April 2, 2025
Economy scales back on last-quarter contraction
Statin reports 0.8 per cent decline for Oct-Dec
Output from the local economy during the final quarter of 2024 (October to December) declined by 0.8 per cent, falling below previous estimates, according to final data released by the Statistical Institute of Jamaica (Statin) this week.
The Planning Institute of Jamaica (PIOJ) had earlier projected a 1.8 per cent contraction in its preliminary estimates for the quarter, released in late February.
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This contraction in the economy, which follows a larger 3.5 per cent decline in the previous July-September quarter sees both Statin and the PIOJ attributing downturns to adverse weather-related activities brought on by the impacts of Hurricane Beryl in July and Tropical Storm Rafael in November.
Statin in its release of the official numbers has, however, indicated that the 0.8 per cent registered during the end of last year was largely driven by a 4.3 per cent decline in the goods producing industries which was partially offset by a 0.4 per cent growth in the services industry. This growth in the services sector, initially estimated to have contracted by 0.7 per cent, was primarily fuelled by gains in important industries.
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“The growth in the services industry was primarily attributed to increases in the following industries: producers of government services (0.8 per cent), wholesale and retail trade; repairs; installation of machinery and equipment (0.2 per cent), transport, storage and communication (1.8 per cent), other services (0.2 per cent), finance and insurance services (0.5 per cent),” Statin said in its report on Monday.
The entity, however, reported declines for the following industries: electricity and water supply (down 1.4 per cent), real estate, renting and business activities (down 0.3 per cent) and hotels and restaurants (down 0.3 per cent).
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Electricity consumption, which fell due to significant damage to Jamaica Public Service (JPS) infrastructure during the third quarter, continued to impact the fourth quarter.
“This was [primarily] influenced by the fall in residential and commercial consumption due to electricity outages resulting from the passing of Hurricane Beryl,” Statin noted.
“The reduction in foreign national visitor arrivals from the United States of America contributed to the decline in the hotels an restaurants industry,” the report added.
Real value added for the goods producing industries however saw wholesale contractions of 10.6 per cent for agriculture, 2.3 per cent for mining and quarrying, 0.5 per cent for manufacturing and 2.7 per cent for construction.
Following two consecutive quarters of negative growth, the PIOJ, which had earlier dismissed talks of a recession in Jamaica, said that despite the downturns observed, stronger metrics related to employment, income and other fiscal indictors were generally found to be trending in the right direction. As a result, these, based on guidelines set out by international economic institutions, did not satisfy the full requirements of a recession, which is also assessed based on a number of other variables including depth, diffusion and duration, PIOJ said.
PIOJ Director General Dr Wayne Henry, further noting that a recession is usually accompanied by a steady rise in job losses and significant increases in unemployment, said neither of these was, at the time, found to be evident based on an assessment of Jamaica’s situation.
“The unemployment rate for October 2024 is 3.5 per cent, and employers have also lamented challenges/shortages in filling some vacant positions. This suggests that, despite the temporary contraction in output, the labour market continues to remain robust and may be considered a lead indicator of a return to growth in the short term,” he said.
The PIOJ, maintaining a generally positive short to medium-term outlook, said that the expectation is for the local economy to return to growth during the first three months of this year, with growth projected to be within the range of 0.1 per cent and 1.0 per cent.
“For financial year 2024/25 the economy is, however, expected to contract within the range of 0.5 per cent to 1.5 per cent,” Henry stated.
