PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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further study, is not included in the impact analysis, but must be considered to augment the projected growth-impact reported here. 7.0 Impact Analysis of Short-Term Growth Stimulus 7.1 The overall projected growth-impacts of the proposed short-term growth measures are summarized in Tables 2.4 and 2.5 below. Appendix 2B presents details of the projected employment and/or regional impacts. The methodology of the impact analysis is described in Appendix 2C. Table 2.4 One-year Growth Impact of Short-term Growth-Strategy Components Projects Expenditure a (J$ million) Additional One-year Growth (% Change in GDP at constant prices) Lower bound Upper bound NWA - Priority Level 1 (PL 1) b 3,292.66 0.34 0.72 NWA - Priority Level 2 (PL2) c 5,703.76 0.59 1.24 RADA Farm Roads 3,883.00 0.46 0.85 Enhanced CRP (various agencies) 1,277.00 0.16 0.27 DBJ Micro Loans 250.00 0.03 0.05 Total 14,406.42 1.58 3.13 a For NWA and RADA projects, the expenditures do not necessarily reflect the total project costs but rather the component of final demand expenditure accounted for in the projection period. b NWA-PL1 projects are those projects which have been targeted for implementation in FY2011/12, but for which the fiscal space was uncertain. c NWA-PL2 projects are those projects that were initially targeted for implementation after FY 2011/12. The accelerated implementation of these projects is being recommended. Source: Compiled by the PIOJ 6.2 Overall, the aggressive front-loading and implementation of the specified shortterm growth projects could increase real GDP growth by 1.6 - 3.1 percentage points above a baseline projection (by PIOJ) of 2.1% for 2011. 2 This implies that instead of a projected 2.1% real GDP growth in 2011, these projects could induce increased real growth to between 3.7% and 5.2%. This boost in growth would come from a total expenditure of J$14.4 billion, amounting to about 1% of current GDP. 6.3 The improvement in growth performance would also have positive benefits for poverty reduction and social inclusion. Under the baseline scenario of 2.1% real growth, the poverty rate in 2011 is projected to be in the range of 16.5% -18.1%, representing a 2 This baseline projection is subject to further review by PIOJ on the basis of incoming data on current economic performance. 17
decline of 2.0 - 2.2 percentage points compared with 2010. 3 predicated on the following assumptions: This baseline projection is 1) Real GDP: Real GDP is projected to grow by 2.1% during FY2011/12, driven mainly by Mining & Quarrying, Hotels & Restaurants, Electricity & Water Supply, and Agriculture, Forestry & Fishing. 2) Employment: Total employment level is projected to increase by 1.5 per cent; this increase is associated with expected growth in the following industries: Agriculture, Forestry & Fishing, Wholesale & Retail Trade, Repair and Installation of Machinery, all of which are labour-intensive industries. 3) Remittance: Remittance is projected to increase as the global economy continues to record economic growth. Economic activities are also expected to improve in Jamaica’s main source of remittance, the USA. 4) Pension: The increase in pension benefits from NIS (initiated in July 2010 and paid in December 2010), in addition to the announced increase in government workers’ pension, will positively impact disposable income and, thus, assist in reducing poverty in an age group (age 60 and over) where it is most prevalent. 6.4 Under the improved growth scenario, the higher growth rates are projected to further reduce poverty rates to a range of 14.8%-16.4% (assuming a 3.7% growth rate) and 12.4% - 14.6% (assuming a 5.2% growth rate). 6.5 The short-term growth projects are also projected to increase tax revenues, based on the increased value-added generated under the improved growth scenario. Table 2.5 shows the amounts of the projected increases in value-added and tax revenues. Table 2.5. Increased Value-Added & Tax Revenue Generated by Short-Term Growth Projects (J$ million) Projects Increment in Real Value-Added Lower Bound Upper Bound NWA - PL1 4,124.0 8,626.8 NWA - PL2 7,143.8 14,943.9 Farm Roads 5,497.7 10,171.3 CRP 1,913.9 3,214.7 Micro Credit 390.8 655.0 Total Value-Added 19,070.2 37,611.7 Tax Revenue (at 23.6%) 4,495.9 8,867.2 Source: Compiled by the PIOJ 3 Poverty rates are measured as the head-count i.e. the proportion of the population below the poverty line. 18
Page 1 and 2: i A GROWTH-INDUCEMENT STRATEGY FOR
Page 3 and 4: To the many ordinary Jamaicans who
Page 5 and 6: Preface The Jamaican economy has ex
Page 7 and 8: for making a determined start on th
Page 9 and 10: the private sector groups, listed b
Page 11 and 12: Citibank N.A. Jamaica Branch Grace
Page 13 and 14: need for “additional fiscal space
Page 15 and 16: Chapter 2 ________________ Summary
Page 17 and 18: 1.0 The Economic Situation Today 1.
