Tourism seems to bounce big in March

April 14, 2021 by

Jamaica’s tourism industry is bouncing back at a better pace than is generally known. Data on passenger movements through the country’s two major international airports show a fall of 51 percent compared to March 2020, but that is a major improvement over the 78 percent decline in the first two months this year.

Tourism is Jamaica’s largest earner of foreign exchange.

Admittedly, last years’ March numbers were negatively affected by the closure of the country’s borders on March 21, but the absolute numbers travelling in March is up substantially over both January and February this year, a sign of an improving market. With the country’s borders closed in the 2020 period, there were virtually no visitors entering the country until the end of May last year.
According to data from Aeroportuario del Pacifico, that manages many of Mexico’s airports and those in Montego Bay and Kingston, Jamaica, show the total number of passenger movements through the Kingston Airport falling 49.7 percent in March 2021 to 36,700 passenger movements, from 72,900 movements in March 2020. For the first three months of 2021, total passenger movements through Kingston’s Airport fell 67.4 percent, from 354,700 in 2020 to 115,500.
A better gauge of the rebound is the month over month change, with total passenger movements in March 2021 being up 22 percent over the 30,100 passenger movements in February this year. Kingston is not the main entrant or departure point for tourist visiting.
Montego Bay Airport saw a fall in the number of passenger movements of 50.5 percent in March 2021, from 261,500 in March 2020 to 129,400 in March this year. For the first three months of 2021, total passenger movements for the Montego Bay Airport fell 73 percent, from 1,133,900 in 2020 to just 304,600. The total number of passenger movements in March 2021 was, however, 71 percent more than the 75,600 handled in February 2021, an indication of a strong recovery trend.

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Investment 2021 – economic recovery

January 4, 2021 by

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.

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Promising tourist season went south

June 10, 2020 by

Jamaica was enjoying a promising 2020 tourism season and then suddenly things went awfully, bad with the worldwide outbreak of the coronavirus that led to the closure of the country’s airports in March and disrupting visitor arrivals.
Stopover visitor arrivals rose strongly by 6 percent first two months of the year ahead of the similar period last year. January enjoyed a 4.9 percent bounce according to data put out by the JTB with February rising by 7.1 percent.
The critically, important USA market that accounts for about two thirds of visitors and much more in dollar intake, outperformed the overall industry bringing 9.7 percent more stopover visitors to the island in the two-month period. Arrivals from Canada were up just 1.6 percent. The UK market the third best market for Jamaica was down 2.1 percent, Europe fell 20.3 percent, but the Latin American market jumped stunning 58 percent to 10,566 persons. The Caribbean region saw 6.4 percent more arrivals coming in than in 2019. Asia fell a sharp 22.4 percent. Africa declined 13 percent and other countries 9.3 percent with just 747 arrivals. The U.S.A market accounted for 64.5 percent of stopover arrivals for the period, up from 62.4 percent in 2019. American tourists spend more on their vacations than the vast majority of visitors.
Cruise ship visitor arrivals continued the decline experienced since last year with a 15.2 percent fall having declined in both months of the year.
Figures for March, are not yet available, but will likely show a sharp fall with the closure of airports in March.

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Jamaica GDP set to gain in 2020

February 23, 2020 by

Economic growth for Jamaica is expected to remain positive in 2020 following increases in 2019, even as the closure of Alpart acts as a drag on the economic growth rate in the first half of the year.
Jamaica will see steady growth with improvements in several areas during the year, with increased output for manufacturing, tourism, finances and other service sectors such as BPO and entertainment. The continuation of major road construction projects and many new buildings going up in the country will also aid the continuation of economic growth during the year.
Growth in stopover arrivals bounced to 7.6 percent in the December quarter up from a slightly slower summer months with gains of 4.5 percent, 2019 finished with an overall increase of 6.5 percent in stopover arrivals and bettered the 4.6 percent increase in 2018 over 2017. The increase in 2019 suggests a very strong demand for the Jamaican product. Increased demand for the product provides room for greater revenues per room as hotels do not have to do a deep discount of rates as they did in the early part of the last decade. The sector should continue to grow around 7 to 10 percent for the coming year and bring in addition inflows around US$400 million over 2020. It could do even more with the strong demand for rooms that could see hotels getting average rates that are higher than in 2019.
Concerns regarding the coronavirus are worth watching. If the spread in the west is more broad-based than it currently the case, it could negatively affect visitor arrival numbers to Jamaica.
Data out of Statin indicates a 4.9 percent increased output in the manufacturing sector for the September quarter, helped by gains in PetroJam production. That is faster than the July quarter, with growth of 3.2 percent and the first quarter growth with negative 1.3 percent following a 2.4 percent increase in the December 2018 quarter. The trend is positive for the manufacturing sector and augurs well for a good increase in 2020. Continued growth in loan financing and increasing interest of companies seeking fresh long-term capital through the capital market are big positives for the business sector in 2020 and beyond. The Manufacturing sector’s use of borrowed funds, excluding cement, was consistent with 20 percent increased borrowing in 2019 and 2018.
An important thrust in Jamaica’s economic development is the increasing number of companies raising long-term capital and listing on the Jamaica Stock Exchange. Increased long-term capital is an important move in getting greater productivity and production of goods and services out of local businesses that will help greater economic growth in the current year and beyond. Increased listings provide investors with viable opportunities to invest capital long term and be an integral part of the wealth creation in society. During 2019, there were several new listings on the Jamaica Stock Exchange. The exchange is forecasting 20 new listings in 2020 based on information provided by stockbrokers. The country will see the majority of companies seeking to list, raising fresh capital for business upgrading and expansion.
Growth in the construction sector will pick up, with the start of the Kingston to Port Antonio road construction and demand continues in the BPO sector that will stimulate the need for more space while adding to employment. Data out of the Bank of Jamaica shows a sharp rise in lending to the sector with an increase of 37 percent over the amount lent in 2018 and well ahead of the 27 increase in 2018 over 2017. The increase in 2019 suggests a further rise in growth in the sector, which should continue into 2020.
The new Old Harbor power plant commenced operation on December 17 and uses natural gas that is much more efficient than the oil-powered plant that was 50 years old and was highly inefficient. The South Jamaica Power Centre plant will provide a more reliable and efficient source of electricity and will result in fewer power disruptions and lower electricity cost as the new plant will use less fuel, fewer workers and requires lower maintenance than the old one, that will be closed in early 2020. With capital expenditure of US$300 million, some of the lower operating costs will be eaten up by interest and depreciation costs. JPS quarterly financial gave a glimpse of what to expect from the switch over with a 10 percent drop in fuel cost for the quarter even as the official switch over took place in mid-December.
The Foreign exchange market went through a number of changes as the central bank reduced the compulsory take from the market from 25 percent down to 20 percent for dealers and 15 percent for Cambios. In effect, the central bank bought no funds from the market through its weekly intervention tool and had no scheduled sale to the market. About four bouts of strong demand resulted in BOJ intervening by selling funds to the market. Notwithstanding, the interventions, the central bank ended the year with the NIR rising from US$3.005 billion at the end of December 2018 to US$3,16 billion after the NIR sank to US$2.95 billion in July.
Over the course of 2019, the exchange rate moved from $127.72 to US$1 at the end of 2018 to end 2019 at J$132.58 to US$1, after it reached its lowest level of J$141.89 to the US dollar on November. The NIR movement for 2019 suggests that the market is in a fairly balanced position. The country has periods when demand and supplies are higher than at other times and the two may not coincide thus creating some disquiet. There are other times when capital flows can impact the market positively or negatively. Unexpected capital flows can create a serious temporary imbalance in the system and may warrant BOJ’s intervention as occurred on a number of occasions over the last twelve months.

