Economy declined 0.1% in Q2

October 5, 2013 by

The Statistical Institute of Jamaica (STATIN) is reporting that the Jamaican economy recorded a mild decline in the second quarter of this year, a big improvement over the decline suffered in the first quarter and down on the estimates put out by Bank of Jamaica and the Planning Institute of Jamaica earlier.

Total value added at constant prices for the Jamaican economy declined by 0.1 per cent in the second quarter of 2013 when compared to the similar quarter of 2012. This resulted from a 0.6 per cent decrease in output of the Goods Producing industries as the Services industries remained relatively unchanged. Total value added at constant prices for the Jamaican economy declined by 1.3 per cent in the first quarter of 2013 when compared to the similar quarter of 2012.

Image courtesy of koko-tewan/FreeDigitalPhotos.net

Image courtesy of koko-tewan/FreeDigitalPhotos.net

Within the Goods Producing Industries, the 9.4 per cent increase in the output of Mining & Quarrying and 1.9 per cent increase in Construction output were not sufficient to offset the decline in Agriculture, Forestry & Fishery of 6.6 per cent and Manufacture of 0.1 per cent.

Within the Services industries, increased output was recorded for Hotels & Restaurants (0.6 per cent), Finance & Insurance Services (0.7 per cent) and Real Estate, Renting & Business Activities (0.2 per cent). Industries that experienced lower levels of output were: Electricity & Water Supply (-2.0 per cent); while Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment, Transport, Storage & Communication and Producers of Government Services all declined by 0.2 per cent. However, Other Services remained relatively unchanged during the period.

When compared with the first quarter of 2013 the economy improved by 1.5 per cent. Both the Goods Producing and Services industries recorded higher levels of output. The Goods Producing industries increased by 1.7 per cent while the Services industries increased by 1.5 per cent.

Related posts | BOJ: Economy likely declined in Q2 | Mining & Agriculture dent GDP badly

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Non-Traditional exports up

October 4, 2013 by

Jamaica’s Non-Traditional Exports earnings continue to record growth for the first six months this year over the similar period in 2012. Earnings from the segment rose by US$28 million or 7.8 percent to US$387 million. “Other” non-traditional domestic exports rose by 17.4 per cent to earn US$283.9 million. This was due to the significant increase in “Chemicals (incl. Ethanol)” of US$65.8 million, which recorded a value of US$96.5 million. “Food” increased by 0.8 percent to earn US$71.8 million.

Jamaica imported US$129.6 million less goods for the first six months of 2013 than for the similar period last year, while exports remained fairly flat resulting in an improvement in the large trade deficit the country has had for several years. During the 2013 period the merchandise trade deficit fell to US$2,257 million from US$2,386 million in the 2012, a decline of 5.4 percent. The movement is in the right direction but will need to undergo further substantial change during the life of the IMF agreement.

Image courtesy of Sommai/FreeDigitalPhotos.net

Image courtesy of Sommai/FreeDigitalPhotos.net

Exports | Total exports during the six months to June 2013 were US$852 million, virtually the same amount as in 2012. Earnings from total traditional exports accounted for US$429 million, down from US$459 million in the comparable period of 2012, a US$30 million decrease or 6.6 percent. The decline is due to a fall in the “Manufacture” group. Earnings from this group accounted for US$80.9 million or 18.9 percent of total traditional exports during the first six months of 2013, a fall of US$43 million or 34.8 percent. Despite the overall decline in the exports of major traditional domestic exports, the “Agriculture” group increased earning by US$14.5 million, when compared to the US$11.2 million in the 2012 period. This was due largely to higher exports of ‘Coffee’ which rose from US$8.2 million to US$10.9 million in the 2013. ‘Citrus’ moved from US$1.5 million in the 2012 period to US$3 million in the current 2013 review period. “Mining and Quarrying” earned US$333 million during the first half of 2013, up from US$324 million in the 2012 period.

Imports | Imports during the first six months was US$3,109 million, down from US$3,239 million in the comparable 2012 review period. The Jamaica Free Zone accounted for US$237 million of imports in 2013. The major commodities imported were “Mineral Fuels, etcetera”, “Food”, and “Chemicals”, “Machinery & Transport Equipment”, “Manufactured Goods” and “Miscellaneous Manufactured Articles”. “Mineral Fuels, etcetera” accounted for 35.9 percent of imports as spending on this commodity fell by US$218 million or 16.3 percent.  Expenditure on “Machinery and Transport Equipment” decreased by US$3.4 million to US$439.5 million for this period. “Manufactured Goods” declined to US$285 million, a fall of US$26 million. Lower imports of ‘manufactures of metal’, ‘non-metallic mineral manufactures’ and ‘paper, paperboards & articles of paper pulp’ were the reasons for this decline.

