Tourist arrivals to Jamaica probably rose 32 percent in March this year over 2022 and are set to deliver a 4 percent increase to 283,000 visitors over 271,742 stopover arrivals in March 2019, data released for Montego Bay’s Sangster’s International Airport suggest.
The data also indicates that arrivals for the 2023 first quarter could result in stopover arrivals to the country rising a solid 45 percent to 742 thousand versus 510 thousand for the same period in 2022 and 5 percent above 2019.
The above is deduced from 491,300 total incoming and outgoing passengers in March 2023 compared with 385,800 in March 2022, Sangster’s International Airport, according to Aeroportuario del Pacifico, airport manages the international airports in Kingston and Montego Bay.
The total number of passengers at Montego Bay Airport increased by 27.3 percent in March this year, from 385,800 in March 2022 to 491,300. By comparison, 491,800 passengers passed through the airport in March 2019.
In the first three months of 2022, the Montego Bay Airport handled 45.6 percent more passengers than the 928,100 in the first three months of 2022 to 1,351,000 in 2023.
Kingston had a greater pick up in passenger movements than Montego Bay, with Norman Manley Airport handling 136,000 passengers in March this year, 38.1 percent more than the 98,500 handled in March 2022.
In the first three months of 2023, Kingston’s Airport saw total passenger movements grow by 46.9 percent, from 268,400 in 2022 to 394,200.
Tourist arrivals jumped 32% in March for Jamaica
BOJ sucks $11 billion from money market
Bank of Jamaica sucked more money from the financial market on Wednesday, April 5, pushing the total CDs outstanding to $99 billion, up from $89 a week ago, with the average rate holding steady under 8.5 percent for a second week but the total amount of CDs outstanding is still below the record of $109.5 billion on March 1.
The bank offered $34 billion in CDs and attracted $59.7 billion from 351 bids, with only 253 successful bids getting allocated funds. The offer elicited bids as high as 13.5 percent and as low as 8 percent. The interest rate for the highest successful bid was 8.749 percent and received 75.23 percent of the amount applied for, with the highest fully satisfied rate being 8.74 percent.
At the auction on March 29, a total of 438 bids amounting to $70 million chased after the $35 billion on offer, with 302 being successful at an average rate of 8.49 percent and resulting in $88.85 billion being quarantined by the central bank. The rate on CDs fell to an average of 8.85 at the March 22 auction from the prior auction rate of 10.54 percent.
Jamaica’s NIR hits new record
Jamaica Net International Reserves surged to a record monthly close in March, to US$4.15 billion after increasing by $221 million in the month and by $66 million in February, surpassing the highest monthly close in December 2021 of $4 billion.
Reserves fell by $111 million in January to $3.87 billion after a build up to $3.98 billion. The increase in March was accompanied by buoyant foreign exchange inflows in the banking system that resulted in an appreciation of the Jamaica dollar from just over $155 to the US dollar in most of February to a low of $150.9 at the end of March.
The buildup in the reserves would be due to a strong rebound in tourism traffic above the 2019 levels reopening on Jamalco Alumina plant continued strong inflows in remittances which are US$1 billion more per year than in 2019 on an annual basis.
The increase for March is in keeping with ICInsider.com’s forecast in December that the NIR could hit a record for the first quarter of 2023. “With tourist arrivals expected to jump sharply in the first four months of 2023 over 2022 which was about a third lower than in 2019, inflows could be up some fifty percent over 2022 from that sector and could boost the NIR for the first quarter.”
Steady remittance inflows for Jamaica
Remittance inflows to Jamaica dipped by US$7.4 million or 2.9 percent in February this year compared with the same period in 2022, thus reversing the 2 percent increase enjoyed in January and resulting in a small decline for the two months, data out of Bank of Jamaica shows.
The decline in February of gross receipts represents the first monthly fall since the decline in October last year.
While gross inflows were down, outflows also fell by US$9 million and resulted in net remittance inflows of US$227 million, compared with US$225 million in February 2022 and continues from a $6 million decline in outflows in January this year and resulting in net inflows for the two months increasing 2.9 percent over last year.
Remittance inflows for January to February this year fell by 0.5 percent to US$496 million.
The United States continued to be the prime source of inflows with 71.7 percent of total flows up from 70.8 percent in February 2022.
