Dr Wesley Hughes, director general of the Planning Institute of Jamaica, expects better performance in the September quarter. - File

Dragged down largely by a slump in the goods-producing sector, the Jamaican economy declined a marginal 0.2 per cent between April and June, when compared to the corresponding second quarter.

The outrun has reversed the marginal growth recorded in the first quarter, with the Planning Institute of Jamaica reporting that for the first half of the calendar year to June, the economy was flat.

Turnaround expected

However, the PIOJ in its forecast released yesterday, projects an upturn in economic activity for the current quarter ending September 30, and has estimated growth at between 0.9 per cent and 1.3 per cent.

"The environment, both the domestic and international, were challenging and we expect the next couple of months to remain so," the PIOJ's director general, Dr Wesley Hughes, told reporters at a briefing.

"... We do expect, however, towards the end of the year some turnaround or stabilisation in the economic situation - not spectacular growth, but some improvement," Hughes said.

PIOJ is not the final arbiter on economic data on economic activity in Jamaica; that is the job of the Statistical Institute (Statin).

But Hughes' outfit, like the island's central bank, issues period forecast and analyses of economic activity and its latest confirms the broad anecdotal evidence - a slow in recent months.

For the first quarter - January to March - the PIOJ had estimated an increase in the gross domestic product (GDP) of 0.2 per cent. Statin confirmed the performance at 0.3 per cent.

Rising unemployment

In its latest analysis, the PIOJ projected that services, which account for 72 per cent of the Jamaican economy, grew by 0.2 per cent between April and June.

But this would have been wiped out by the 0.9 per cent decline in the goods-producing sector, which includes manufacturing and agri-culture. And apparently, there was the predictable impact, a loss of jobs, although the data provided by the PIOJ did not show a clear correlation between the economic slowdown and rising unemployment.

However, Hughes pointed out that at April this year, unemployment was 11.9 per cent, or 2.5 percentage points higher than the 9.4 per cent at April 2007. Indeed, in January 2008, unemployment was 10.2 per cent, 1.7 percentage points better than April, confirming a shedding of jobs during the first quarter.

Thriving construction

According to Hughes' data, only construction and installation, performed positively in the goods producing sector during the review period. And then, it was largely public works and major commercial projects - such as hotel and airport expansion rather than residential construction - that accounted for the sector's three per cent growth.

"The residential component is estimated to have declined," Hughes said.

However, a drop in residential construction was not unexpected in the face of the fall-out in the bevy of unregulated investment schemes in which Jamaicans had parked billions of dollars with the expectations of double-digit monthly returns.

The agriculture sector, the PIOJ estimated, tumbled nearly seven per cent, with all segments of farming being part of the down-ward spiral.

Mining and quarrying dipped by 1.5 per cent, tugged downwards, the PIOJ reported, by a slippage in alumina production, with alumina refinery still feeling the effects of hurricane dean nearly a year ago.

Manufacturing was down 0.8 per cent. Significantly, too, electricity and water output, often used as a proxy for broader economic activity, declined 1.9 per cent, Hughes reported.

In terms of electricity generation, the monopoly distributor, Jamaica Public Service, and other pro-ducers had fall-offs in generation.

"There was reduced demand for three of the six consumer groups," said Hughes

Transport, storage and commu-nications declined by 2.3 per cent and Hughes said that the transport component was "explained by a reduction in passenger movements at the international airports."

At Montego Bay's Sangster International Airport , the island's major tourism hub, passenger movement was down by 4.2 per cent.

But at Kingston's Norman Manley International Airport, there was growth of 2.1 per cent.

It was not clear how the passenger movements at the two international airports reflected in a 3.7 per cent increase in stop-over visitor arrivals, which apparently was more than enough to offset a 17.8 per cent decline in cruise ship arrivals for the hotels, restaurants and club subsector to record real growth of 1.3 per cent.

Indeed, visitor expenditure in the second quarter, at US$466.4 million, was 0.2 per cent higher than the corresponding period last year.

With regard to other service industries - finance and insurance - there was growth of 1.2 per cent during the quarter, which the PIOJ attributed to an expansion in loan and investment portfolios and an increase in fees and commission income earned by institutions.

The distributive trade grew by 0.8 per cent.

sabrina.gordon@gleanerjm.com