The Planning Institute of Jamaica (PIOJ) has said that the nation is not in a recession, despite the local economy seeing its second straight quarter of decline, shrinking by 1.8 percent from October to December of last year.
After weeks of intense public discussion, the organization reaffirmed its conclusion at a quarterly conference on Wednesday morning while providing preliminary estimates of GDP production for the last quarter of 2024.
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PIOJ Director General Dr Wayne Henry stated, “The Jamaican economy though facing a downturn in output is not in a recession, however, there remain significant challenges due to hydrological shocks reflected largely in the fallouts in tourism, electricity and water supply, and agriculture.”
Although it only partially satisfies the definition of a recession, Henry noted the views of macro-fiscal organizations like the World Bank and International Monetary Fund (IMF), which believe that GDP is not a reliable indicator of a recession, and stated that a broader range of economic indicators, including income, employment, and fiscal health, should also be taken into account when determining whether a nation is actually in a recession. He thinks that the disruption of economic activity due to seasonal adjustments caused by unfavorable weather events presents a gap in making this broad assessment since Jamaica is reportedly maintaining good macroeconomic health as evidenced by its record unemployment rates and high consumer confidence.
According to the PIOJ, the predicted 1.8% contraction, which comes after a greater 3.5% decrease in the July–September quarter, is mostly due to the aftermath of Hurricane Beryl, Tropical Storm Rafael, and other occurrences.
It is believed that the shocks from these events have had a detrimental effect on nearly all the main industries that produce products and services, leading to a wholesale contraction in several significant sub-sectors, including mining, agriculture, manufacturing, construction, hotels, and restaurants.
The director general stated that it is anticipated that the economy would resume growth in the current quarter, which runs from January to March, with short-term prospects being mostly favorable.
Henry stated, “Within this context, economic growth is anticipated for the final quarter of fiscal year 24/25. For the Jan-Mar 2025 quarter, growth is projected to be within the range of 0.1-1.0 percent. For FY 24/25 the economy will contact within the range of 0.5-1.5 percent. These contractions largely reflect the negative impact of loss and damage suffered because of several hydrological events on productive activities.”
