As the novel coronavirus pandemic continues to negatively impact the prospects for gross domestic product (GDP) growth, the Planning Institute of Jamaica (PIOJ) in its latest assessment of economic activities reported contractions across all major sectors in the services and goods-producing industries.
In a quarterly briefing on Wednesday last, the country’s chief planning agency said that the economy declined by 18 per cent for the April to June quarter, four percentage points more than it had previously projected, when it estimated a 12-14 per cent decline in its outlook while reporting on the January to March quarter earlier this year.
Director general of the PIOJ, Dr Wayne Henry, said that the out-turn for the April-June quarter was as a result of the implementation of measures to manage the pandemic along with the associated impacts, ranging from border closures, restricted movements, business closures, job losses, weakened demand and reduced economic activities.
In an estimated report on real sector developments, the director general said that the goods-producing industry contracted by an estimated 7.0 per cent for the quarter with all industries registering a decline.
“This performance largely reflected the impact of the temporary closure of the JISCO/Alpart Alumina refinery, drought conditions which adversely affected agriculture production, and measures implemented to contain the spread of the COVID-19 pandemic,” he reported.
For the period, agriculture fell by 8.5 per cent which was largely attributed to drought conditions. The mining and quarrying industry declined by 25.2 per cent and the manufacturing industry, which was one that grew in the last quarter, also reported a 2.9 per cent decrease. The construction industry was estimated to have declined by some 3 per cent due to lower residential and non-residential building construction activities and reduced capital expenditure on civil engineering activities.
“The services industry was estimated to have declined by 20.6 per cent reflecting a fall in real value added in all industries, with the exception of producers of government services which remained flat,” Henry added.
A breakdown by segments reflected electricity and water supply contracting by 8.8 per cent to real value added due to reduced consumption with a similar fate for transport storage and communication which fell by 29.6 per cent. Finance and insurance services declined by 3.0 per cent while the wholesale & retail trade; repair & installation of machinery (WRTRIM) industry also decline by an estimated 20 per cent , impacted by estimated contractions in associate sectors in the goods-producing industry. The major service industry, hotels and restaurants contracted by a whopping 87.5 per cent. This was largely attributed to sharp declines in visitor arrivals which led to a significant fall-off in stopover arrivals by 98.9 per cent to 7,188 visitors along with a decline in the number of people utilising restaurant services.
The PIOJ in its assessment further noted a 10.2 per cent decline to real GDP for the first six months (January-June) of this year. “The goods-producing industry is estimated to have contracted by 4.4 per cent while the services industry contracted by 11.5 per cent. The industries which were estimated to have recorded the largest decline during the first half of the year were hotels & restaurants (down 50.0 per cent), mining & quarrying (down 30.5 per cent), and other services down (23.1 per cent).”
Henry, in his report, said that based on the current spikes in infection rate, it is unlikely that the economy will be able to rebound from these fallouts until the next two years when the pandemic is expected to subside.
“Growth in output is expected to resume during FY2021/22 given the cycling-out of the impact of the closure of the Alpart refinery, as well as an expected reduction in the impact of the COVID-19 pandemic on economic activities,” he said.
“Although the current growth prospects are daunting, it is imperative that businesses and the country in general, use this downtime effectively to seek out the opportunities which have emerged as a result of the pandemic, as well as implement productivity enhancing measures to place businesses in a position to capitalise on the rebound after the pandemic,” the director general advised.
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