2.3% growth driven by rainfall
THE ESTIMATED 2.3 per cent economic growth Jamaica experienced in the quarter to September 2016 has been largely attributed to increased rainfall which is driving agriculture, according to co-chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles.
He said that in the last six quarters, the country has had small but positive growth which has been increasing each quarter.
Byles cautioned, however, that “a lot of that growth is coming from rainfall which is driving agriculture,” a big component in the country’s gross domestic product (GDP), “compared to last year when we had drought and the year before when we had drought”.
He said that while he was happy to see growth and to see it increase each quarter, “I am not complacent about it and know that a big part of it has to do with the better output of agriculture consequent on rainfall”.
LIKELY GROWTH RATES
Asked about the Economic Growth Council’s (EGC) target of five per cent growth in four years, Byles suggested that based on the growth trend so far, without anything extraordinary happening in the economy, such as a hurricane or other natural disasters, Jamaica was likely to see growth rates of Richard Byles, co-chair of EPOC.
up to five per cent in six or seven years.
“What the EGC is trying to do is to turbocharge that by looking at those aspects of the economy and doing business which are restrictive to further growth; and to that extent, you have to commend their efforts. It’s a good thing, and I certainly support that effort,” he said.
“We are a small economy and if we do get a significant flow of foreign investments, it can spur our growth significantly. So, there is always hope, and in any event, if we even fell short of five per cent in four years, the effort that we are making to do that is well worth it. So, maybe we get four per cent in four years, great. Better than three per cent in four years or two and a half per cent in four years,” said the EPOC co-chair.
According to Byles, foreign direct investment inflows in 2011-12, before Jamaica signed a four-year economic support programme with the International Monetary Fund, stood at about US$303 million or about 2.1 per cent of GDP, which was “really low and really was a reflection of the state of the economy at that time”.
In 2015-16, the Bank of Jamaica estimated that foreign direct investment inflows to Jamaica was US$946.3 million or 6.6 per cent of GDP. “This is a good indicator of confidence in the economy, when you see foreign direct investments rise like this,” he said.
Byles said the central bank also reported that credit to the private sector for the 12 months to September 2016 grew by 14.3 per cent. “When you compare that to one year ago, September 2015, it was then 7.8 per cent, and if you took it back to June of 2015, it was 4.5 per cent,” said Byles.
“More and more credit is going to the private sector, shared between retail purchases as well as business investments, and is another good indicator of confidence in the economy and the reinvestment of the private sector in the economy,” he added.
CONFIDENCE IN ECONOMY