CARICOM trade imbalance | Imports from CARICOM during the first six months of this calendar year, was US$432 million representing 13.9 percent of total imports from the rest of the world. Imports decreased by US$105 million or 19.5 percent, below the US$537 million for the January to June 2012 period. Contributors to the downward movement in imports were: “Mineral Fuels, etcetera” falling by 28.5 percent or US$115 million to US$288 million. “Manufactured Goods” fell by 9.8 percent to US$11.3 million while “Chemicals” moved from US$15.4 million to US$13.9 million in the current 2013 review period. “Food” valued at US$86 million was up from US$75 million an increase of US$11 million or 13.6 percent. Other major imports namely “Beverages & Tobacco” and “Misc. Manufactured Articles” moved up and were valued at US$20 million and US$7 million respectively.

Total exports to CARICOM were valued at a mere US$33 million for the January to June 2013 period, down from US$35 million in the 2012 period.  Domestic exports amounted to US$28 million, down from US$30 million in the 2012 period. “Chemicals” was valued at US$3 million, down from US$6.5 million recorded in the similar 2012 period. Earnings from “Food” increases was valued at US$16 million, up from the US$15.4 million exported in the corresponding 2012 review period. “Beverages & Tobacco” had a positive impact on the growth in exports and was valued at US$5.2 million compared to the US$4.8 million recorded in the similar 2012 review period. For the period under review, Jamaica incurred a trade deficit of US$399 million with CARICOM. When compared to the US$501 million deficit recorded for the 2012 period, the trade deficit narrowed by US$102.4 million or 20.4 percent.

Related posts | Trades deficits narrows to May

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Producer prices tamed in August

October 4, 2013 by

Data out from the Statistical Institute of Jamaica (STATIN) indicates that the inflationary pressures in the goods producing sector has been moderate during August this year.

According to the government body charged with responsibility to collect and collate data on the country, the Producer Price Index for the Mining & Quarrying industry increased by 0.2 percent for August. This was due to the upward movement of 0.2 percent in the index for the major group ‘Bauxite Mining & Alumina Processing’. Producer prices for the Manufacturing industry increased by 0.4 percent the result of the movement in the major groups, ‘Food, Beverages & Tobacco’ and ‘Refined Petroleum Products’ that showed increases of 0.2 percent and 3.0 percent respectively. However the index for the major groups ‘Chemicals and Chemical Products’ showed a decline of 5.0 percent.

The point to point period, August 2012 to August 2013 showed movement in the index for the Mining & Quarrying industry of 13.6 percent, a decline of 0.3 percentage point below the 13.9 percent recorded for the previous period. Additionally the point to point for Manufacturing recorded an increase of 8.2 percent. This increase resulted from advances of 8.0 percent and 9.7 percent for the two most influential major groups namely ‘Food, Beverages & Tobacco’ and ‘Refined Petroleum Products’.

For April 2013 to August 2013, the index for Mining & Quarrying industry advanced by 2.1 percent, while the Manufacturing industry increased by 1.5 percent for the corresponding period.

Related posts | BOJ: Economy likely declined in Q2

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August curse hits Taxes

October 1, 2013 by

August has proven the most difficult month for the stewards of Jamaica’s finances, going way back in time to when Omar Davies was the Minister in charge and during Audley Shaw’s tenor as well.

What we’re calling the ‘August curse’ is a familiar cycle for the tax inflows to the government coffers to look good up to July, and then Wham! It hits a brick wall in August, falling well below target and with not much improvement for the rest of the fiscal year. Historically, this usually happens when a major tax package is implemented.

True to the curse, the August 2013 out turn is not looking good. Revenues that were up half a billion dollars over budget to July is now down $5.1 billion at the end of August to $162.7 billion versus $172.7 billion projected.

JaCurrencyDollarsNon tax revenues grew by $1.6 billion to $11 billion but tax revenues fell by $5.9 billion. Grants also increased, as it grew $830 million to $1.54 billion. The major fall in revenues was Payroll related taxes $2.7 billion, tax on interest $1.50 billion, tax on dividend $600 million, customs duty and SCT and GCT on imports were off by $4.3 billion but was offset by a big jump in travel tax which increased by $1.85 billion.

Expenditure to the end of August is also down by $10 billion with interest cost falling by $5.1 billion, wages down $1.2 billion and programmes $3.2 billion.

August Curse | For August overall revenues were down by $5.6 billion even as non-tax revenues increased by a billion to $2.3 billion. The shortfall came primarily from PAYE $850 million, tax on interest $2.7 billion, special consumption tax for local goods $600 million and $1.3 billion on imports, GCT on local goods and services $700 million and on imports $500 million and customs duty $400 million.

