Robert Matheson (left) and Donavan McKoy (right) of Cummins Advanced Business Solutions demonstrate a money-sorting machine for Sonia Jackson, head of Statin. - File
The Jamaican economy recorded 2.4 per cent growth during the three months to June relative to the first fiscal quarter of 2005, according to the Statistical Institute of Jamaica (Statin).
However, electricity sales - touted as a measure of growth capable of capturing the large informal sector by state officials, including finance minister Dr. Omar Davies, and most recently reiterated by the International Monetary Fund (IMF) in its May 2006 country report on Jamaica - declined by 1.2 per cent during the review period.
The IMF pointed to changes in electricity consumption as a rough proxy of real economic movement, noting that when applied to Jamaica, the data on electricity consumption and real gross domestic product (GDP) growth showed a large discrepancy, suggesting that real GDP growth in Jamaica may have been underestimated.
Using electricity sales as measure, real GDP actually declined in 2004 by one per cent, largely as a result of the impact of Hurricane Ivan, which sideswiped the island in September 2004, as opposed to the one per cent growth recorded by the official statistics government body.
Electricity sales for 2004 was 2.97 million mwh, a one per cent decline relative to 2003.
In 2005, GDP growth of 1.4 per cent as measured by the Sonia Jackson-run Statin tracked closely to electricity sales growth of 1.3 per cent.
Real terms
However, during the three months to March 31, electricity sales jumped by 4.7 per cent relative to the comparative 2005 quarter, but Statin's measure for real growth was 1.8 per cent.
According the July 2006 edition of the Bank of Jamaica's monthly Statistical Digest, electricity sales during April to June 2006, totalled 776,000 megawatt hours (MWh), down from the 786,000 MWh sold in the June quarter of 2005 Ñ a 1.2 per cent decline.
Incidentally, the electricity and water sector grew by two per cent in real terms during the review period, according to Statin data.
Statin numbers also show that all but two sectors sectors experienced real growth during the June quarter - manufacturing, and construction and installation, which declined for the third consecutive quarter when real output dropped by 4.4 per cent.
The sector has been plagued by a shortage of cement in the local market since October 2005, when heavy rains were said to have significantly impacted Carib Cement's mining operations, ultimately affecting quality and volume output.
This led the firm to import cement, starting in December last year, to fill the shortfall and provided the motive for government to break the virtual monopoly set up for the local cement manufacturer by lowering tariffs from 40 to 15 per cent in March this year, and subsequently to zero by June.
The problem facing the sector was further exacerbated by the withdrawal of cement produced between February 19 and 25, from the market which by Wednesday Business estimates involved close to 20,000 tonnes of cement.
The manufacturing sector, which contributes 12.6 per cent of total GDP and which has been in steady decline, averaging one per cent a year since 1997, saw real output drop by 4.3 per cent during the review quarter.
The decline was due to a falloff in foods, beverages and tobacco of 10.7 per cent, contrasting with a 4.2 per cent improvement in real GDP experienced across other areas of manufacturing.
The falloff in foods, beverages and tobacco largely reflects the decision by Carreras, Ñ which made $647 million in net profit from $1.6 billion in revenue for the three months to June 30, 2006 Ñ to move its cigarettes manufacturing outfit to Trinidad, which was done on a phased basis between mid-year last year to November 2005.
The local manufacturing plant was closed down.
Agriculture, forestry and fishing continued to recover during the June quarter after the fallout in the sector in late 2004 and the first half of 2005, when early storms brought severe rains on the heels of the devastation caused by Hurricane Ivan.
The 17 per cent growth in this sector was insufficient to cover the 17.8 per cent decline during the June quarter last year compared to the June quarter of 2004. Also, the three months to June 30, 2004 saw zero growth,according to Statin's data, when compared to June quarter of 2003.
In fact, agricultural output during the period under review was the second lowest it has been during a June quarter since 1997, beating only 2000 levels, when there was a 21.4 per cent decline.
Export agriculture took the biggest hit, measuring 18 per cent growth during the review quarter but falling significantly short of the growth needed to recover from the 51 per cent decline during the June 2005 quarter.
Jamaica's largest sector, distributive trade, which contributes 21.5 per cent of Jamaica's output, was flat compared to the corresponding period last year, which industry analysts say reflect lower disposable income and the fallout in the construction sector.
Finance and insurance,which makes up eight per cent of real output, grew by 2.2 per cent, while real estate and business services (5 per cent of GDP) grew by 2.5 per cent.
Mining and quarrying (6 per cent of GDP) grew by 1.5 per cent, in real terms.
camilo.thame@gleanerjm.com
