Gov’t forecasts average 4.1% GDP growth
Published:Saturday | February 20, 2021 | 12:12 AM
The Holness administration is forecasting that the economy will see real gross domestic product (GDP) growth averaging 4.1 per cent over the next four fiscal years.
In the Fiscal Policy Paper, tabled in Parliament on Thursday, the Ministry of Finance and the Public Service said that the recovery was predicated on the expected loosening of the pandemic’s grip on the economy as global vaccination against COVID-19 continues.
Jamaica is expected to receive its first supply of the AstraZeneca coronavirus vaccine before the end of this month, through the COVAX facility.
The ministry says that output growth of 5.2 per cent is projected for financial year 2021-22, as the demand for goods and services increase over their 2020-21 fiscal year levels.
It is anticipated that expansion will be mainly driven by hotels and restaurants; transport, storage and communications and other services, buoyed by an increase in the number of tourist arrivals, as well as a gradual return to normality given the sharp decline in economic activity in the 2020-21 financial year.
Over the medium term, the finance ministry says growth within the goods-producing sector is expected to be driven by agriculture, forestry and fishing, based on the continued stabilisation of the supply chain associated with irrigation projects, as well as increased demand linked to the increase in tourism.
Mining and quarrying outlook positive
There is also a positive outlook for the mining and quarrying sector due to the expected increase in production capacity following the resumption of operations at the JISCO (Alpart) refinery during the 2022-23 financial year.
The Government says that inflation is expected to stabilise at around five per cent over the medium term.
For the 2020 calendar year, the All-Jamaica Consumer Price Index grew by 5.2 per cent, relative to the 6.1 per cent recorded for the 12-month period ending December 2019.
The nominal exchange rate declined during the review period, relative to December 2019. At the end of last year, the weighted average selling rate was US$1 to J$142.65. This represents an accelerated depreciation of 7.6 per cent relative to the 3.8 per cent recorded for the corresponding period in the previous year.
The Ministry of Finance explained that the selling rate of the Jamaica dollar vis-à-vis the US dollar faced increased pressure, owing to increased end-user demand, particularly from the manufacturing and distributive trade and the significant reduction of US-dollar inflows, due to the dramatic fallout in tourist arrivals.