Page 19 and 20: expected to provide an essential an
Page 21 and 22: Table 2.1. The Policy Framework: A
Page 23 and 24: programme of social inclusion that
Page 25 and 26: Strategic Focus Table 2.2. Growth S
Page 27: 6.0 Short-Term Growth Stimulus 6.1
Page 31 and 32: Table 2A.2. NWA Projects To be Fast
Page 33 and 34: Table 2A.5. Community Renewal Proje
Page 35 and 36: Table 2B.3. Impact of Repairing Far
Page 37 and 38: Appendix 2C Methodology of the Grow
Page 39 and 40: Part I _________ Overview 28
Page 41 and 42: 2.0 Vision 2030 Jamaica Before delv
Page 43 and 44: 3.0 May 2010 Security Event and Aft
Page 45 and 46: the longer than anticipated global
Page 47 and 48: April July October January April Ju
Page 49 and 50: Three industries recorded increases
Page 51 and 52: 9.0 Proposals for Growth-Stimulus I
Page 53 and 54: targeted economic and social infras
Page 55 and 56: partnering with government to disco
Page 57 and 58: 3.0 Growth Inducement Strategy The
Page 59 and 60: Growth-Inducement Strategy Alignmen
Page 61 and 62: 50 Part II _________ Situational An
Page 63 and 64: inadequate provision of public infr
Page 65 and 66: 2.0 Macroeconomic Assessment 2.1 In
Page 67 and 68: Increased global oil consumption wa
Page 69 and 70: $4,742.0 million and $688.4 million
Page 71 and 72: Non -Traditional Domestic Exports E
Page 73 and 74: negative impact of the Jamaica Debt
Page 75 and 76: ethanol and paint, whereas lower de
Page 77 and 78: Analysis of preliminary GCT data re
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The number of ship calls to the isl
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industry was, however, estimated to
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4.0 Projected Performance 4.1 Calen
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increased marketing and extension s
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Electricity & Water For FY 2010/11,
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J$ Million Figure 5.1. Private Sect
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2011/12). These extreme weather eve
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Chapter 6 ________________ Assessme
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creates allocative inefficiencies,
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Million $ Per cent Jun-10 Mar-10 De
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Table 6.1. Employed Labour Force by
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J$ million Mar-10 Dec-09 Sep-09 Jun
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FIGURE 7: GROSS NATIONAL SAVINGS RA
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4.10.2. However, the extent of the
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Part III ____________ Analytical Fr
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functional relationship between the
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It follows that: (5) s = I/Y = [S -
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However, the existence of measureme
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(d) v* = Y*/K* This is a measure of
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in Chapter 8. The mutual interactio
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Transforming the complex set of str
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Appendix 7A A Methodological Note T
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Chapter 8 ____________________ Asse
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The DBI focuses more narrowly on qu
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to ask, is it possible to predict g
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can be made to serve a very useful
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For further elaboration of the cons
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progressive Jamaica-based firms and
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Table 8.2. Jamaica: Doing Business,
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Table 8.4. Global Competitiveness I
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Table 8.5 (continued) Rank Indicato
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Rank* Constraint Table 8.7 Business
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Chapter 9 ___________________ Inter
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3.0 The Burdens of LAC’s Logistic
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conditions. These combined with a p
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Figure 9.4. Proportion of Primary A
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6.0 Logistics are Essential for Tou
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7.0 Fundamental Steps Forward for J
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Part IV ________________ Policies a
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Current Status: Cabinet by decision
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e more than compensated for by the
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B ____________________ Eliminating
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Commercial Bank loan rates have als
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5.0 Expected Outcomes These measure
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capital, mainly in the form of equi
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oth local and overseas (including t
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Table C.1. Proposed Implementation
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Locally, the Scientific Research Co
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Develop formal and informal links t
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D ____________________ Business Pro
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5.0 Recommendations Based on the ma
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2.5 Coexistent with the levels of u
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industry as well as provide funding
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Table E.2. Unemployed Labour Force
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indirect losses experienced when th
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Table F.1 (continued) Area Type of
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G ____________________ Community Re
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Figure G.1 Community Renewal Progra
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Table G.1 Priority Initiatives Obje
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Table G.2 Phased Implementation Pla
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H ____________________ Proposed Wes
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3.0 Transparency Guarantees By desi
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and Coordinating Unit (PCMU) was es
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therefore need to have sanctioned o
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Figure I.1. Functions of National P
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The rationalisation was guided by t
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deliver services in an efficient an
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efurbishing to allow for accommodat
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Part V _______________ Panelists’
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With the benefit of hindsight, some
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ight. Where we as a society fail is
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and exclusion of the majority of th
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the elders, youth, children. What f
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C __________________ Enhancing Nati
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Figure C.1. National resilience is
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