STATIN GDP Data Suggest Jamaican Economy Hit the Brakes in Q2 2024

  • The Jamaican economy grew by just 0.2% during the second quarter of 2024 (Q2 2024) compared to Q2 2023, according to STATIN. This was slightly higher than the preliminary figures of the Planning Institute of Jamaica (PIOJ), 0.1%, but still significantly slower than the growth of 1.4% recorded in Q1 2024.
  • This slowdown occurred amid a 2% decline in the Services Industries - the first decline since Q1 2021 - which dampened the 1.5% rise in the Goods Producing Industries.
  • The decline in the Services Industries was largely due to contractions in Wholesale & Retail Trade, Repairs, Installation of Machinery & Equipment (WRTRIM); Producers of Government Services; and Real Estate, Renting & Business Activities, which fell by 0.5%, 1.9%, and 1.5%, respectively. However, growth was seen in Hotels & Restaurants (1.0%), Finance & Insurance Services (2.4%), Transport, Storage & Communication (0.7%), Electricity & Water Supply (2.3%), and Other Services (0.1%).
  • Growth among the Goods Producing Industries was driven by Agriculture, Forestry & Fishing, Mining & Quarrying, and Manufacturing, which grew by 3.4%, 4.0%, and 1.8%, respectively. Favourable weather conditions and ongoing government support to boost crop production aided the growth in the Agriculture, Forestry & Fishing sector. Growth in Mining & Quarrying was largely driven by a surge in alumina output, which rose by 15.0% to 385.2 thousand tonnes in 2024, up from 334.9 thousand tonnes in 2023, in response to increasing global demand. Meanwhile, the Manufacturing sector experienced a 1.8% growth, fueled primarily by a 4.1% increase in the Food, Beverages & Tobacco sub-industry.
  • However, a reduction in activities in the building construction and civil engineering sector weighed down output in the Construction industry, which declined by 1.9%.
  • Looking ahead to Q3 2024, the PIOJ projects that Jamaica's economy contracted by -0.1% to -1.0% relative to Q3 2023, largely due to the impacts of Hurricane Beryl. As a result, the short-term outlook for the overall economy appears negative, with anticipated contractions in the Agriculture, Mining & Quarrying, Electricity & Water, and Hotels & Restaurants sectors.
  • However, there remains a chance that the impact of Hurricane Beryl could be less severe than expected. Forward-looking estimates from the Bank of Jamaica (BOJ) suggest that real economic activity for FY2024/25 will be more favourable than expected, thanks to a less severe damage estimate attributed to Hurricane Beryl. Jamaica’s economic recovery post-Beryl is expected to be led by growth in the agriculture, tourism and construction sectors with support from the GOJ and other key stakeholders.
  • Starting Q4 2024, Agriculture sector recovery will likely be fueled by the GOJ’s financial support to farmers, allowing for rapid replanting and a faster recovery in production levels. For the tourism sector, with the US Fed signalling its economy is still resilient, a more favourable July 2024 Travel Advisory from the US Embassy, and efforts from the GOJ and other stakeholders to improve the Tourism Product, Jamaica’s Tourism sector is likely to rebound as the winter tourist season approaches. For the construction sector, amid the significant infrastructure damage, major post-hurricane repairs in the public and private sectors will likely ramp up expenditures for rebuilding, driving construction activity and economic growth.
  • Nonetheless, resurgent inflation could prompt the BOJ to pause rate cuts, while a continued slowdown in tourism, an extended economic contraction from Beryl or another violent storm hitting Jamaica before the end of the 2024 hurricane season could all weaken economic growth prospects.

 (Source: STATIN & NCBCM Research)