Jamaican Economy Expands by 12.9% in Q2 2021-PIOJ

  • The Jamaican economy grew by 12.9% for the April to June 2021 quarter, influenced by increased production in the goods producing and services industry of 7.8% and 14.0% respectively, according to the Planning Institute of Jamaica.
  • The growth in the goods producing industry was mainly driven by an increase in the real value added by the agriculture, forestry & fishing (10.3%), manufacturing (3.1%) and the construction (18.3%) sectors.
  • Improved weather conditions and increased demand accompanied by the relaxation of measures to contain the COVID-19 pandemic, particularly from related industries such as Hotels Restaurants, were the main factors driving the performance of the manufacturing and agricultural sectors. The expansion in the construction sector was influenced by increased capital expenditure on civil engineering activities and a rise in residential and non-residential building.
  • All sectors in the services industry grew, with the highest growth seen in the hotels and restaurants sector at 330.7%. The sector rallied from depressed levels in Q2 2020 on the back of an increase in tourism activity due to relaxed travelling restrictions and vaccine-led recovery in key markets.
  • The prospects for overall economic recovery in the short term are positive, with the PIOJ projecting growth between 4%-6% in Q3 2021. This should be led by the gradual recovery of the global economy, which augurs well for external demand; as well as continued recovery in the levels of domestic employment; and a strengthening in business confidence, which are both expected to support domestic demand.
  • However, the spread of the Delta variant, re-imposition of stricter containment measures, adverse weather conditions during the hurricane season, plant down-time due to relatively aged plant equipment in major industries, as well as the recent fire at the Jamalco Alumina refinery, are significant downside risks to this forecast. Importantly, the imposition of no movement days to stem the spread of the virus is likely to severely impact key sectors, such as retail and distribution, weighing on business confidence and corporate profits.

(Source: PIOJ and NCBCM Research)