Balance of payment improves

November 19, 2013 by

Jamaica’s central bank, Bank of Jamaica, is reporting that the country’s Current Account deficit for January to June 2013 improved by US$268 million to US$519 million compared to the corresponding period in 2012. The outturn for the review period represents a continuation of the improvement in this indicator since 2011 the report said. The enhanced outturn for the six months period to June emanated from all sub-accounts, mainly Goods and Primary Income (formerly Goods & Services) which improved by US$141 million and US$50 million respectively.

Change in presentation | The Balance of Payments (BOP) has been modified from what used to be published in the past. The major change in presenting the report is that the Capital Account will no longer be grouped with the Financial Account, but with the Current Account instead. The overall balance from the Current and the Capital account is now referred to as Net Lending or Borrowing. Also, the use of debits and credits for the Financial Account is replaced by Net Acquisition of Financial Assets and the Net Incurrence of Liabilities. There is also introduction of categories of Primary and Secondary Income, which are conceptually consistent with the System of National Accounts (SNA). Primary Income encompasses returns that accrue to institutional units for their contribution to the production process or for the provision of financial assets and renting of natural resources, while Secondary Income represents Current Transfers between residents and non-residents.

Oil-pricepump150x150Goods producing | For the Goods sub-account, the deficit improved by US$1401 million to US$1.899 billion, versus the corresponding period in 2012. Imports of Goods fell by US$133 million to US$2.779 billion, primarily driven by a US$218 million decrease in Mineral Fuel imports and partially offset by a US$132 million increase in Chemical Imports. Imports of food decreased by US$37.0 million in the period.

Goods Exported increased by US$7.5 million to US$880 million, primarily as a result of a US$66 million increase in Chemical Exports, particularly ethanol.

The balance on the Services sub-account increased by US$50 million to US$453 million for the review period. This resulted primarily from an improvement of US$48 million in the net inflows to the insurance and pension services accounts.

The Primary Income sub-account improved by US$50 million during the review period. This emanated primarily from a US$83 million increase in net investment income flows. Relative to the corresponding period in 2012, the balance on the Secondary Income sub-account improved by US$27 million to US$1 054.1 million. The improvement mainly resulted from a US$18 million increase in the net flows to Financial Corporations, Nonfinancial Corporations, Households, and Non-Profit Institutions Serving Households.

The deficit on the Capital Account improved by US$6.4 million to US$7.7 million for the review period. This outturn together with the balance on the Current Account yielded a net borrowing position of US$527 million, an improvement of US$273.9 million relative to the January-June 2012 period.

The Financial Account recorded a net borrowing position of US$197.4 million, an improvement of US$278.6 million compared to the corresponding period of 2012. The largest contributing subcomponent of the net borrowing balance was Other Investments, which had a net borrowing balance of US$181.2 million. This was primarily due to a decline in the net acquisition of loan assets by US$369 million, coupled with an increase of US$253.8 million in the net incurrence of loan liabilities.

Flows from official and private sources were insufficient to finance the net borrowing balance from the Current and Capital accounts; consequently, the NIR declined by US$100.0 million for the review period.

Related posts | Non-Traditional exports up | NIR up in September

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Unemployment jumps to 15.4%

November 15, 2013 by

Jamaica’s unemployment rate, which has been on the increase since 2008, jumped to 15.4% for July 2013 compared to 13.1% in July 2012 as more workers came into the workforce. For the same period, the unemployment rate for males was 11.7% compared to 19.9% for females. The Employed Labour Force for July 2013 was 1,108,100, which was 3,100 less than the 1,111,200 recorded in July 2012 but was slightly above the numbers recorded in March this year. For males, it decreased marginally by 600 (0.1%) to 632,100 and for females by 2,500 (0.5%) to 476,000 for the period.

In March this year, the number of employed persons was 1,107,400 compared to 1,098,700 recorded in March 2012 and 1,093,200 in December last year.

The number of unemployed persons in July 2013 was 201,600. This was an increase of 34,200 (20.4%) when compared with 167,400 in July 2012. The number of unemployed males increased by 13,900 (19.9%) and the number of females by 20,300 (20.8%) for the same period.

The July 2013 Labour Force Survey, was conducted by the Statistical Institute of Jamaica (STATIN) and covered the week of June 23-29.

