John Myers Jr., Business Reporter

Dr Wesley Hughes, director general of the Planning Institute of Jamaica. - File

The Planning Institute of Jamaica (PIOJ) is maintaining its 3.0 per cent projection for GDP growth, presenting a more optimistic picture than the central bank which expects that external events could slice 0.4 per cent off the target for output.

But the planning agency's call on inflation out-turn, 11-14 per cent for the fiscal year, comes close to that of monetary authority Bank of Jamaica, which has predicted a 14.5 per cent movement.

The PIOJ in its quarterly briefing on Jamaica's economic performance said growth in the March quarter was marginal at 0.2 per cent, a good half point below the agency's already low expectations of 0.7 per cent.

PIOJ Director General Wesley Hughes blamed the out-turn on "unplanned events" and the lingering effects of Hurricane Dean and rains from last year.

The weather impacted the reaping of cane and the production of bauxite and alumina, with Hughes noting that those developments also served to erode exports.

Also stymieing growth was high commodity prices, especially for crude oil, rice, wheat and fertilisers.

Gains and declines

Agriculture, mining and manufacturing suffered the biggest decline with an overall 14.1 per cent drop, while miscellaneous services (activities in hotels, restaurants and clubs) recorded the largest gain at 7.4 per cent.

Inflation for the review quarter was 5.2 per cent, driven mainly by price increases in food and non-alcoholic beverages, up 7.2 per cent; housing, water, electricity and petroleum, up 3.7 per cent; and miscellaneous goods and services, up 6.8 per cent.

"These three categories combined accounted for approximately 70 per cent of overall inflation during the quarter," Hughes said.

He said inflationary pressures would continue to impact growth in the economy as commodity prices remain volatile, which may force the Government to revise growth projections.

The PIOJ director general said he would maintain the 3.0 per cent growth projection, unless revised by the ministry of finance.

Government revenues for the review period was $10.9 billion more than projected, but expenditure overshot by $17.8 billion more than budgeted.

The country's trade deficit widened to US$469.5 million as imports increased 22.4 per cent to US$646.7 million in the review quarter.

Increased exports

Exports also increased, but at a much smaller rate of 4.8 per cent to reach US$177.2 million between January and March.

A 7.4 per cent growth in miscellaneous services, 3.5 per cent jump in construction and installation, 2.0 per cent upswing in finance and insurance services, 2.0 per cent growth in real estate and business services and a 1.2 per cent increase in the distributive trade helped to check the downturn in the economy, although not by much as growth peaked at a flat 0.2 per cent when compared with the same period last year.

The slowdown in the United States economy has not to date affected the tourism industry, for which total visitor arrivals increased 6.7 per cent during the quarter. Stopover arrivals also jumped 12.1 per cent while cruise passengers arrivals increased 1.1 per cent.

The PIOJ is projecting that output will grow between 0.5 per cent and 1.1 per cent during the second quarter, to be driven mainly by the services sector which is projected to grow between 0.9 per cent and 1.3 per cent and the goods producing sector which is estimated to increase by as much as 0.8 per cent in the quarter ahead.

john.myers@gleanerjm.com