Jamaica went deeper into recession in the third quarter, during which the economy contracted by 0.6 per cent year over year, said the Planning Institute of Jamaica (PIOJ).
The July to September performance would follow GDP declines in the first and second quarters of 0.1 per cent and 0.2 per cent respectively, as recorded by the Statistical Institution of Jamaica (STATIN).
“The out-turn for the July to September 2012 period largely reflected the impact of the sluggish global economic environment on the main export industries, as well as drought conditions (on the agriculture sector) which prevailed in June and July 2012,” said PIOJ Director General Dr Gladstone Hutchinson at the planning agency’s quarterly press briefing in Kingston yesterday.
Jamaica’s Industrial Decline
The goods-producing industry declined by 2.4 per cent while the services industries remained flat, according to the PIOJ.
All the goods-producing sectors registered declines, with mining and quarrying posting the biggest contraction of 10.4 per cent. Construction continued to struggle, with a decline of 3.5 per cent; manufacture fell by 0.6 per cent; and agriculture was down 0.5 per cent, its first quarterly decline since the December 2010 quarter which was severely impacted by Tropical Storm Nicole.
Within the services industry, the PIOJ reported that tourism registered an increase of 2.3 per cent; electricity and water was up 0.2 per cent; finance and insurance grew by 0.8 per cent; and wholesale and retail trade, repair and installation of machinery jumped by 0.4 per cent. All other service sectors recorded declines, noted the agency.
While the total number of employed persons increased by 11,100, the unemployment rate went up by 0.5 percentage points from July 2011 to 12.8 per cent at July 2012. Half of the 16 industry groups posted increased employment levels, led by the wholesale and retail, repair of motor vehicle and equipment sector — which had 13,800 more persons employed — and manufacturing with an increase of 6,400 more persons on the job.
Meanwhile, the PIOJ expects GDP for the fourth quarter of 2012 to contract between 0.5 and 1.5 per cent, with the outcome likely to fall within the lower half of the projected range. The impact of Hurricane Sandy on the agriculture sector as well as lost production time, compounded with continued weakness in the global economy, are major factors behind the negative outlook.
“Most industries are expected to decline,” said Hutchinson, while noting that tourism, finance and insurance, and wholesale and retail trade industries should, on the other hand, show continued growth.
However, Hutchinson is bullish about the country’s economic prospects for the Medium term, if Government follows “first-phase” reforms of a growth strategy designed to turn around the economy. The Growth Inducement Strategy for Jamaica in the Short to medium Term, which was used to inform the budget and IMF negotiations, is now available to the public online, said the PIOJ boss.
The first-phase reform measures, which include labour market and fiscal reforms, are expected to lay the foundation for the second phase initiatives that will consist of specific growth projects in strategically targeted sectors (among them, tourism, global logistics, agriculture and business process outsourcing).