PIOJ shaves top end of growth projections, but economic outlook positive
The Planning Institute of Jamaica, PIOJ, has reduced by one percentage point the upper end of growth projections for gross domestic product, the measure for economic output, for this fiscal year ending March 2024.
It comes despite industry recovery and record employment levels.
“The PIOJ’s projection is for growth in output within the range of 1.0 per cent to 2.0 per cent for the fiscal year,” said PIOJ Director General Dr Wayne Henry in his quarterly briefing on Thursday.
The previous projection was for growth of 1.0 to 3.0 per cent.
Henry said there was a current drag on growth from industries such as agriculture and construction, even though the declines are expected to dissipate by the end of the fiscal year.
He noted, however, that the economy will continue to benefit from growth in the ‘mining and quarrying’ and ‘hotels and restaurants’ sectors, and described the economy as having a positive outlook.
The PIOJ presents preliminary estimates on economic performance for each quarter. Its findings are based on early information available from the major data providers. Consequently, its figures are subject to change over time as additional information emerges.
During April to June 2023, the economy grew 1.5 per cent over year-earlier levels: the goods industry grew 1.0 per cent and the services industry grew 1.8 per cent.
The mining industry grew 163 per cent due to the reopening of alumina producer Jamalco; while tourism grew 9.0 per cent.
Jamaica also benefited from increased demand spurred by higher levels of employment, as well as increased business and consumer confidence, relative to the corresponding quarter of 2022.
The sector suffering the largest falls were agriculture, down 7.1 per cent due to drought conditions, and construction, down 3.3 per cent due to waning activity.
“Further growth was stymied by the impact of drought conditions on agriculture and water production, as well as relatively aged equipment in some industries, which resulted in unplanned downtimes,” said Henry.
For the first six months of 2023, real GDP was estimated to have grown by 2.9 per cent.
Jamaica’s economy was pummelled during the initial phase of the pandemic, which decimated business activity, jobs and disposable incomes. The economy, which shrank in the region of 10 to 11 per cent, suffered its largest decline in at least a generation with the onset of the pandemic in 2020. Henry said that it also led to higher levels of poverty and widening inequality.
The prevalence of poverty in 2021 was 16.7 per cent, which reflected an increase of 5.7 percentage points relative to 2019. But the country soon began to claw its way out of the crisis. The ongoing recovery has been underpinned by higher growth rates than the country has had over decades.
There was no poverty data for 2023 but on the positive side, a record number of Jamaicans are now employed.
Earlier this week, the Statistical Institute of Jamaica, the final arbiter of economic data, released its latest Labour Force Survey for April 2023, showing that the unemployment rate stood at 4.5 per cent.
Henry said it represents the highest employment levels on record, but also noted that there are ongoing laments by employers about the challenges in finding skilled workers.
To better grow the economy, Jamaica needs to upskill its workforce to enhance existing abilities, and workers need to reskill, that is, learn new skills, he said.
“The record-low unemployment rate speaks well to Jamaica exiting the recovery phase and entering into a new growth phase. The extent to which this new growth phase will be high and inclusive will depend not only on the creation of new jobs, but higher-paying jobs that are driven by improvements in labour productivity,” Henry said at the briefing.