Expenditure was off by $4.6 billion aided by $1.8 billion cut in Programmes, a small drop in the wage bill and a big $3.7 billion fall in interest cost but capital expenditure climbed by $1.2 million.

Why shortfall? | The Financial Secretary Devon Rowe indicated that the revenue shortfall occurred based on a number of factors. These include lower withholding tax on interest due to the government paying out lower interest to bond holders. He further indicated that revenue of about $1.5 billion was collected in the last business day of August, which fell on a week end. Those funds have been recorded in August’s revenues. Petro Jam plant was shuttered for some time thus reducing SCT on fuel imports. He confirmed that August is usually a difficult month for collections based on the impact that back to school expenditure has on people’s disposable income.

Related posts | July surplus as Govt income jumps | Government may wipe out deficit

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Remittances dip in June

September 29, 2013 by

Data made available by Jamaica’s central bank shows net remittances falling US$7.3 million in June 2013 or 4.8 per cent relative to the corresponding period of 2012 as net flows amounted to US$145.8 million.

Gross remittance inflows for the month were US$166.0 million, a decrease of US$9.1 million or 5.2 per cent relative to the corresponding month of the previous year. The fall in total remittance inflows reflected a decrease of US$8.0 million in inflows through Remittance Companies and a decrease of US$1.2 million in inflows via Other Remittances.

USdollarStacks280x150Net remittances for January to June 2013 were US$899.3 million, a growth of US$8.4 million relative to the corresponding period of 2012. The out-turn for the review period reflected a reduction in outflows, which were partly offset by inflows. For the period to June, 2013, total remittance inflows were US$1,020 million, a decrease of US$6.5 million.

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August inflation increase moderate

September 18, 2013 by

The inflation rate for August 2013 compared to July 2013 rose by 0.4 per cent as measured by the All Jamaica ‘All Divisions’ Consumer Price Index.

The index for the division ‘Transport’ recorded the highest movement of 0.9 per cent for the month, largely the result of a rise in the cost of airfares, motor vehicles and petrol and its related products. The most heavily weighted division ‘Foods & Non-Alcoholic Beverages’ recorded an upward movement of 0.2 per cent. In this division the highest movement of 2.0 per cent was recorded for the class” Fruit’.  This movement was however moderated by the decline of 1.0 per cent for ‘Vegetables and Starchy Foods’. The index of 2.2 per cent in “Water Supply and Miscellaneous Services Related to the Dwelling” which was tempered by a decline of 0.3 per cent in “Electricity, Gas and Other Fuels” the report from Statistical Institute of Jamaica disclosed.

The year–to-date inflation was 4.8 per cent, 1.5 percentage point above the 3.3 per cent that was recorded for the similar period in 2012.The point-to-point movement was 9.5 per cent.

Jamaica_coat_of_arms_280X150All other divisions that make up the All Jamaica index recorded increases below 1.0 per cent. ‘Alcoholic Beverages and Tobacco’ rose by 0.4 per cent, ‘Clothing and Footwear,’ 0.4 per cent, ‘Furnishings Household Equipment’ and Routine Household Maintenance’, 0.2 per cent, ‘Health’, 0.3 per cent, ‘Recreation and Culture’, 0.7 per cent, ‘Restaurants and Accommodation Services’ 0.4 per cent, and ‘Miscellaneous Goods and Services’ 0.8 per cent. There was no movement recorded for both ‘Communication’ and ‘Education.’

There were increases in all three regions: Greater Kingston Metropolitan Area, 0.4 per cent, Other Urban Centres, 0.6 per cent and Rural areas, 0.2 per cent.

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NIR down but so is IMF debt

September 9, 2013 by

The latest data from the Bank of Jamaica shows a decline in the net international reserves for the country to US$882 million at the end of August, down from US$930 million at the end of July, a decline of US$48 million.

The decline was mainly due to the central bank paying off US$77 million to the IMF thus reducing the amount due to them from US$861 to US$783 million. The gross reserves stands at US$1.687 billion or US$125.5 million less than at the end of July.

The gross NIR now represents 11.22 weeks of estimated Goods & Services Imports.

The country now enters a period that is traditionally characterised by lower inflows and higher demand. However, with the Highway 2000 Ocho Rios leg to resume, the next few months should be seeing capital inflows in connection with this project, which should help augment other inflows to the system.

