PIOJ Reports Estimated 0.1% Economic Growth for the April-June 2024 Quarter

  • According to data from the Planning Institute of Jamaica (PIOJ), Jamaica’s economy saw a marked slowdown from the 2.7% and 1.9% expansions in Q4 2023 and Q1 2024 respectively to 0.1% in Q2 2024.  The marked slowdown was led by a deceleration in both the goods-producing and services industries.
  • The Goods Producing Industry slowed from 1.9% in Q1 2024 to an estimated 0.7% in Q2 2024 with the Agriculture, Forestry and Fishing (AFF) slowing from 7.4% to 2.7% and Mining and Quarrying (M&Q) down from 18.7% to 6.2%. Additionally, the construction sector contracted for the third consecutive quarter, down 3.8% in Q4 2023, 3.7% in Q1 2024 and an estimated 2.4% for Q2 2024. The downturn in the construction industry is largely due to decreased construction activity as high interest rates diminish funding for construction projects.
  • The Services Industry decelerated over the last three quarters and slowed from 1.3% in Q1 2024 to 0.1% in Q2 2024. The Q2 2024 slowdown occurred amid lower growth in the Electricity & Water Supply Industry (EWS) from 6.5% to 2.3%. Additionally, the Wholesale & Retail Trade; Repair and Installation of Machinery (WRTRIM) and Transport, Storage & Communication sectors contracted by 0.9% and 0.3% respectively. There was also a slowdown in the Hotels and Restaurants Industry.
  • The estimated WRTRIM contraction, is attributable to an estimated 2.4% decline in total Gross Sales in Minerals, Fuels & Lubricants (-4.1%), Other Wholesale & Retail Sales of Goods & Services (-3.1%) and Hardware, Building Supplies, Electrical Goods & Machinery (-8.3%).
  • Notably, the Hotels and Restaurants Industry decelerated from a 6.9% growth in Q1 2024 to a marginal increase of 0.1% in Q2 2024. Preliminary data indicates that this may be attributed to a 0.4% decrease in stopover arrivals and a marginal 1.1% increase in visitor spending.
  • Looking ahead to Q3 2024, Jamaica's economy is anticipated to contract by -0.1 to -1.0% compared to Q3 2023, due to the effects of Hurricane Beryl. Consequently, the short-term outlook for the overall economy is negative, with expected contractions in the Agriculture, Mining & Quarrying, Electricity & Water, and Hotels & Restaurants industries.
  • Amid the anticipated contraction, the Bank of Jamaica (BOJ) implemented its first rate cut, reducing the rate by 25 basis points from 7.00% to 6.75% and signalled that additional rate cuts will depend on incoming data. While the BOJ also expects to see a contraction for Q3 2024, the regulator did not foresee Jamaica falling into recession, which is defined as two consecutive quarters of economic contraction.

 (Source: PIOJ & NCBCM Research)