|
Introduction
The
impact of the global recession proved to be a great influence on the
performance of the Jamaican economy during 2008. In addition to the global
recession, internal occurrences also contributed to negative performances in
the domestic market. This was reflected in:
-
the sharp rise in global commodity prices particularly oil and fertilizer
during the first seven months, which increased production costs and eroded
the competitiveness of locally produced goods;
-
the subsequent decline in commodity prices associated with falling demand
due to the global financial and economic crisis since September.
With this widespread downturn, the economies of Jamaica's major trading
partners were affected which in turn spiraled a reduction in economic
activities. In addition, this was accompanied by a decrease in consumer
confidence and demand for Jamaica's goods and services as well as a downturn
in investment flows, resulting in constrained economic performance.
The
economic performance was also negatively impacted by the continued effects
being experienced due to the passage of Hurricane Dean and also Tropical
Storm Gustav.
The Jamaican Economy
Global Environment
The downturn in the international economy due to
the impact of the global recession caused a contraction in growth, with the
international economy estimated to have grown by 3.4 per cent in 2008, which
highlighted the slowest rate of growth in the last five years. The developed
nations grew by an average of 1.0 per cent while the Emerging Market economies
grew by an estimated 6.3 per cent. The factor behind such a downturn in
economic performances worldwide was directly attributable to the effects of
the global financial crisis. The crisis reached to an intense state during the
last quarter of 2008, which triggered a substantial fall in asset prices,
significant losses in individual wealth and also declines in aggregate demand.
The advent of higher food and energy prices caused an acceleration of global
inflation rates surpassing that of the previous year and reaching the highest
average levels in over a decade. There was an increase in the volume of world
trade represented in a growth of 4.1 per cent, on the other hand the value of
global exports increased by 21.2 per cent which was directly linked to the
higher average commodity prices for 2008. There was a decline in Foreign
Direct Investment by 21.0 per cent due to a decrease in consumer and investor
confidence.
Jamaica's Macro's Economy
There was a decline in the Jamaican economy in
relation to Gross Domestic Product, experiencing a contraction of 0.6 per cent
during 2008. This was documented as being the first decline recorded in 10
years. This contraction in the economy during 2008 was largely attributable to
the effects of the global economic crisis.
There was a decline in the GDP earned from the
Goods-Producing Industry and all the sub-industries (excluding Mining and
Quarrying), where a 3.0 per cent drop was experienced. The Services Industry
however, experienced growth of 0.3 per cent attributable to the improved
performance of the Finance and Insurance Services and Tourism industries.
The downturn in the economic performance for 2008
was a combination of the effects of Hurricane Dean from the previous year,
particularly on the Agriculture and Mining and Quarrying.
Also the effects of the increase in commodity
prices experienced during 2008, specific to oil and fertilizer which had
negative impact on several industries due to the instability caused in
relation to competitive pricing.
Finally the onset of the global economic crisis
which started to show its side effects in the later part of 2008, led to a
further deterioration in economic performance. There was a decline in external
demand for Jamaica's goods and services and also a sharp decline in the
availability of capital for both public and private sector support.
Despite this, the rate of inflation remained at
16.8 per cent in 2008, the same as that observed in 2007. This high rate was
attributable to the sharp increases in international commodity prices observed
in the first half of 2008.
EXPORTS
Jamaica
exported goods valued at US$ 2.7 billion in 2008 compared to US$ 1.897 billion
in 2007, a 29.8 per cent increase. Production of agricultural goods such as
sugar, coffee, and banana all experienced severe declines except sugar which
had a higher revenue in 2008 following the previous year. Banana exports fell
by 99.6 per cent in 2008 from US$ 9222 to 37 in 2008. This is due to the
hurricane and tropical storm which destroyed crop production. Coffee on the
other hand saw a massive decline due to a fall in the demand from US$ 4.6
million in 2007 to US$ 1.3 million in 2008, a 71.7 per cent decrease. There
was an increase in traditional exports particularly from the mining and
quarrying sectors which had a 4.2 per cent increase from US$ 1.3 million in
2007 to US$ 1.4 million in 2008. The Bauxite industry accounted for US$
114,501 an increase of US$ 1563. Alumina production exported and earned the
most revenue in 2008 with US $1,264,910 compared to US$1,193,126 in 2007. The
non-traditional exports increased significantly from US$753,832 in 2007 to US
4 1,094,750 in 2008, representing a 31.1 per cent increase. Growth was evident
in the production and exportation of yams, ackee, baked productions, dairy
products, bird�s eggs and sauces. Other non-traditional manufacture exports
were denied from ethanol which had over 100 per cent increased and mineral
fuels which had a 24.9 per cent increase from US$ 325,984 in 2007 to US$
434,355 in 2008. The Beverages and Tobacco sector decreased by 5.6 per cent
from US$ 52,588 to US$ 49,638 in 2008.
