Quarterly GDP Declines Again, but Growth is on the Horizon

• The Jamaican economy contracted by 0.8% in the fourth quarter of 2024 (Q4 2024) compared to Q4 2023, these are the findings in the latest release from the Statistical Institute of Jamaica (STATIN). The year over year decline in economic activity was due to the impact of Tropical Storm Rafael in November and the lingering effects of Hurricane Beryl. This marked the second consecutive quarterly decline for 2024,
• Despite a 0.4% increase in the Services Industries, the Goods Producing Industries declined by 4.3%, resulting in the overall falloff in real value added. All Goods Producing Industries experienced declines, with Agriculture, Forestry & Fishing contracting the most (-10.6%), followed by Construction (-2.7%), Mining & Quarrying (-2.3%), and Manufacturing (-0.5%). The decline in Agriculture, Forestry & Fishing was observed in both the Traditional Export Crops and Other Agricultural Crops (including Animal Farming, Forestry & Fishing) sub-industries, which fell by 46.3% and 4.1%, respectively.
• The effects of Hurricane Beryl, compounded by heavy rains from Tropical Storm Rafael in November 2024, drove the sharp contraction in the Agricultural industry. The Ministry of Agriculture estimated total crop, livestock, and infrastructure damages at J$621Mn.
• Meanwhile, growth in the Services Industries was primarily attributed to increases in Producers of Government Services (0.8%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (0.2%), Transport, Storage & Communication (1.8%), Other Services (0.2%), and Finance & Insurance Services (0.5%). However, the growth was tempered by the declines in Electricity & Water Supply (-1.4%), Real Estate, Renting & Business Activities (-0.3%), Hotels & Restaurants (-0.3%), Other Services (-0.2%) and Finance & Insurance Services (-0.5%).
• Overall, preliminary estimates for the calendar year 2024 indicate that total value added at constant prices fell by 0.7% compared to 2023. However, looking ahead, there are signs that the economy could expand in 2025, with the PIOJ projecting a 0.1% to 1.0% increase for the March quarter.
• That said, there are risks to the outlook. The uncertainties around the Trump administration's trade, immigration and other policy changes could adversely affect remittances, exports, and tourist activity if they weaken U.S. consumer confidence through higher inflation and increased uncertainty. These developments could lead to a reduction in Jamaica’s current account balance while also affecting demand for the sovereign’s goods and services, given the likelihood of lower household income due to lower remittance inflows. Overall, lower demand would dampen economic growth and could lead to further local economic contraction

(Sources: STATIN & NCBCM Research)