Tweet
Targets derailed - 'Dean' blows economy off course Damage tops $20 billion
published: Friday | September 14, 2007
John Myers Jr., Business Reporter
Peter-John Gordon - file
Hurricane Dean damage has been estimated nationally at $20 billion and the Planning Institute of Jamaica (PIOJ) is warning that economic growth will be restricted as a result.
Additionally, the PIOJ seesinflation possibly climbing into double digits.
"The economy is now projected to grow by 1.1 per cent," said director of the economic planning and research unit in the PIOJ, Dr. Peter-John Gordon, who stood in for his boss Dr. Wesley Hughes at an economic forum, Thursday.
GDP was originally forecast to grow by 2.1 per cent.
Gordon, speaking at Pan Caribbean's annual breakfast forum on the economy at the Terra Nova hotel in St. Andrew, said the projected one-point downturn was assessed based on the significant damage to the agricultural sector - which was the main catalyst behind the growth of the economy last year - as well as power generation, bauxite facilities, roads and other infrastructure.
The agriculture sector took a $9 billion hit from 'Dean', $4 billion of which was in the banana sector.
Domestic agriculture took a $1 billion hit, while sugar had losses of $2 billion.
There was also significant damage to coffee, which is one of the main export crops.
Inflation rate
The increased cost associated with the rehabilitation of the economic sectors, said Gordon, will push the inflation rate higher than expected to between nine and 10 per cent for the year. He said the impact on prices would be driven mainly by movements in international commodity prices, including oil and raw materials for the poultry industry.
"Inflation is expected to come out between nine and 10 per cent, but I'm saying this with trepidation because STATIN (the Statistical Institute of Jamaica) will be coming out with the new basket for measuring inflation," said the PIOJ director.
The new basket for measuring inflation will include cellphones and computers.
The PIOJ was uncertain of the likely date when STATIN would start using the new formula, as well as, how much this would affect inflation levels.
On the flipside, however, Gordon said he expected growth in the construction and distributive sub-sectors as the restoration process continues.
Prior to the hurricane, several key areas of the economy had been showing positive results.
Bauxite data for July showed a 10.3 per cent rise in production to 1,340 kilo tonnes which came about as a result of a 14 per cent increase in crude bauxite production and 8.4 per cent in alumina production.
Stop over tourist arrivals increased 2.8 per cent to 185,000 for the same month. However, cruise passenger arrivals declined 11.3 per cent in the same period.
Gordon said the PIOJ was optimistic that the economy would return to 2.5 per cent growth next year when most sectors would have been rehabilitated and production was back to normal.
"It is unlikely that you will get a jump in two or three years to six per cent; beyond that I don't know." he said.
"We have to wait to see some of the policy shifts before we can analyse that."
The PIOJ is overseeing a programme that is meant to take Jamaica to first world or developed status by year 2030.
The plan requires the country to grow by 6-7 per cent per annum.
john.myers@gleanerjm.com
published: Friday | September 14, 2007
John Myers Jr., Business Reporter
Peter-John Gordon - file
Hurricane Dean damage has been estimated nationally at $20 billion and the Planning Institute of Jamaica (PIOJ) is warning that economic growth will be restricted as a result.
Additionally, the PIOJ seesinflation possibly climbing into double digits.
"The economy is now projected to grow by 1.1 per cent," said director of the economic planning and research unit in the PIOJ, Dr. Peter-John Gordon, who stood in for his boss Dr. Wesley Hughes at an economic forum, Thursday.
GDP was originally forecast to grow by 2.1 per cent.
Gordon, speaking at Pan Caribbean's annual breakfast forum on the economy at the Terra Nova hotel in St. Andrew, said the projected one-point downturn was assessed based on the significant damage to the agricultural sector - which was the main catalyst behind the growth of the economy last year - as well as power generation, bauxite facilities, roads and other infrastructure.
The agriculture sector took a $9 billion hit from 'Dean', $4 billion of which was in the banana sector.
Domestic agriculture took a $1 billion hit, while sugar had losses of $2 billion.
There was also significant damage to coffee, which is one of the main export crops.
Inflation rate
The increased cost associated with the rehabilitation of the economic sectors, said Gordon, will push the inflation rate higher than expected to between nine and 10 per cent for the year. He said the impact on prices would be driven mainly by movements in international commodity prices, including oil and raw materials for the poultry industry.
"Inflation is expected to come out between nine and 10 per cent, but I'm saying this with trepidation because STATIN (the Statistical Institute of Jamaica) will be coming out with the new basket for measuring inflation," said the PIOJ director.
The new basket for measuring inflation will include cellphones and computers.
The PIOJ was uncertain of the likely date when STATIN would start using the new formula, as well as, how much this would affect inflation levels.
On the flipside, however, Gordon said he expected growth in the construction and distributive sub-sectors as the restoration process continues.
Prior to the hurricane, several key areas of the economy had been showing positive results.
Bauxite data for July showed a 10.3 per cent rise in production to 1,340 kilo tonnes which came about as a result of a 14 per cent increase in crude bauxite production and 8.4 per cent in alumina production.
Stop over tourist arrivals increased 2.8 per cent to 185,000 for the same month. However, cruise passenger arrivals declined 11.3 per cent in the same period.
Gordon said the PIOJ was optimistic that the economy would return to 2.5 per cent growth next year when most sectors would have been rehabilitated and production was back to normal.
"It is unlikely that you will get a jump in two or three years to six per cent; beyond that I don't know." he said.
"We have to wait to see some of the policy shifts before we can analyse that."
The PIOJ is overseeing a programme that is meant to take Jamaica to first world or developed status by year 2030.
The plan requires the country to grow by 6-7 per cent per annum.
john.myers@gleanerjm.com