By Lavern Clarke, Staff ReporterJAMAICA EXPERIENCED 4.1 per cent real growth in the economy in the October to December period last year, pushed largely by rebounds in tourism, mining and transport, the Planning Institute of Jamaica (PIOJ) announced Thursday.
In a resumption of quarterly press briefings at the PIOJ, director-general Dr. Wesley Hughes said the economy's positive performance will continue into January to March, with the figures indicating that the quarter will also see growth in Gross Domestic Product (GDP) of three per cent.
Based on those estimates, Hughes also predicts that the 2002/03 fiscal year will end with growth of 1.8 per cent of GDP, compared to the two to four per cent that Finance Minister Dr. Omar Davies targeted. GDP growth for calendar 2002 was estimated at 1.2 per cent.
Hughes said, however, that while PIOJ does its own analyses and estimates, the final authority on GDP and growth remains the Statistical Institute of Jamaica (STATIN).
But, "we are satisfied that we will get the direction right, if not the precise measure," he told journalists. The PIOJ said the he decided to resume the briefings based on concerns that too much economic debate was based on "gut feeling" rather than the facts, and was also a response he said to recent criticism that Government data on the economy was not made public on a timely basis.
In the quarter under review, real growth occurred in both the goods and services sectors. In line with recent trends, services continued to lead the way with 5.3 per cent of increased earnings, compared to 3.3 per cent for goods producers.
The movement in national earnings were so steep only because the similar quarter in 2001 had performed poorly, coming in the wake of the 9/11 terrorist attack on the United States.
However, the numbers also indicated that the current quarter also grew when compared to the October-December 2000 period. The comparative total GDP were $5.05 billion in the current period against $4.9 billion two years ago.
"The recovery in real output reflects a return to normality in several sectors that were affected by external and domestic shocks during the last 18 months," said the Institute.
Tourism expenditure grew 16 per cent on earnings of US$297.2 million; transport and communications rose 11 per cent, and electricity and water 6.3 per cent.
Bauxite production hit 3,446 kilo tonnes taking the sector to a 24 year high of 13,119.5 tonnes for the calendar year. Its performance contributed significantly to the 26 per cent growth in the mining and quarrying sector.
The only negative performers were government services which fell 0.3 per cent, and agriculture, which is still overcoming the effects of three floods from November 2001 to September 2002. The sector declined by 13 per cent in the December quarter and 8.6 per cent over the calendar year.
Turning to the macro-economy, the PIOJ boss said it is now accepted that the fiscal deficit is "unsustainable" and needed correcting. During the quarter, the deficit widened by $11.6 billion, compared to the $7.8 billion programmed - the result of a $2.1 billion shortfall in revenues and $5.8 billion of over-budget expenditure.
Asked to give his estimates of the deficit, the PIOJ boss fudged, saying that Finance Minister Dr. Omar Davies had already announced targets of eight per cent of GDP.
Looking to the monetary side of the economy, Hughes said "inflationary impulses were relatively well-contained," notwithstanding increases in price pressures and exchange rate adjustments, which saw a 3.5 per cent depreciation in the currency over the quarter.
Depreciation in real terms was 0.7 per cent, said Hughes, adding that this outturn would have been beneficial to companies seeking to compete in exports.
Inflation outturn was 2.5 per cent for the quarter, 7.3 per cent for the calendar year, and a projected 7.1 per cent for the fiscal year, which ends in March.
Interest rates also rose from 17.25 per cent to 18.25 per cent, a consequence of the measures taken to defend the exchange rate. Hughes noted that while the Government does not operate a fixed exchange rate, "the emphasis is on orderly adjustment."
The PIOJ boss, despite acknowledging that "macro-management is complicated by exchange rate adjustments as well as the widening deficit," said he remained confident that the Patterson administration could reduce the deficit to six per cent in the next fiscal year, and balance the budget in 2006.
He, however, refused to say how it could be done, noting that to do so would be pre-empting the Finance Minister and the upcoming budget.