Related Posts | NIR surpasses $1 billion

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Trades deficits narrows to May

September 3, 2013 by

Jamaica imported goods valued at US$2.69 billion during the January to May 2013 period, while imports for the similar period in 2012 was US$2,735 billion, a decrease of US$42 million. Exports for the January to May 2013 period amounted to US$714.0 million, when compared to the US$720.0 million recorded in the comparable 2012 period a fall of US$6.0 million narrowing the trade deficit by US$36.1 million.

Imports | The value of imports for commodity groups, showed a general downward trend. The primary commodity group imported during the period was “Mineral Fuels, etcetera” which amounted to US$960.8 million and accounted for 35.7 per cent of total imports.  Relative to the US$1,143.5 million imported for the January to May 2012 period, the value of “Mineral fuels, etcetera” decreased by US$182.7 million or 16.0 per cent. This decline was as a result of reduction of items such as ‘Coal, Coke and Briquettes’ and Gas, natural and manufactured. “Machinery and Transport Equipment” valued at US$374.6 million, declined marginally from US$378.6 million in the similar 2012 period. “Manufactured Goods” valued at US$230.6 million, fell by US$30.3 Million or 11.6 per cent.

Traditional Domestic Exports | During the five months of 2013, the contribution of major traditional domestic exports to the value of domestic exports decreased from 54.9 per cent in the 2012 review period to 50.9 per cent in the similar period in 2013. Traditional exports amounted to US$347.5 million in the period, down US$35.4 million from US$382.8 million in the 2012 period. The decline is in the “Mining and Quarrying” and “Manufacture” groups.

Non-traditional exports increased during the January to May 2013 period by US$20.7 million or 6.6 per cent to US$335.2 million.

Caricon280x150Imports from CARICOM for the first five months of 2013 accounted for 13.5 per cent of total imports and was valued at US$362.3 million representing a decrease of US$91.8 million or 20.2 per cent when compared to the US$454.1 million recorded for the 2012. The value of the Non-fuel imports from CARICOM amounted to US$125.8 million, up from US$115.1 in the comparable 2012 period.

“Mineral Fuels, etcetera” decreased during the 2013 review period, by US$102.6 million or 30.0 per cent and was valued at US$236.5 million. Other notable commodity groups imported from the region included “Food”, valued at US$76 million, “Beverages and Tobacco” US$17.2 million, “Chemicals”, US$11.4 million, and “Manufactured Goods”, US$9.9 million.

The United States of America (USA) remained Jamaica’s main trading partner during the January to May 2013, with US$923.9 million or 34.3 per cent of imports originating from that country. Total exports to the United States amounted to US$368.2 million or 51.6 per cent. Jamaica incurred a trade deficit with the United States of US$555.7 million, down from US$667.3 million in the similar 2012 period.

Total exports to CARICOM for the January to May 2013 period was valued at US$26.7 million, representing a decline of US$2.2 million or 7.8 per cent. Domestic exports to CARICOM decreased to US$22.2 million and accounted for 3.3 per cent of the country’s domestic exports. Re-export for the period increased and was valued at US$4.5 million, in the current review period.

For the first five months of 2013 Jamaica incurred a trade deficit with her CARICOM partners of US$335.6 million when compared to the US$425.2 million recorded for the January to May 2012 period. The trade gap narrowed by US$89.6 million or 21.1 per cent.

Related posts | Non-traditional exports narrow trade deficit | Non-traditional exports climbs 18% | Non-traditional exports climbs 18%

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Sharp increase in May Remittances

September 3, 2013 by

For May 2013, net remittances were US$162.0 million, an increase of US$19.6 million or 13.7 per cent relative to the corresponding period of 2012. This resulted from an increase in gross remittance inflows and a contraction in outflows as the foreign exchange market settled after the signing of the agreement with the IMF agreement by the government.

Gross remittance inflows for the month were US$181.5 million, an increase of US$14.9 million or 8.9 per cent relative to the corresponding month of the previous year and the highest monthly inflow for 2013. The inflows are the highest since 2009 when inflows fell to US$142 million and last year’s $166.7 million.  The rise in total remittance inflows emanated from increases of US$8.0 million and US$6.9 million in both the Remittance Companies and Other Remittances subcategories, respectively.

Total remittance outflows for the review month decreased by US$4.7 million to US$19.6 million. The combined impact of inflows and outflows resulted in net remittance flows increasing for May 2013.

ForEx280X150Historical data show a link with exchange market instability and remittance flows. In 2009, other remittances started to fall from October 2008 when they fell US$10 million to US$28 million; in November it fell further to US$18.3 million; moved up to $27.1 in December while in January it fell to US$25.6 million; US$19 million in February and US$19.4 million in March. The average monthly inflows for the first quarter of 2008 was $40 million. The decline seems to coincide with the sharp fall in the value of the local dollar and scarcity of US dollars in the economy as investors, who received foreign currency, would most likely have held onto them than surrender them into the system. The same situation appears to have occurred since 2012 into the early months of this year.

