A farmer tends his field in this 2005 Gleaner photo. Agriculture was a main contributor to the decline in the economy in the final quarter of 2007, a period in which Jamaica struggled to recover from Hurricane Dean. - File

Jamaica recorded negative growth in the final quarter of 2007, a period that was particularly challenging for manufacturers and producers whose 3.2 per cent decline was the major upset to gross domestic product (GDP).

The Statistical Institute of Jamaica, which tracks economic growth, also reported that inflation had narrowly missed the 20 per cent mark, coming in at 19.9 per cent for the fiscal year ending March.

Services, which is the main anchor on which economic growth hangs, also bucked the trend to post a decline of 0.4 per cent in the October-December period.

Overall, the economy dipped 1.3 per cent in the period, floored by fallouts from the hurricane in August as well as rising world prices which pushed the cost of doing business higher.

But the calendar year ended with real growth of 1.2 per cent growth - 0.5 per cent for the productive services and 1.5 per cent services.

That growth was estimated nominally at $249.6 billion, or an average of $62.4 billion per quarter.

Recovery expected

"Any decline is a cause for concern, particularly with the productive sector falling by 3.2 per cent," said analyst Orville Johnson of Today's Money Limited. "This is a big drop."

Johnson, however, is not expecting the December period's misfortunes to extend into the first quarter of 2008, a period of traditionally high tourism flows from the peak winter season.

"Some recovery should take place," he said.

For the first quarter of 2008, the economy, according to Johnson, is expected to benefit form inflows from the tourism sector, which so far, have shown some positive results.

"Remittance inflows will also play a role, and there have been some steady investments in the telecommunications and construc-tion sector," he added.

Still, there is concern about the erosion of purchasing power in the periods ahead.

"While a recovery is expected, a fallout in the business sector is likely to be a factor in the strength of the economy, as consumption power decreases," said Johnson.

Inflation already stands at 5.2 per cent for the calendar year to date March.

business@gleanerjm.com