Labour Force | In July 2013, the number of persons in the Labour Force was 1,309,700, which was 31,200 (2.4%) higher than the 1,278,500 recorded in July 2012. The male labour force increased by 13,400 (1.9%) from 702,300 in July 2012 to 715,700 in July 2013, and the female labour force increased by 17,800 (3.1%) moving from 576,200 to 594,000 in the same period.

The Employment Rate for July 2013 was 84.6%, which was a 2.3 percentage point decline from the 86.9% in July 2012. The Employment Rate declined for both males and females over the period. For males, it declined by 1.8 percentage points, moving from 90.1% to 88.3%, and for females it declined by 2.9 percentage points, from 83% to 80.1% over the same period.

Outsiders | The number of persons who were classified as Outside the Labour Force in July 2013 was 768,000. This represents a decrease of 25,500 (3.2%) when compared to 793,500 in July 2012. In the same period, the number of males Outside the Labour Force declined by 10,400 (3.3%) moving from 314,400 to 304,000 and the females by 15,100 (3.2%) moving from 479,100 to 464,000 over the period.

Where they work | The Occupation group ‘Clerks’ had an  increase in employment of 5,600 (5.8%) persons, moving from 96,300 in July 2012 to 101,900 in July 2013. The group ‘Craft and Related Trade Workers’ had the largest decline for the period, moving from 149,600 to 141,800 in July 2013 resulting in a decline of 7,800 (5.2%) persons.

The largest increase in employment occurred in the industry group ‘Real Estate, Renting and Business Activities’ where the number of persons employed increased by 11,300 (19.3%). Similar increases were experienced in the group ‘Health and Social Work’ where it increased by 4,300 (14.3%) persons. During the same period, the industry group ‘Manufacturing’ declined by 8,700 (11.3%) persons followed by ‘Wholesale & Retail, Repair of Motor Vehicle & Equipment’ which declined by 5,200 (2.4%) persons.

Unemployment rates among youths aged 14-24 years was 38.3% for July 2013. This was an increase of 6.6 percentage points when compared with 31.7% in July 2012. The male unemployment rate for youths was 29.5% compared to 50.3% for females.

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Producers inflation moderate

November 5, 2013 by

As reported by Statin, the Producer Price Index for the Mining & Quarrying industry increased by 0.7 per cent for September. This resulted mainly from the depreciation of the Jamaican dollar via-a-vis the American Dollar.

The Manufacturing industry recorded an advance in producer prices of 0.5 per cent. Contributing significantly to this increase was the upward movement in the index for the major group ‘Food, Beverages & Tobacco’ up by 0.2 per cent and ‘Refined Petroleum Products’ by 1.9 per cent. However, these movements were tempered by the major group ‘Chemicals & Chemical Products’ which reflected a decline of 0.2 per cent in its index for the period under review.

Image courtesy of wandee007/FreeDigitalPhotos.net

Image courtesy of wandee007/FreeDigitalPhotos.net

The point to point period, September 2012 to September 2013 recorded an increase of 14.0 per cent in the index for the Mining & Quarrying industry. For the same period, the Manufacturing industry’s index increased by 8.0 per cent. For the fiscal year to date, April 2013 to September 2013, showed that the index for Mining & Quarrying industry advanced by 2.8 per cent, while the Manufacturing industry recorded an increase of 2.0 per cent.

A comparison of the third quarter 2013 over the second quarter of 2013 for the Mining & Quarrying and the Manufacturing industry showed both industries increasing by 2.0 per cent and 1.2 per cent respectively.

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Big drop in trade deficit

November 5, 2013 by

Jamaica enjoyed a big drop in its trade deficit in the first 7 months of the year as the deficit declined to US$2.64 billion compared to US$2.85 million in the same period for 2012 according to the latest data put out by the Statistical Institute of Jamaica (STATIN).

According to the Government’s agency for the collection of economic and other data, merchandise imports during January to July 2013 was valued at US$3.62 billion, a decrease of US$213 million when compared to the US$3.83 billion recorded in the similar period last year due mainly to a fall in the value of fuel imported. Earnings from total exports during review period was similar to the 2012 period both at US$978 million.

CoffeeTrade280x150Statin sated in their release that the decline in imports was largely attributed to the decrease expenditure on “Mineral Fuels, etcetera”. Other areas showing decreases were “Machinery & Transport Equipment”, “Manufactured Goods” and “Miscellaneous Manufactured Articles”. “Mineral Fuels, etcetera” valued at US$1.28 billion, fell by US$241 million or 15.8 percent compared with the 2012 period. “Machinery & Transport Equipment” fell by US$5.3 million or 1.0 percent to US517.5 million and “Manufactured Goods” was valued at US$338 million, a decrease of US$35.3 million.