Labour Market Trends in Jamaica
Examination of the Labour Force
figures published by STATIN for 2007 and 2008 showed increases in the total
number of persons in the labour force and persons employed. There was a 1.5
per cent increase in the labour force from 1,276,650
to 1,296,125 and a 0.5 per cent increase in employed persons from 1,152,350 to
1,158,850. The number of persons unemployed in 2008 stood at 137,250 compared
to 124,050 in 2007 a 9.6 per cent increase. A breakdown into the males and
females showed an increase in the total number of each in both the labour
force and the employed. However, unemployed males in 2008, from 42,675 in 2007
to 51,957. The rate of unemployed females also increased from 81,375 in 2007
to 85,300.
The goods producing sector
employed 35.2 per cent of the total employed labour force while the services
sector employed 64.6 percent or 748,800 persons of the total employed labour
force. Sector employment over the two years was highest for community, social
and personal services with 317,700 persons, followed by Wholesale and Retail
trade, Hotels and Restaurant services with 269,700, Agriculture, Forestry and
Fishing had 216,500 persons while the Construction, Manufacturing and Mining
services had 110,900, 71,200 and a 700 respectively. There were significant
differences within the occupational groups. Professionals, Senior Officials
and Technician recorded the highest increase of 7,900 from 219,250 in 2007 to
227,150 in 2008. The Agriculture and Fisheries sector followed with 3,650 from
204,150 to 207,800. Clerks also had an increase of 2075 from 100,325 to
102,400. A decline of 5.3 per cent took place for elementary occupations from
172,450 to 163,375. The Oversees Employment Programme administered by the
Ministry of Labour and Social Security decreased its cadre of persons working
on the Hotel and Farm Work Programme by 14.3 per cent from 13,958 workers to
11,959 in 2008. A total of 5863 persons were employed in the United States
Programme compared to 7840 the previous year (2007); 4857 males and 1,006
females were employed in 2008compared to 6118in 2007, 5938 males and 158
females. Remittances saved on the US Programme drastically decreased from
us$30.97 million in 2007 to us$9.912 million, a 68 per cent decline in
remittances for 2008. For the Canadian Programme, there was an increase of 8.6
per cent from can$10,715 million to can$11.729 million.
Industrial Relations
The number of industrial
disputes reported to the Ministry of Labour and Social Security increased by
5.5 per cent from 188 in 2007 to 199 in 2008. The total number of industrial
disputes under wage and Conditions of Employment were 41 compared to 66 for
the previous year (2007) Dismissal and Suspensions had 58 while Bargaining
Rights 53 compared to 2007 while saw 62 and 49 respectively of the total
dispute handled, the Community, Social and Personal Services Group register
the highest of 65. The Financing, Insurance, Real Estate and business services
were second with 35 complains and the Transport, Storage and Communication
Services third with 28. There were a total of 8 work stoppages for 2008
against 23 the pervious year. The main cause being Wages and Conditions of
Employment. The Industrial Disputes Tribunal handed down a number of awards
in 2008, 17 compared to 13 in 2007. The awards went to nine sectors, five went
to Transport, Storage and Communication four to Finance, Insurance and Real
Estates three went to the Community, Social and Personal Services while the
remaining 6 sectors were all awarded one each. An examination of the nature of
the disputes for these awards handed out in 2008 revealed that 12 were related
to Wages and Conditions of Employment, three went to Dismissals and
Suspensions and two went to Bargaining Rights. The Unions handling these
complaints were the BITU with four, The NWA six, the UAWU had 3, the Trade
Union Congress TUC 2, the BITU UPSU/TUC and other 1. A number of Trade Unions
participated in the representational rights poll conducted. The BITU and the
NWU both had 9, the union of clerical, administrative and supervisory
employees (UCASE), the union of administrative and supervisory personnel (UTASP)
and the Jamaican Workers Union JWU all had 1 each. The United Allied Workers
Union (UAWU) and the Trade Union Congress reported 2 polls each. The total
number of workers seeking representation increased by 16.8 per cent from 1191
in 2007 to 1433 in 2008.
PERFORMANCE OF KEY SECTORS
Construction
In 2008 the construction industry experienced a decline in real
value of 5.5% compared to 2007. Despite this the sector contributed 8.3% to
overall economic growth. The downturn was as a result of a reduction in the
building construction and civil engineering sections of the industry. Low
levels of expenditure on bridges and road repairs along with a slow down of
highway construction resulted in a reduction in civil engineering activities.
