Jamaican economy grows 1.9% in March quarter

The Jamaican economy expanded by 1.9 per cent in the January-March quarter, stymied by slowing housing starts, according to preliminary estimates from the Planning Institute of Jamaica.

Real estate, a star performer during the start of the pandemic, has now entered into a slow slide.

“Higher prices do impact demand, so we are suspecting it does have an impact on new investment,” said PIOJ Senior Director James Stewart, the official who led the agency’s quarterly briefing on Tuesday.

Construction dipped 4.5 per cent during the quarter.

“There was a 56.5 per cent contraction of housing starts by the National Housing Trust,” James added.

Housing prices and mortgage rates have risen since 2020, partly due to the benchmark interest rate hikes by the Bank of Jamaica, which moved in increments from 0.5 per cent to 7.0 per cent.

Stewart said that while “interest costs are significant determinants for any mortgage, PIOJ did not have enough data to determine specifically to what level it might have impacted demand.

“We do not have that information; we could not say,” said the PIOJ official, who heads up the PIOJ’s economic planning, research and policy logistics unit.

The broad goods producing industry grew by an estimated 3.0 per cent, driven by improved performances in three industries – mining and quarrying grew 25 per cent, agriculture, forestry and fishing grew by 8.0 per cent, manufacturing grew 2.0 per cent. Construction was the only main goods sector that declined.

The services sector grew 1.6 per cent, led by electricity and water supply, up 7.0 per cent; hotels and restaurants up 6.0 per cent; finance and insurance, up 1.5 per cent; and transport storage and communication, also up 1.5 per cent.

“The improved performance related to travel and tourism and a general increase in demand for electricity,” said Stewart.

Within the tourism market, visitor arrivals by plane, January to March, increased by 7.5 per cent to over 788,000 passengers; cruise arrivals were up 18 per cent to 563,000 visitors; and total passenger spend increased by over nine per cent US$1.3 billion.

For the full fiscal year ending March, PIOJ estimates that the economy expanded by 2.0 per cent. A final call on the performance will come from the Statistical Institute of Jamaica, which is scheduled to release its report on the March quarter at the end of June.

Looking forward, the PIOJ forecasts growth of 1.5 per cent to 2.5 per cent for the June quarter.

“It is based on the continuation of the growth momentum, the continued strengthening of the mining industry, increased domestic demand, and the continued strengthening in the global economy which augurs well for external demand for Jamaica’s goods,” said Stewart.

For FY2025 is projected at 1.0 to 3.0 per cent.

business@gleanerjm.com