Economic prospects remain positive – Byles
Published:Tuesday | February 22, 2022 | 10:36 AM
Bank of Jamaica (BOJ) Governor Richard Byles says Jamaica's economic prospects remain “generally positive” against the background of the prevailing coronavirus (COVID-19) pandemic.
“Economic activity and employment continue to rebound, inflows into the foreign exchange market are buoyant, and the county's international reserves have remained strong,” he said.
Byles was speaking during the BOJ's digital quarterly media briefing on Monday.
He said the 5.8 per cent growth out-turn recorded for the July to September 2021 quarter, as reported by the Statistical Institute of Jamaica (STATIN), represents continued recovery in economic activities.
It follows 14.2 per cent for April to June 2021, after a 10.6 per cent contraction a year earlier.
Byles said growth for fiscal year 2021/22 is still projected to be within the seven to 10 per cent range, before moderating between two and four per cent in 2022/23.
“In this context, the key drivers of this rebound are the services industry, particularly tourism and related sectors, notwithstanding setbacks from the Omicron variant of the coronavirus,” he pointed out.
He said the forecast further assumes that the temporary disruption of production at the Jamalco alumina refinery in Clarendon will be resolved by June this year.
Byles pointed out that the forecast risks are “skewed to the downside”, suggesting the possibility of slower growth.
“Growth in tourist arrivals and related activities could be lower than currently projected, given the potential impact of efforts to control the pandemic. Also, the impact of the shortage of key raw materials and… higher inflation on real incomes could have an adverse [effect] on growth,” he added.
The BOJ also projects that gross foreign currency reserves will continue to remain healthy.
Jamaica's gross international reserves totalled a substantial US$4.3 billion as at February 16, representing the equivalent of 140 per cent of the level considered adequate, Byles informed.
“This will be supported by a current account deficit of the balance of payments ranging between 0.5 per cent and one per cent of gross domestic product (GDP), a sustainable level by traditional measures,” Byles told journalists.
He added that the performance of the balance of payments is expected to be supported by further recovery in the tourism sector.
Byles said the labour market also continues on a path of improvement, following a reduction in the unemployment rate to a record low 7.1 per cent.
The BOJ governor noted, however, that recent developments regarding the rate of domestic inflation, for which the January out-turn was 9.7 per cent, “remains an ongoing source of concern for the BOJ”.
“These developments have prompted the Bank to pursue stronger measures to influence a return of inflation to the [BOJ's] target of four to six per cent, in the near term,” Byles added.
- JIS News
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