Traditional Exports | Earnings from major traditional domestic exports during the 2013 review period decreased by US$21 million to US$488 million due to the significant decline in ‘Manufacture’. Goods classified under the “Manufacture” group accounted for US$86 million, down from US$129.5 million in 2012 mainly due to the decrease in the export of ‘Sugar’ and’ Rum’. “Agriculture” group recorded an increase, earning US$17 million, as the major commodity in this group “Coffee” earned US$13.3 million compared to US$10.4 million in 2012. “Mining and Quarrying” earned US$385 million in the 2013 period.

Non-Traditional Exports | Earnings for this segment to July 2013 rose by 3 percent or US$12.8 million to US$442.4 million.  “Other” non-traditional domestic exports rose by 8.1 percent to earn US$318 million.  Of this amount,  “Chemicals (incl. Ethanol)” earned US$99 million, an increase of US$47 million.

Caricom_logo150X150CARICOM | Imports from CARICOM during the first seven months was worth US$484 million but it decreased by 18.3 percent or US$108.5 million when compared to the same period in 2012. The decrease in the import bill was due mainly to lower imports of “Mineral Fuels, etcetera” as spending fell by US$120 million to US$314 million. “Manufactured Goods” recorded a value of US$13 million, down from US$15 million in 2012. Other decreases were seen in “Chemicals” and “Machinery & Transport Equipment” valued at US$15.7 million and US$6.0 million respectively. Three of the five commodity groups recording increases were “Food” valued at US$100.2 million, “Beverages & Tobacco” ( US$24.9 million) and “Misc. Manufactured Articles” ( US$8.4 million).

Total exports to Caricom declined by 3.6 percent during the review period. Domestic Exports accounted for US$33 million, and Re-exports US$6 million. The fall in domestic exports was due mainly to lower exports of “Chemicals”, which decreased by US$3.6 million or 51.0 percent to US$3.5 million and “Misc. Manufactured Articles”, which fell by 12.9 percent to US$2.2 million. However, “Food” the major export earner, increased and was valued at US$19 million, up from the US$17.5 million. Jamaica recorded a trade deficit of US$445 million with her CARICOM partners, down from US$552 million in the 2012.

Related posts | Non-Traditional exports up

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Govt set to wipe out deficit

November 5, 2013 by

The budget presented by the Government of Jamaica to the nation in April did not paint a full picture of what was on the cards. That is, the full wiping out of the fiscal deficit in one year and laying the foundation for a reduction in the heavy debt to GDP load the country has borne for decades. The government is well on target to do this based on the performance to September with a deficit of only $6.6 billion and the heavy inflow of taxes between January and March 2014.

After faltering in August partially due to the last day’s collections not counted in the August fiscal numbers, revenues in September shot past the forecast to land the overall year to date collections right on target but for a half a billion dollar shortfall, which was more than made up for by a near $11 billion savings on the expenditure side. The fiscal deficit is well ahead of forecast at just $6.6 billion versus a target at this stage of $17 billion.

Jamaica_coat_of_arms_280X150Although revenues as a whole are on track, there are areas of concern where intake is less than planned by a fair degree. Capital and non-tax revenues are up by $5 billion year to date which helped to offset fall off in other areas. Also of note, travel tax, which is up by 69 percent due what the Ministry says is past due amounts that being collected, but this is not sustainable at the same pace going forward once the arrears are cleared.

Negative inflows | International trade is down year to date by $2.6 billion; this would have been far worse but for the positive collections for travel tax. Production and consumption taxes have not performed badly although down by $388 million from a forecast of $58.5 billion as education tax is down versus budget by 8 percent to $8.6 billion. Betting and gaming tax is down 38 percent at $1.13 billion. In the area of income taxes, PAYE is down by 6 percent or $2 billion to $30.4 billion, corporate taxes are up by $800 million as tax on dividends fell by $765 million or 57 percent against forecast. As government paid out less interest on the debt, the collection for tax on interest income fell.

Less debt | Government borrowed nearly $10 billion less than budgeted and cut the interest paid for servicing the monstrous debt by $5.6 billion. Payments for other housekeeping expenses other than wages declined by $2.6 billion, in addition $1.7 billion was spent on capital items during the six months period.

Related posts | August curse hits Taxes | July surplus as Govt income jumps

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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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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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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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