Although there was a reduction of activities in the sector, cement supplies
increased by 11.0% in 2008 and importation of the product increased by over
115% compared to the previous year.
Employment in the Construction Sector fell by 6.1% in 2008
compared to 2007. The industry�s share of the employed labour force was 9.8%
or 127,300 persons. The sector�s work force comprised approximately 95% men.
Although the persons employed in the sector are predominantly male, the number
of women working in construction increased by 30.8% to 6,800 during 2008.
Finance and Insurance
The finance and insurance sectors grew by 1.5% during 2009 and
contributed to 11.4% of the total Gross Domestic Product (GDP). The increases
included stock of loans and advances at commercial banks which increased by
26.2% and building societies loan stock which increased by 29.0%. Although the
sector�s performance improved during 2008, during the latter part of the year
growth slowed as a result of the global financial and economic crisis. The
downturn led to a decline in economic activities as well as in business and
consumer confidence. The existing problems caused the Bank of Jamaica (BOJ)
and the Financial Services Commission (FSC) to continue strengthening their
respective regulatory framework in order to maintain stability in the
industry. BOJ also offered a temporary lending facility to maintain stability
in the financial sector amidst the global economic crisis. It also increased
the cash reserve requirement for commercial banks, merchant banks and building
societies by 11.0%.
Wholesale and Retail Trade
Real Value added for the Wholesale and Retail Trade
industry grew by 0.1 per cent for the year 2008. This growth was as a
result of increased remittances, imports and other activities in the Tourist
Industry. The sector�s contribution to GDP was $96,283.3 million or 19.0 per
cent and accounted for 23.7 per cent of the labour force.
For the calendar year 2008, the distributive sector highest
sales came from the Hardware, Chemicals and Automobiles groups. On the other
hand the Furniture, Food and Beverages groups registered the largest decline
in sales. The Tourism sector grew by 2.7 per cent during the year. However the
length of stay declined and this reduction was attributed to the Global
economic downturn in the market.
This sector is being regulated by four agencies. These
include the Fair Trading Commission, which spearhead
competition and address related issues. The
Consumer Affairs Commission which educates the public about the rights and
responsibilities of the consumer, The Bureau of Standards and the Trade Board
Limited. The Trade Board Limited monitors and issues permits for the
importation of selected products such as motor vehicles, explosives, gaming
machines, sugar and milk powder. All of which recorded a reduction in the
number of permits issued to import such products.
The overall performance of the sector can be described as
slow especially during the second half of the year.
Manufacturing
The manufacturing industry is estimated to have declined by
1.2 per cent to 42 751.9 million at constant prices. Real value added for
Other manufacturing declined by 2.4 per cent to 18 771.9 at constant prices
due to lower output levels in the categories of chemical, chemical products
and metallic minerals.
Total exports for the manufacturing industry increased by
37.5 per cent to US$ 1.2 billion compared to US$ 905.4 million in 2007. This
out-turn reflected increased earnings from Non-Traditional manufacture exports
as Traditional goods declined by 1.0 per cent. The increase in non
traditional export earnings was also as a result of decline in the value of
crude material exported. Growth in revenue earnings was recorded for Non-
traditional exports due mainly to revenue from the export of Ethanol and
Mineral fuels.
In relation to investment, the government of Jamaica has
expanded and implement new investments. In 2008, there was an increase in the
number and value of projects in the manufacturing industry. Jamaica Trade and
Invest (JTI) increase the number of projects to thirteen up from six with
capital investment of 72.0 per cent more than 2007. The petrochemicals
sub-industry recorded the highest value of investment as previous years. This
is as a result of the expansion of an ethanol dehydration facility at Port
Esquivel. Expansion was also seen in the agro-processing sub-sector due to
the expansion of plastic bottle production.
The number of persons Employed to the manufacturing sector
is 71,150 persons with an overall labour force of 80,100
Mining and Quarrying
Real Gross
Domestic Product (GDP) for the Mining and Quarrying sector grew by 1.1 per
cent during 2008. This growth resulted in increased production of alumina and
crude bauxite of 1.4 per cent and 0.8 per cent respectively. Even though there
was growth, the industry was constrained by factors such as:
�
Hurricane
Dean and Tropical Storm Gustav;
�
Equipment problems at some alumina refineries; and
�
Plant down time at the St. Ann�s Bauxite Company.
