By Andrew Smith, Photography EditorJAMAICANS CAN breathe a sigh of relief about the state of the economy for the time being, according to a recent review by the Planning Institute of Jamaica (PIOJ).
The country is on track to meet key targets, with the fiscal deficit (budget shortfall) and inflation estimates running below expected levels for the three months ending June 30. Growth is also higher than projected for the period.
"There was a fiscal deficit of $14.3 billion during the review quarter," said Dr. Wesley Hughes, PIOJ director-general. This was $2.6 billion less than budgeted, a very positive development.
The fiscal deficit has come to be regarded as a key indicator of the country's financial health. This is because outside investors can use it as a quick guide to suggest the country's capacity to repay its debts. The successful deficit reduction came about because revenue was $1.2 billion more than budgeted and expenditure was $1.4 billion less. The fiscal year starts in April and ends in the following March.
GDP GREW
Dr. Hughes was speaking at a press briefing held yesterday at the PIOJ's main office in New Kingston. The Statistical Institute of Jamaica provides Jamaica's official statistics, but the PIOJ provides more current data, necessary for ongoing tracking of economic activities.
The gross domestic product (GDP), a measure of the country's economic output, grew by 3.3 per cent in the April-June quarter, he said. This is a higher rate than the growth target for this financial year, which is projected at 2.5 per cent.
MAINTAINED GROWTH
"Not only have we maintained the growth momentum, but we have seen a slight 'uptick' in the rate of growth," he said.
This is a broad-based expansion with the goods producing sectors growing by 4.6 per cent and the service sectors growing by 2.3 per cent. Within the goods producing sector, mining and manufacturing were the outstanding performers, growing by 8.7 and 6.8 per cent respectively. This reflects the rebound in the bauxite/alumina industry and industrial activity generally. Agri-culture shrank by 0.2 per cent because of an ongoing drought, Dr. Hughes said.
Within the service sectors, the hotels, restaurants and clubs sub-sector was the outstanding performer, reflecting the impressive developments under way in the tourism industry.
"The growth momentum is expected to continue, into the next quarter," Dr. Hughes said. He projected a 2.8 per cent growth in overall GDP for the July-September quarter.
Inflation for the review quarter was 1.9 per cent. Translated to an annual basis, that would amount to an inflation figure of 7.6 per cent. The annualised inflation figure is 1.4 per cent below the 9 per cent target set for the financial year.
But inflation for July 2004 was one per cent, Dr. Hughes said. This is a much higher rate than that for the quarter ended in June and would jeopardise the inflation target if maintained. Inflationary pressures are expected from higher fuel prices and back-to school related expenses during the July- September 2004 quarter, he said.
