PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

a reduction in net interest income on loan stock at deposit-taking institutions due
to the impact of the Jamaica Debt Exchange
a reduction in the stock of loans and advances.
3.2 Calendar Year 2010
Gross Domestic Product 26
A decline of 1.2 per cent in real GDP was estimated for 2010, the third consecutive
annual contraction. Productive activity was constrained by the prolonged impact of the
global recession on the domestic economy. Consumer demand remained subdued due to
uncertainty regarding economic prospects, increased unemployment and the reduction in
real income. The economy was also adversely affected by the impact of two shocks,
namely: (i) security operations in sections of Kingston & St. Catherine; and (ii) the
Passage of Tropical Storm Nicole. The Electricity & Water Supply, Finance & Insurance
Services and Mining & Quarrying industries registered the largest reduction in value
added, declining by 4.3 per cent and 4.0 per cent and 2.5 per cent, respectively.
For the first half of the year, real GDP declined by 1.5 per cent with the Goods Producing
and Services industries contracting by 3.1 per cent and 1.3 per cent, respectively. A
decline of 0.8 per cent was estimated for the July-December 2010 period, resulting from
the combined effect of a 0.3 per cent expansion in the Goods Producing Industry and a
1.6 per cent contraction in the Services Industry. Growth in the Goods producing Industry
was due mainly to a 27.0 per cent increase in the Mining & Quarrying industry and was
associated with the reopening of WINDALCo’s Ewarton alumina plant in July 2010.
During the final six months of 2010, lower value added in the Services Industry will
primarily be influenced by reduced activity in the Electricity & Water, Transport Storage
& Communication and Finance & Insurance Services industries. Strong growth was,
however, estimated for the Hotels & Restaurants industry.
The decline in real GDP during the July-December 2010 period emanated from
contractions in both the third and fourth quarters of 2010. Based on official estimates, a
decline of 0.9 per cent was recorded for the July-September 2010 period, a slowing in the
rate of decline compared with the out-turn in the previous two quarters. Preliminary
estimates for the October-December 2010 quarter indicated that the economy declined by
0.8 per cent compared with the corresponding period of 2009. Economic activity during
October – December 2010 was constrained by continued weak domestic demand in
addition to the effect of Tropical Storm Nicole. The Agriculture Forestry & Fishing and
Electricity & Water Supply industries were estimated to have recorded the strongest
contractions. Lower real value added for Agriculture Forestry & Fishing was due mainly
to the negative impact of Tropical Storm Nicole primarily on Domestic Crops. The
Electricity & Water Supply industry declined due to reduced electricity demand from all
user groups and reflected the general downturn in economic activities as well as the
impact of cooler than normal temperatures during the quarter. The Mining & Quarrying
26 Real GDP figures for 2010 are based on official January-September 2010 figures from STATIN and
preliminary October-December 2010 estimates from PIOJ.
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