By Dennise Williams, Staff ReporterTHE JAMAICAN economy has transformed itself into a services-based economy.
And it is the strength of services, such as tourism, banking, education, health and transportation, that has put the economy on a "growth path" according to the Planning Institute of Jamaica (PIOJ) director-general, Dr. Wesley Hughes. However, on the strength of the bauxite and alumina industry, the goods producing sector is also contributing significantly to economic growth now.
"Services dominate 65 per cent of Jamaica's economy," Dr. Hughes said at a press briefing on May 17, at the PIOJ New Kingston head office. He said more people are employed in services than in any other sector.
The contribution of the services sector in the economy has served as a balance to the goods producing sector, which includes manufacturing. Dr. Hughes explains, "In previous years, the large decline of the goods producing sector overshadowed the fact that the services sector was growing significantly."
For the fiscal year 2003/2004, both services and goods producing sectors increased by two per cent. And real gross domestic product (GDP), a measure of national production, grew by an estimated two per cent.
Looking at the first quarter of 2004, the PIOJ outlined the position of the major industries in Jamaica.
MINING AND QUARRYING
Real GDP increased by 11 per cent while total bauxite production grew by 8.2 per cent.
MANUFACTURING SECTOR
The real GDP grew by an estimated 2.8 percent. Significant features of this sector were that production of sugar went up by 22.6 per cent, molasses up 33.6 per cent, edible oils up 13 per cent and edible fats up 14 per cent. These increases meant that the food, beverages and tobacco section of manufacturing grew by 2.3 per cent. Gasolene production was up by 45.8 per cent while Paint production went up by 7.2 per cent.
CONSTRUCTION AND
INSTALLATION SECTOR
Increased levels of construction activities in the residential category pushed the growth of this industry by 2.6 percent. Within this industry, cement production increased by 34 percent to reach 200,344 tonnes, the highest quarterly level ever recorded by PIOJ. Additionally, housing starts and completion increased by 137.5 percent and 71.5 percent respectively.
ELECTRICITY AND WATER
There was growth of 2.7 per cent in the sector. Electricity generation increased by 3.6 per cent while water production declined by 0.6 per cent.
TRANSPORT, STORAGE AND COMMUNICATIONS
This sector grew by 2.2 per cent mainly influenced by higher levels of activities at airports.
FINANCIAL SERVICES SECTOR
Loans and advances, increased fee income from wealth management and the growth in earnings from fixed income securities translated into a growth rate of 1.6 per cent for this sector.
TOURISM
The sector experienced growth of seven per cent. Total arrivals were up by 3.4 per cent, stopover arrivals were up by seven per cent, cruise visitor arrivals up by 1.4 per cent and visitor expenditure was up by 6.8 per cent.
DISTRIBUTIVE TRADE
The distributive trade sector, encompassing hardware and building supplies, food, beverages and tobacco, and chemicals grew by 1.5 percent. This growth is in line with the higher levels of activity in sectors such as tourism and construction.
"The increased productivity during the quarter took place against the background of relative stability in the foreign exchange market, quarterly inflation rate of 1.9 per cent and a fiscal surplus $7.5 billion," Dr. Hughes said
It was suggested that the Government's surplus was a result of the sale of Government's assets and improved revenue collection.
In terms of the foreign exchange market, Dr. Hughes stated that the real exchange rate depreciated by 0.6 per cent.
Additionally, inflation, for January to March was driven by a 0.9 per cent increase in food and drink and increases in utilities charges. Water user charges increased by 20.1 per cent, rental charges for telephone lines increased by 26 per cent as well as increased user charges for electricity. Looking ahead, Dr. Hughes admitted that inflation going forward would be negatively impacted by higher fuel costs.
Nonetheless, Dr. Hughes expressed confidence in the economy and projected that real GDP for April to June 2004 would increase by two to three per cent.
