The Jamaican economy grew 8.3 percent in the September quarter over the June quarter, with construction rising 7 percent over 2019 as signs of recovery from the highly depressed June quarter takes hold. This trend should continue as the tourism sector picks up the pace of recovery from a virtual lockdown between March and June.
The Hampshire Apartments complex built by Guardian Life.
With construction being the star performing sector for the September quarter, continued growth in this area is expected to continue into 2021 as new road construction, the building of houses and hotels continue. The country is short of factory and warehouse space; these areas could add to growth in 2021 and beyond.
As the hotel sector gradually picks up pace, the drag that the sector has on the rest of the economy should decline, as such other sectors serving the industry should also see improvements. Some of the sectors are transportation, manufacturing, agriculture, water, electricity and banking.
In all probability, the first quarter of this year is set to show a sharp fall in visitor arrivals compared to last that saw just over 574,000 stopover arrivals, with January and February at full capacity with 463,000 visitors but there were no visitors on April or May and just over 7,000 in June. The recent trend suggests that barring unforeseen developments, the 2021 June quarter numbers should show an encouraging out turn, indicating that the recovery continues apace. Visitor arrival numbers were the highest in November since the reopening, with just under 50,000 stopover visitors, down 76 percent from the 203,000 arrivals in 2019. That beats October with 45,000, which is ahead of July and August with over 41,000 stopovers. December final numbers are not yet in, but preliminary numbers put arrivals to December 28 at an encouraging 98,000 arrivals. The numbers should reach 110,000 by the end of the month or 39 percent of the 281,000 arrivals in December 2019. The trend since reopening in June is for a near gradual monthly percentage-wise improvement.
Rebound in tourism will increase the supply of foreign exchange to the market and hopefully, lend to greater stability of the rate even as the central bank rebuilds the Net International reserves.
The BPO sector seems set to grow, with employment stated to be moving from 40,000 to 50,000 during the year. Late last year, the president of the Global Services Association of Jamaica, Gloria Henry, told the Observer that the sector had rebounded to the point where it now employs some 39,000 people.
In reciting developments in the BPO industry, the Jamaica Observer newspaper reported recently the following: “According to Henry, in the Montego Bay Free Zone, where she operates, the information technology outsourcing portfolio has grown by 12.77 percent and the aim is to grow by 66 percent this year. Henry pointed out that the BPO industry leaders had started 2020 with a great deal of enthusiasm and were ready to implement projects in a number of areas to boost employment to 50,000.”
“We have navigated uncertainty very well and now with resilience, we are advancing towards the future,” said Henry as she indicated that five new BPO sites are scheduled to be launch in the first quarter of this year.”
Areas of the local economy that have social distancing restrictions will continue to be under pressure with reduced business activity. Areas such as live entertainment and, by extension, transportation will find it hard to recover fully in 2021.
Balance of trade data up to September, reported by the Statin, shows a sharp fall in the country’s import bill resulted in a billion-dollar reduction while exports declined by a much smaller amount, leading to a sharp improvement in the trade balance.
The government will be collecting more revenues as the economy gradually opens up and some areas of expenditure, such as support for the fall out of the Coronavirus, will be reduced.
Al in all, things are looking much better for a strong recovery in the overall economy for 2021, but it is unlikely to fully recover until 2022.
Under such subdued economic activity, interest rates should continue to remain low, but the unemployment rate that rose sharply in 2020 will gradually fall during the year.
Against the above development, the local stock market should deliver positive results in 2021 and real estate values should continue to increase.
