PIOJ Director General Dr. Wayne Henry told the PIOJ's quarterly media briefing that growth prospects for the economy are generally negative based on the anticipated impact of the COVID-19 pandemic, which led to a fall in demand for goods and services because of the response measures imposed.
He said measures including the closure of Jamaica's borders to passenger traffic; restrictions on operating hours; as well as physical distancing protocols; have negatively impacted key drivers of economic activities such as hotels & restaurants, manufacturing, transportation, entertainment, and construction services.
Dr. Henry noted that against that background, the PIOJ is projecting contraction of between 12 and 14 per cent this quarter.
He also stated that the PIOJ is expecting contraction within the range of four to six per cent this financial year.
He noted that this is based on the assumption that most things will go right for the country - such as the avoidance of a major COVID-19 outbreak, a gradual relaxation of measures that restrict the movement of persons, and lower international and domestic demand associated with an increase in unemployment rates as some firms will take longer to reopen.
Dr. Henry said the PIOJ is expecting a return to growth performance during the January to March quarter of 2021 to temper the declines over the next two quarters.
However, he noted the economic out-turn for the financial year could be worse than projected based on certain risks to the forecast. These include: slower than anticipated restart of economic activities in key industries due to supply side constraints; adverse weather conditions, particularly on the agricultural activity; the advent of a second round of contagion due to the relaxation of measures to contain the spread of COVID-19; and slower than than anticipated restart of the economies of Jamaica's main trading partners which will negatively impact external demand.
Dr. Henry said the services industry will record a significant share of the decline for 2020/2021, particularly in the hotels & restaurants and the transport, storage & communication industries.
External demand for Jamaican products are also expected to be weak.
Last quarter's negative growth ended 20 consecutive quarters or five years of no economic contraction.
Finance Minister Dr. Nigel Clarke reacted to the PIOJ's grim economic forecast during Wednesday afternoon's sitting of the House of Representatives, noting that "a contraction of that nature we have not had in living memory."
"This contraction and the global economic shock brought on by the pandemic is being manifested in Jamaica in several ways," he said, indicating that "tens of thousands of persons" have lost their jobs including, those from the tourism and restaurant sectors as well as many young people who had taken on obligations but have "been suddenly ruptured from their jobs on account of this pandemic."
Dr. Clarke was speaking as the Government and Opposition clashed over whether a bill to amend the Financial Audit and Administration Act should have been debated on Wednesday.
The Finance Minister insisted that the debate could not be pushed back as the Government needed to proceed with budgetary changes for the COVID-19 response.
Vision 2030 pushed back?
In the meantime, the effects of the COVID-19 pandemic could result in some of the Vision 2030 development targets being pushed back.
Dr. Henry said the PIOJ's preliminary review of the development targets under Vision 2030 Jamaica suggests there will be slippages in several indicators.
These include real Gross Domestic Product (GDP) annual growth rate and nominal GDP per capita, the unemployment rate and poverty prevalence rates.
Dr. Henry said a review of the targets is now underway to determine how best to revise programmes in an effort to adapt to the challenges brought on by the global pandemic.
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