bank of Jamaica (BOJ) Governor, Richard Byles, says the anticipated gradual recovery of economic activity from the impact of the coronavirus (COVID-19) is expected to result in improvements in the current account deficit of the balance of payments (BOP).
- Byles noted that due to drastic changes in the pattern of economic activity in Jamaica and abroad, the current account deficit is projected to worsen by more than five percentage points of gross domestic product (GDP) in the current fiscal year to 7.5 per cent, from the 2.3 per cent estimated in 2019/20.
- “This worsening mainly reflects the impact of the sudden stop in tourist arrivals and the slowdown in remittance inflows,” he said.He said that, in contrast, the merchandise trade deficit is projected to improve due to a decline in imports, particularly fuel, consequent on lower oil prices, which fell from US$55 per barrel during the last fiscal year, to US$30 currently.
- Additionally, Mr. Byles said the fall in the incomes of Jamaicans, coupled with a decline in foreign direct investment (FDI)-related projects, is expected to constrain the importation of non-fuel consumer goods, raw materials and capital goods. He argued that the assumed gradual recovery of economic activity “implies that the current account deficit will also improve gradually over the ensuing two years”.