Jamaican economy grew 5.2% in 2022
The Jamaican economy grew 5.2 percent in 2022, preliminary data released by the Statistical Institute of Jamaica (Statin) states, with GDP marginally surpassing the previous highest fourth quarter performance in 2019. The latest results reflect an increase of 6.3 percent in Services and 2.1 percent in the Production of goods, the release states.
During the fourth quarter of last year, the total value added at constant prices for the Jamaican economy grew by 3.8 percent, compared to the fourth quarter of 2021 and resulted from growth in the Services and Goods Producing Industries of 3.6 percent and 4.7 percent, respectively.
According to Statin, all industries within the Services Industries grew, except the Producers of Government Services, which fell by 0.8 per cent. The main area for growth was increased activities in Hotels & Restaurants 21.6 percent, Other Services 10.4 percent, Transport, Storage & Communication 5.9 percent.
Tourism is Jamaica’s largest earner of foreign exchange.
The growth in Hotels & Restaurants was mainly influenced by a 36.5 percent increase in foreign national arrivals during the period. The increase in the Goods Producing Industries was primarily due to higher output levels in Agriculture, Forestry & Fishing 5.9 percent, Manufacturing 5.4 percent and Mining & Quarrying, 99 percent due to the resumption of operations at the JAMALCO plant, impacted the performance of the Mining & Quarrying industry. The Construction industry that has been buoyant in the past few years, declined 4.8 percent in the December quarter.
BOJ CD rate drop for a second week
Rates paid on Bank of Jamaica 30 days CDs dropped for a second week at the latest auction on Wednesday this week, to 8.49 percent from 8.85 percent on March 22.
The rate declined from 10.54 percent at the auction on March 17 after BOJ offered $18 billion, which attracted $57.86 billion on March 22. At this week’s auction, $35 billion was offered by the central bank and attracted $70 billion, resulting in the highest successful rate at 8.85 percent and the lowest at 7.5 percent, down from 8.2 percent the week before. BOJ absorbed $88.85 billion at the end of the CD auction, up from $81.85 billion the previous week but still down sharply from a peak at $109.5 on March 1.
The move brings the CD rates in line with Treasury bills, with an average rate for 90 days coming in at 8.21 percent on March 8.
Interest rates held at 7% for Jamaica
Interest rates set by the Bank of Jamaica held at 7 percent for the overnight deposits, even as inflation continues to fall rapidly in the country and now running at an average of 0.20 percent per month or 2.4 percent annualised since November last year. The monetary Policy Committee determined the decision at meetings held this week.
According to the country’s central bank, “Inflation continued to ease, consistent with Bank of Jamaica’s monetary policy and international developments. Jamaica’s inflation rate to February 2023 of 7.8 percent was below the rate of 8.1 percent at January 2023. The February outturn was the lowest rate since December 2021.”
The key external drivers of headline inflation, such as grains, fuel and shipping prices, continued to decline, broadly in line with the Bank’s expectations. In addition, inflation expectations continued to track.
Core inflation (excluding food and fuel prices from the Consumer Price Index) at February 2023 also decelerated to 6.6 percent from 7.1 percent at January 2023 and is projected to fall further as monetary policy remains tight.
Annual inflation is projected to continue to fall to the Bank’s inflation target range of 4 to 6 percent by the December 2023 quarter. One-off regulated price adjustments may, however, result in a temporary uptick in inflation.
Notwithstanding positive developments in inflation, “the MPC noted that the risks to the inflation outlook remain elevated. In a context where the domestic economy continues to grow, labour market shortages carry the potential for future wage adjustments that can put upward pressure on inflation.
BOJ holds overnight rate.
Higher inflation could also result from a worsening in supply chain conditions and higher commodity prices if there are further geo-political disruptions. Among the factors that could lead to lower-than-projected inflation, weaker-than-expected global growth could negatively affect domestic demand, and some projected adjustments to regulated prices may not materialise.”
“Therefore, to continue underpinning inflation returning to the target range and to underwrite continued stability in the foreign exchange market, the MPC unanimously agreed to hold the policy interest rate at 7 percent, to maintain tight Jamaican dollar liquidity in the money market and to continue fostering relative stability in the foreign exchange market. The Bank’s liquidity management strategy incorporates the impact of the one percentage point increase in the domestic and the foreign currency Cash Reserve Requirements applicable to DTIs, effective the beginning of April 2023.”