Growth in tourism expected in 2020

Money Market rates have been down and “This decline was also related to the increased supply of  liquid assets during the quarter, given the maturity of GOJ bonds over the period.” Interest rates have been generally trending downwards from April of 2019, following sharp falls in 2018.
Spike in the exchange rate of the Jamaican dollar to the US dollar in the last quarter of the year put added pressure on prices and pushed inflation rate for the year to 6.2 percent, well above the 4.6 percent for the last 12 months to November 2019. Inflation for January dropped sharply by 1.1 percent as the FX rate impact was not present with the Jamaican dollar appreciated. Movements of the local currency accounted for a large part of increased inflation in 2019. The natural level of inflation is in the two to three percent range. The inflation rate should move back to more moderate levels in 2020 than it ended in 2019.
Government normal revenues up to November were running 7.5 percent ahead of the $373 billion intakes forecasted, with inflows at $400 billion to December 2019. This increase is after the government removed or reduced taxes at the start of the 2020 fiscal year with no new taxes levied. The preliminary guideline for the 2021 fiscal year, is for increased expenditure amounting to $18 billion in non-interest expenditure, but that is likely to be well below a probably $30 billion increase in normal revenues. With interest cost on government debt set to fall below that of the 2020 fiscal year, following the sharp fall in interest rates during 2019. The government will have room to increase spending in an election year. There is likely to be increased in capital spending, to be well ahead of the $75 billion projected for 2020, the Ministry of Finance instructions suggest for fiscal 2021.
Unemployment rates continue to fall, with the October 2019 unemployment rate down to 7.2 percent, the lowest on record. Labour Market conditions are projected to continue improving for the next eight quarters, the country’s central bank contends “the expected improvement reflects employment growth in manufacturing, finance & insurance, and business process outsourcing.” The Statistical Institute of Jamaica data shows the number of unemployed dropped to 96,700 persons in October with the number employed rising to 1.248 million persons. Based on the trend seen over the last three years, the unemployment rate should drop a possible one-percentage-point in 2020 compared to 2019 putting the unemployment around 6 to 6.5 percent. What is important about this improvement is the increase in the number of employed persons that will lead to increased demand in the economy, helping to stimulate increased growth levels.
Crime continues to be a major negative on the country acting as additional taxes on the wider economy, unfortunately, this major negative will continue to be present for some time to come.

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Jamaica’s all season tourism

September 22, 2019 by

Jamaica enjoying strong growth in stopover arrivals in 2019

A few decades ago, some hotels in Jamaica closed their doors during the summer months until December.
Much has changed since with the summer months last year pulling in more long-stay quests than the winter months.
Last year, the winter months of January to March saw 625,002 stopover visitors coming to Jamaica while 629,486 came in the April to June period. July 2018 had the most stopover arrivals to that point with 257,050 visitors with March, having 236,818 being the next highest. February 2018 with the least number of days had 193,575 visitors and was the lowest of the seven-month period.
Stopover visitor arrivals in 2019 March with 271,642 had the most just beating out July’s 270,462.
For 2019, the January to March period saw the industry recording a 13.3 percent increase over the same period in 2018 to reach 708,297 visitors and almost 26,000 more than the April to June 2019 period with total stopover arrivals of 682,386.
The less important cruise arrivals declined in 2019 to July with 979,648 passengers compared to 1,134,006 in 2018. While the first three months fell by 6.7 percent to 728,265 the second quarter declined by 23 percent to just 273,823 passengers, pushed by a 41 percent fall in May and 28 percent decline in June. In July the fall off was 25.5 percent with 77,560 arrivals versus 104,127 in 2018.

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