Positive growth expected for economy

DR. WESLEY HUGHES, Director General at the Planning Instit-ute of Jamaica (PIOJ), has said that if growth trends observed during the last quarter of the 2000/01 fiscal year continued, then the economy was poised to record its strongest growth since the mid-1990s.

He noted that the growth target is expected to be helped by the continued stability in the major macro-economic indicators, reduction in both external and domestic interest rates, strong investment flows in the telecommunications, energy and tourism sectors and improved weather conditions.

Giving an overview in the Economic Update and Outlook published by the Planning Institute of Jamaica, Dr. Hughes said that the major downside risks are the weakness in the United States economy, the domestic debt problem and a possible increase in global oil prices. "The overall short to medium term outlook is, however, positive," he said.

On the performance of the economy during the last fiscal year, Dr. Hughes said the economy showed a definite but modest trend towards recovery during 2000/01, with real sectors growing during the last quarter.

Other macro-economic indicators remained relatively strong, he said, with the Net International Reserves (NIR) growing to a record level of US$1.3 billion and inflation still under control. The strong reserve position assisted in preserving the relative stability of the exchange rate, he added.

Dr. Hughes said that a budget surplus of $4.4 billion was recorded during the fiscal year. He said the general improvements in the various indicators facilitated a gradual reduction in benchmark interest rates in line with policy expectations.

During the review quarter, performance in the real sector was underpinned by a turnaround in the agricultural, mining and manufacturing sectors. The PIOJ's agriculture index increased by 10.9 per cent, relative to a 13.5 per cent decline in the similar period last year.

The mining sector benefited from the re-opening of the Gramercy plant in Louisiana, United States in November 2000, recording an increase of 13.1 per cent in total bauxite production, compared with an 8.0 per cent decline during the corresponding period of 2000.

Growth in the manufacturing sector was fairly broad-based with the petroleum sub-sector being very significant. Also registering growth were the tourism, telecommunications and energy sectors, he stated.

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