review of economic performance - planning institute … relative to the low levels recorded in the...

Review of Economic Performance July–September 2016

Planning Institute of Jamaica November 16, 2016

November 16, 2016 Planning Institute of Jamaica 2

Overview: July- September 2016

For July - September 2016, real GDP is estimated to have increased by 2.2% relative to July - September 2015.

Real value added in the Goods-producing industries grew by 6.7%

Real value added for the Services industries expanded by 0.8%


Real Value Added in the Goods Producing Industries (%)

Jul-Sep 2015

Oct-Dec 2015

Jan-Mar

2016

Apr-Jun 2016

July-Sep 2016

Goods Producing 4.6 1.5 1.0 3.3 6.7

Agriculture, Forestry & Fishing

4.7 -3.6 3.0 9.4 28.0

Mining & Quarrying

-0.8 -2.1 -0.8 -1.9 2.0

Manufacture 8.9 6.7 0.3 0.6 0.0

Construction 1.2 1.0 0.3 1.6 1.2


Agriculture, Forestry & Fishing

The Agriculture, Forestry & Fishing industry increased by an estimated 28.0%, reflecting:

Other Agricultural Crops up 41.9% attributed to growth in all nine domestic crop groups Vegetables, up 68.8%; Condiments, up 53.2%; Potatoes, up

50.8%

Traditional Export Crops up 22.7 % due to higher output for Sugar cane, banana and coffee

Post Harvest Activities up 26.9 %

The improvement in the industry was facilitated by: Recovery relative to the low levels recorded in the

corresponding period. More favourable weather conditions relative to the

corresponding quarter of 2015. Increased demand


Mining & Quarrying Real Value Added for Mining & Quarrying grew by 2.0%, largely

reflecting the combined effect of higher output of the heavier weighted alumina which outweighed a decline in crude bauxite production: Alumina production, up 9.9%

Higher production at Jamalco (up 13.0%) and WINDALCO (up 3.9%)

average capacity utilization rate at alumina refineries increased to 41.9%, up 3.8 percentage points.

Crude bauxite production, down 37.8%, due to lower demand associated with the financial challenges, faced by the main purchasers of Jamaica’s bauxite (Sherwin and Noranda).


Manufacture Real Value Added for the Manufacture industry was

estimated to have remained flat, explained by growth in the Food, Beverages and Tobacco component counterbalanced by an estimated decline in the Other Manufacturing component:

Food, Beverages and Tobacco grew, due to higher production for sugar (1106.4%); molasses (709.3%); animal feeds (4.6%); and rum & alcohol (7.1%).

Decline in Other Manufacturing influenced mainly by Lower production of all Petroleum products such as Fuel Oil (down 26.1 %), Turbo Fuel (down 14.5 %) and Automotive Diesel oil (down 12.8 %).

These declines may be attributed to the closure of the refinery for 18 days during the review period for maintenance purposes, relative to a closure of 7 days during the similar period of 2015.

Other Products that recorded decreases were cement, down 4.4 %, and clinker down 59.3 %


Construction Real Value Added for Construction grew by 1.2%,

reflecting:

Growth in Building Construction component resulting from increased activities in non-residential construction projects (hotels & BPO expansion) and the residential construction category.

A 9.4% increase in the total value of mortgages and a 202.7% increase in the total number of housing starts.

An estimated contraction in the Other Construction component due to lower capital expenditure on civil engineering activities reflecting:

no disbursement by NROCC compared with $6.4 billion in the corresponding quarter of 2015;

JPS down 50.4% to $864.5 million.


