PIOJ Estimates a 1.8% Contraction in the Economy for Q4 2024

• According to PIOJ, the Jamaican economy is estimated to have contracted by 1.8% for the quarter ended December 2024 (Q4 2024), relative to the corresponding quarter of 2023, reflecting declines in both the Services and the Goods-Producing industries. The estimated out-turn for the review quarter largely reflected the impact of the lingering effects of Hurricane Beryl from the previous quarter, coupled with Tropical Storm Rafael and other hydrological events during the review quarter. Overall, the Goods-Producing Industry is estimated to have contracted by 4.7%, while the Services industry is estimated to have declined by 0.7%.
• During the quarter, all Goods-Producing industries are estimated to have declined, with agriculture being the most significantly impacted, contracting by 12.0%. The outturn was the result of damage to crops, as well as delays in reaping and replanting caused by the series of hydrological events. The industry’s performance was due to lower output in all sub-components of the industry, with the exception of Animal Farming.
• Mining & Quarrying, Manufacturing, and Construction also experienced declines of 3.2%,0.7% and 2.1% respectively. The decline in the Mining & Quarrying industry was due to a fall in the production of alumina and crude bauxite. A contraction in the Other Manufacturing sub-industry, which outweighed the estimated growth in the Food, Beverages, and Tobacco Industry, weighed on the performance of the Manufacturing Industry. This was primarily due to a reduction in the Refinery Service Factor, as the refinery was closed for 39 days during the review quarter, compared to 32 days in the same quarter of 2023. Estimated downturns in both the Building Construction and Other Construction sectors was behind the contraction in Construction.
• The performance of the Services Industry reflects the lower real value added in five of the eight sectors. Producers of Government Services were estimated to have remained unchanged. Among the declining sectors were Electricity & Water Supply, which fell due to lower electricity consumption, Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM) due to reduced sales in key sub-categories, and the Hotels & Restaurants industry, which reflects the decrease in stopover arrivals.
• Furthermore, visitor arrivals to the island continue to be negatively impacted by the impact of a fall in airlifts due to supply-side issues with Boeing; two travel advisories issued during 2024; and to a lesser extent, industrial disputes, which halted operations at some hotels.
• Despite two consecutive quarters of economic decline, the PIOJ is maintaining that Jamaica is not in a recession, as a recession cannot be determined solely by GDP. However, significant challenges persist, particularly due to hydrological shocks, which have impacted the Tourism, Electricity & Water Supply, and Agriculture, Forestry & Fishing Industries. Based on the latest available data, the PIOJ is forecasting that the economy will return to positive growth in the January-March 2025 quarter.

(Source: PIOJ)