Bauxite
and
Alumina
Sub-Sector
Total bauxite
production amounted to 14,636.1 kilo tonnes compared with 14,567.7 kilo tonnes
in 2007. This increase was as a result of growth in the production of both
crude bauxite and alumina. In 2007, the alumina production trended down due to
hurricane Dean and mechanical problems. This negative impact continued into
the first half of 2008 resulting in a decline in alumina production of 3.2 per
cent when compared with the corresponding period in 2007. However by year end,
production increased to 3,995.4 kilo tonnes or 1.4 per cent from 3,940.6 kilo
tonnes in 2007. This increase was due to an expansion in the capacity
utilization rate by 0.7 percentage points to 87.8 per cent. Crude bauxite
production also increased to 4,452.0 kilo tonnes from 4,417.9 kilo tonnes when
compared with 2007. Like alumina, this growth was facilitated by an expansion
in the capacity utilization rate of 0.6 percentage point to 89.0 per cent.
However further growth was restrained by down time of 10 days and heavy rains
in November 2008 which disrupted mining activities.
Total bauxite
exports were 14,718.7 kilo tonnes in 2008, reflects an increase when compared
with 14,476.4 kilo tonnes in 2007. This increase was due to a 2.6 per cent
increase in the bauxite equivalent of alumina which outweighed the decline
registered for crude bauxite. The decline in the amount of crude bauxite
exported was mainly due to a disruption in the shipment schedule, Tropical
Storm Gustav and mechanical problems.
POLICIES AND
PROGRAMMES
In 2008 the
Ministry of Energy, Mining and Telecommunications was split into two - the
Ministry of Mining and Telecommunication and the Ministry of Energy. The
Ministry of Mining continued to work on the draft National Minerals Policy
which will be resubmitted to Cabinet.
The draft
National Minerals Policy seeks to manage and develop Jamaica�s minerals
industry. The main goals of the Policy are:
-
An industry
that contributes greatly to Jamaica�s development and manages mineral
resources from the pre-mining to post-mining stages effectively.
-
Re-organizing
the mineral industry through increased mineral usage, production of value
added goods and exportation of minerals and mineral products.
-
Supporting
institutions which enable the continued development of the minerals
industry.
A draft plan,
Vision 2030 Jamaica, the National Development Plan was completed and work
continued on the Mining and Quarrying sector action plan. The long-term
strategic goals are:
-
An economically
viable and globally competitive industry based on value added products by,
ensuring appropriate policy and regulatory framework, and utilization of
modern technology for the long-term development of the minerals sector;
-
A socially
responsible sector, through sustainable mining communities, harmonious
relationships between communities and mining and quarrying entities and
adoption of a holistic approach to the wellness of industry employees; and
-
Minimum
negative environment consequences from mining and quarrying through
effective control of negative environmental occurrences and adequately
rehabilitated mined-out mineral bearing lands.
� EXPORT
EARNINGS
Total export
earnings for 2008 grew by 4.0 per cent to US$1,386.3 million compared to
US$1,309.9 million in 2007. This increase in export earnings was attributed to
higher earnings from alumina due to higher export prices. The growth in
earnings was restricted by the sharp decline in the price of aluminium during
the latter half of the year. The price Jamaica received for its aluminium fell
by 20.4 per cent in the fourth quarter when compared with the corresponding
period in 2007
Other Sectoral
Developments
Jamaica's tourism sector
experienced growth of 2.7 per cent during 2008. A total of 2,856,172 visitors
came to Jamaica resulting in income of US$1.871.3 million which made the
sector one of the country's leading foreign exchange earners. Employment in
hotels and restaurants experienced a decrease to 80,900 persons in 2008 from
81,875 in 2007
The first annual decline in 28 years was recorded in 2008
as the Transport, Storage and Communication sector registered $61, 265.9
million a decline of 2.2% in GDP. This decline was a result of lesser
activities at the island�s sea and air ports. In terms of Cargo handled at the
island�s ports, there was a decline by 0.7 per cent. As it relates to the
number of vehicles being certified fit, an increase was recorded. The sector
continued to educate and enforce Road Safety programmes to ensure and promote
safety on the roads.
Mobile telephony also showed continued increase. This was
due to increased competition among the mobile operators and the expansion and
re-branding of Cable and Wireless which became LIME and America Movil who
switched to Claro.
Aircraft movements at the island�s international airports
fell due to the decline in operations such as fleets and routes. All this
decline was due to the financial crisis in the United States which became a
Global problem, also Tropical Storm Gustav and higher fuel costs. Overall the
sector performed at a slow rate.
During 2008, real value added
for "Agriculture Forestry and Fishing" declined by 5.1 per cent. The downturn
in the sectors performance was due mainly to:
-
The lingering effects of
Hurricane Dean in 2007;
-
Tropical Strom Gustav in
2008; and
-
Hikes in the prices of items
such as fertilizer, seeds and animal feed.
Gross output of export crops
declined by 16.2 per cent with banana, coffee and sugar cane being the most
affected.
|