January to May 2013 | Net remittances for January to May 2013 were US$753.5 million, representing a growth of US$15.6 million or 2.1 per cent relative to 2012. The out-turn for the review period reflected an increase in gross inflows, helped by a reduction in outflows. For the period, total inflows were US$854.2 million, representing a minor increase of US$2.6 million.

Remittance inflows for the year to-date were above the corresponding pre-crisis (2008) out-turn. However, the growth rate in remittance inflows has seen a deceleration since 2010, most likely due to Jamaicans speculating against the local currency as the country went through a prolonged period without an IMF agreement and a declining net international reserves and overvaluation of the Jamaican dollar as a result of years of local inflation exceeding by far that of our major trading partners.

The increase in total remittance inflows reflected a US$13.5 million or 10.8 per cent improvement in inflows through Other Remittances, together with a US$10.9 million or 1.5 per cent reduction in flows from Remittance Companies sub-category. For the review period, the positive growth in net remittances inflows was also due to a contraction of US$13.0 million in outflows.

Related posts | April remittances back on track | Remittance inflows dip

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Eastern Carib businesses more optimistic

September 2, 2013 by

There is often quite some difference between perception and reality. Nowhere is this more prevalent than in the views of business persons about economic matters and forecasting of the immediate economic developments and how it will affect their businesses. Nevertheless the views of the business sector is sought formally by governments and government agencies. Others in the private sector are also interested as such views can shape the action they take. Central bankers are particularly interested as the views of the business sector will help them in planning monetary policy moves.

The Eastern Caribbean Central Bank (ECCB) undertakes a Business Outlook Survey (BOS) twice per year. The latest such survey was conducted in each of its member countries during the second quarter of 2013 and indicates that, in general, economic conditions for businesses for the period January to June 2013 deteriorated compared with the corresponding period of 2012. However, businesses in the Eastern Caribbean Currency Union (ECCU) expect an improvement in economic conditions for the second half of 2013, compared with the corresponding period in 2012.

The businesses surveyed also indicated that the terms and conditions for lending in the ECCU region were not as tight during January to June 2013 compared with the comparative period of 2012.

OneCaribbeanMedia_easternCarib150x150Looking forward. businesses indicated that the terms and conditions for lending set by the banks will tighten in the second half albeit to a lesser extent than January to June 2013. The results indicate that general business conditions in the ECCU for the period January to June 2013 deteriorated more than had been expected. Businesses are optimistic about an improvement in business conditions during the last six months of 2013. Credit conditions were considered to have tightened but to a lesser extent during the first six months of 2012.

Further easing is expected over the period July to December 2013 albeit to a lesser extent than the period January to June 2013.

During the July to December 2013 period, businesses expect their sales performance and profits to improve relative to the second half of 2012. With respect to overall exports, Antigua and Barbuda, Dominica, Grenada, Montserrat, and St Vincent and the Grenadines are optimistic about their exporting prospect during the outlook period while businesses in Anguilla, St Kitts and Nevis and Saint Lucia expect conditions to remain the same. Respondents throughout the ECCU indicate that they expect the cost of doing business to continue on an upward trajectory.

With respect to construction activity, sentiments in Dominica, Grenada Montserrat, St Kitts and Nevis and St Vincent and the Grenadines are optimistic about the outlook period while businesses in Antigua and Barbuda and Saint Lucia expect activity to remain unchanged for the projection period. Businesses in Anguilla expect construction activity to continue to decline.

First half outlook | At the ECCU level, 37.4 per cent of the businesses surveyed indicated that they anticipate that general economic conditions would improve in the first half of 2013, while 23.6 per cent expect economic conditions to deteriorate. Of the total, 39.0 per cent expect conditions to remain the same. This resulted in an overall NPI of 13.74 for the region, reflecting the overall positive business sentiment for the first half of 2013. Respondents also expressed optimism when they were asked about the economic climate within their sector survey respondents in five of the ECCU member countries are optimistic about their prospects for the first half of 2013, with positive NPIs being recorded for Grenada (60.0), Montserrat (48.0), Antigua and Barbuda (47.62), St Kitts and Nevis (20.0), and St Vincent and the Grenadines (12.50); while businesses in Saint Lucia (-66.67), Dominica (-36.0), and Anguilla (-18.75), were generally pessimistic about their prospects.

ECCU member countries | Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Anguilla and Montserrat

Related posts | Mixed views from Eastern Carib States

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