Real Value Added for the Services Industries (%)

Jul-Sep 2015

Oct-Dec 2015

Jan-Mar 2016

Apr-Jun 2016

Jul-Sep 2016

Services Industry 0.8 0.7 0.9 0.8 0.8

Electricity & Water Supply 3.1 4.5 5.3 5.0 2.9

Transport, Storage & Communication 1.7 0.7 0.4 0.7 0.8

Wholesale & Retail Trade; Repair and Installation of Machinery

0.6 0.6 0.5 0.5 0.6

Finance & Insurance Services 0.5 0.7 1.5 1.4 1.5

Real Estate, Renting & Business Activities 0.6 0.5 0.4 0.5 0.5

Producers of Government Services -0.1 -0.1 -0.1 -0.1 -0.2

Hotels and Restaurants 1.2 0.9 2.4 1.3 2.3

Other Services 0.9 1.1 0.3 0.6 1.0


Electricity & Water Supply

Real value added in the Electricity & Water Supply industry grew by an estimated 2.9%, reflecting increases in electricity consumption and water production Electricity consumption, up 1.9% due to increases in

generation recorded in the following categories Other (Power interchange customers, e.g., bauxite

companies), up 4.8%

Small Businesses (using less than 500kVa), up 1.0%

Residential, up 5.5%

Water production, up 12.8% reflecting increases in: the Eastern division of 16.1%

the Western division of 8.6%


Transport, Storage & Communication Real value added for Transport, Storage &

Communication grew by 0.8% reflecting an expansion in the Transport & Storage; and the Communication components of the industry.

Transport component grew reflecting increased levels of activities at airports.

Airport activities were estimated to have increased due to 3.5% increase in total air passenger movements to 1,416,339 and a 6.5% increase in air cargo movement to 4.5 million kg.

Increased Communication activities were associated with an intensification of competition among major service providers.


Finance & Insurance Services

Real value added in the Finance & Insurance Services industry increased by 1.5% during the quarter, due largely to: Increased net interest income at deposit taking

institutions; and Higher revenue generated from fees and commission

income


Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM)

Real Value Added in the WRTRIM industry grew by 0.6% supported by: Increased volume (12.4%) and value (27.0%) of Automated

Banking Machines and Point of Sale transactions

An improvement in the related Construction and Agriculture industries

Higher sales were recorded in 5 of the 8 goods categories, including: Motor Vehicles, Auto Repairs & Accessories, up 19.3%

Wholesale & Repair of Household Goods & Office Equipment, up 7.9%

Textiles, Clothing, Shoes & Jewellery, up 2.9%

Hardware, Building Supplies, Electrical Goods & Machinery, up 1.8%

Hotels & Restaurants

Real Value Added for Hotels & Restaurants grew by 2.3%.

This was due to an increase in stopover arrivals, up by 2.7%.

Additionally, Cruise passenger arrivals fell by 4.0%,

Total Visitor Expenditure increased by 5.8% to US$589.6 million


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

July-Sep 15 July-Sep 16

Stopover Cruise Total

GD

P T

able

Quarterly Real Value Added Growth (%)

2011–2016

The Macroeconomic Environment

The performance during the quarter took place against the background of:

Quarterly inflation rate of 1.4%

Fiscal deficit of $10.4 billion

Real depreciation of the exchange rate


Inflation

For July–September 2016, inflation was 1.4% largely reflecting: Housing, Water, Electricity, Gas & Other Fuels (up 6.2%)

This increase was due to higher cost for electricity associated with an increase in international crude oil prices as well as an upward adjustment in domestic electricity tariff rates.

Food & Non-Alcoholic Beverages (up 1.0%)

For January–September 2016 inflation rate was 0.8%


Fiscal Accounts

The fiscal deficit was $10.4 billion for the quarter

This was $0.1 billion better than budgeted due to:

$4.5 billion (3.9 %) higher than programmed revenue

$4.4 billion (3.5%) higher than programmed expenditure

Revenue & Grants totalled $120.2 billion in July– September 2016, while Expenditure totalled $130.6 billion.


Exchange Rate

The average nominal exchange rate at the end of September 2016 was $128.27 per US$1.00, representing a 1.5% nominal depreciation compared with end of June 2016.

This translates into a real exchange rate depreciation of 0.3% relative to the US dollar


External Trade

A trade deficit of US$2,239.7 million was recorded for January – July 2015, an increase of US$355.1 million compared with the similar period of 2014.