Time come for BOJ to start cutting interest rates
Interest rates in Jamaica and around the world were pushed up since 2021 to curb inflation that got out of hand, in the process Bank of Jamaica hiked their overnight rate that was from 0.50 percent up to August 2021 to a high of 7 percent in November last year, since then point to point inflation peaked in April last year at 11.8 percent, but has since declined sharply by 34 percent to February this year, with the pace since November last year running at 44 percent below the similar 2021 period.
The fall since 2021 has been consistent, although the rate for a few of the months exceeded this pace. The average monthly inflation rate has dropped from the 2022 level of 0.6 percent per month from November 2021 to October 2022 and is now running at an average of 0.2 percent per month or 2.4 percent per annum over the last five months, well below the Bank’s target of 4-6 percent per annum. If history is anything to go by, the next three months should see relatively low inflation, suggesting that the current average of 0.2 per month could continue for a few more months.
The Bank of Jamaica’s target is close at hand based on the point to point inflation, with the danger now that the rate could fall well below the lower end of the band if the BOJ does not act soon to lower interest rates.
They seem to have taken a first step by reducing the amount of money they are pulling out of the market, with the total amount of CDS dropping from $109.5 billion at the beginning of March to $82 billion at the last auction in March.
Investors who were receiving negative interest rates are now seeing positive rates for the first time since 2019 and the trend suggests that this will become more positive over the next few months as inflation continues to fall to more acceptable levels.
Government wage settlement and the minimum wage hike will pressure inflation, but interest rates at current levels are no longer warranted. Other developments in favour of lower inflation are a fall in the price of Oil on the world market from US$80 in early February when the last CPI was computed, and is now trading around $70 but fell as low as $65 in March, with some expecting more declines in the months ahead. The Jamaican dollar has been appreciating and is now down to J$151 region, thus having a moderating effect on prices across a wide cross section of goods and services.
Remittances up in January for Jamaica
Remittance inflows into Jamaica rose 2 percent to US$248.6 million for January 2023, up from US$243.7 in 2022, data out of Jamaica’s central bank show and represent the 6th monthly increase since January last year, with increases in the first two months of the year, as well as August, November and December.
The slow increase for January is in stark contrast to some others in the region. Guatemala and Mexico with growth of 17.4 percent and 12.5 percent respectively and El Salvador with an increase of 6.4 percent, the Bank of Jamaica report shows.
Remittances in 2021 amounted to 58 percent of Imports, down from 61 percent in 2020 but only 37 percent in 2019 and 135 percent of the inflows from the tourist industry in 2021, 206 percent in 2020 and 67 percent in 2019. The ratio for tourism would have declined in 2022 and below the 100 percent level for 2023 based on the sharp recovery in that industry in 2022 and so far in 2023.
Inflation moderating fast in Jamaica
Inflation in Jamaica continues to moderate according to the latest report on the All-Jamaica Consumer Price Index released this week by the Statistical Institute of Jamaica (STATIN) showing that the point-to-point inflation rate as of February 2023 was 7.8 percent, this compares with 8.1 percent reported to January, this year.
The rate of inflation over the first two months of the year is 0.2 percent, in line with the average for the last four months and is now running at 45 percent below the average of 0.37 percent for the four months to February last year. Factors that could lower the pace, even more, are the recent revaluation of the Jamaica dollar and prices for some goods that are declining as new inventory items cost falls compared to the stock of goods in 2022 and most importantly the recent fall in the price of oil.
The CPI increased by 0.5 percent for February 2023 the release stated, up from a modest decline in January. The latest “increase was mainly influenced by a 2.7 percent increase in the index for the division Housing, Water, Electricity, Gas and Other Fuels. The increase in the index for the division Housing, Water, Electricity, Gas and Other Fuels was impacted by higher electricity rates which resulted in a 7.4 percent rise in the index for the group Electricity, Gas and Other Fuels. There was a negligible decline in the heavily weighted Food and Non-Alcoholic Beverages division as prices continued to fall for items within the class Vegetables, tubers, plantains, cooking bananas and pulses, by 2.4 percent. This was however at a slower rate when compared to the (-5.8%) that was recorded for the previous month, January 2023”.