Imports for the period decreased by 12.1 per cent to US$3,037.1 million, mainly reflecting:

Mineral Fuels, etcetera – US$758.2m, down US$495.0m

Food – US$519.7m, down US$42.1m

Exports for the period fell by 7.5 per cent to US$797.4m, reflecting declines in three of six categories. The largest declines were recorded for Minerals Fuels, etcetera, down US$67.0 m; and Manufactured Goods, down US$12.2 m.

Remittances

Remittance inflows for January–May 2016 amounted to US$934.5 million, up US$29.8 million relative to January–May 2015.

Growth of 3.3% was recorded for remittance inflows for January–May 2016 compared with the corresponding period of 2015.

Employed Labour Force in Selected Industries


ITEM 2015 2016

January April July October January April July

BOTH SEXES

TOTAL POPULATION 2,723,200 2,724,600 2,725,900 2,727,200 2,728,500 2,729,800 2,731,800

Population 14 years and over 2,083,800 2,084,800 2,085,900 2,086,900 2,087,900 2,088,900 2,090,400

Labour Force 1,320,200 1,300,400 1,320,500 1,325,200 1,341,700 1,353,500 1,363,300

Employed Labour Force 1,132,200 1,128,500 1,147,500 1,146,600 1,163,600 1,168,600 1,186,900

Unemployed Labour Force 188,000 171,900 173,000 178,600 178,100 184,900 176,300

Outside The Labour Force 763,600 784,400 765,400 761,700 746,100 735,400 727,100

Unemployment Rate 14.2 13.2 13.1 13.5 13.3 13.7 12.9

Job Seeking Rate 9.8 8.9 8.8 8.9 8.4 9.1 8.1

The unemployment rate for July 2016 was 12.9% compared with a rate of 13.1% in July 2015.

The Total Labour Force increased by 42 600 persons to 1 363 300 relative to July 2015.

The Employed Labour Force increased by 39 100 persons to 1 186 900 relative to July 2015.

The number of persons outside the Labour Force

declined by 38 200 persons relative to July 2015.

The unemployed labour force increased by 3 300 to persons relative to July 2015.


Labour Market Indicators

Total Employed Labour Force 2008–2016

November 16, 2016 Planning Institute of Jamaica

1,174,500

1,083,600

1,186,900

1,020,000

1,040,000

1,060,000

1,080,000

1,100,000

1,120,000

1,140,000

1,160,000

1,180,000

1,200,000

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

Oct

ob

er

Jan

uar

y

Ap

ril

July

2008 2009 2010 2011 2012 2013 2014 2015 2016

Previous highest level of employed labour

Global economic crisis

103,300 jobs added

New highest level of employment

90,900 less jobs

No. of Persons

Short-Term Prospects & Developments October–December 2016

Prospects for the overall economy in the short-term are positive based on: Continued strengthening of productive activities in most

industries, led by expected strong performances by Agriculture, Tourism and Construction

Implementation of major Growth Inducing Projects and the impact of initiatives to spur productivity e.g. Major Infrastructure Development Programme

Greater stability in prices associated with increased food production and stable crude oil prices

Continued strengthening of confidence levels consequent on a IMF Board approval of a successor Precautionary 3-year Stand-by Arrangement .


Inflation October 2016

The rate of inflation for October 2016 was 0.2% largely reflecting:

An increase of 0.5% in Food & Non-Alcoholic

Beverages due primarily to the higher cost of vegetables and starchy foods.



Tourism October 2016

Data indicates:

Preliminary airport arrivals declined by 1.5%

Cruise passenger arrivals up by 2.9%


Electricity October 2016

Total electricity consumption declined by 0.3% to 269.1 million KWh.



Growth October-December 2016

Real GDP is projected to grow within the range of 1.0 % – 2.0% during October–December 2016 vis-à-vis October–December 2015.

review of economic performance - planning institute … relative to the low levels recorded in the...

Documents