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Tropical Storm Nicole - Planning Institute of Jamaica

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is however expected to be tempered by the appreciation <strong>of</strong> the <strong>Jamaica</strong>n dollar, continued<br />

constraints in domestic demand, and provisions allowing imports <strong>of</strong> vegetables in short supply.<br />

2. Fiscal Operations <strong>of</strong> Central Government<br />

Greater challenges to achieving the target <strong>of</strong> 6.5 per cent <strong>of</strong> GDP was due to demands for increased<br />

capital expenditure because <strong>of</strong> infrastructure damage estimated at $18.90 billion. This will<br />

necessitate approval <strong>of</strong> increased fiscal space by the IMF. This against the background <strong>of</strong> projected<br />

lower GDP and continued increase in unemployment. These will impact negatively on revenue<br />

collections and in turn government’s ability to provide counterpart funding for some <strong>of</strong> the<br />

necessary infrastructural projects for the remainder <strong>of</strong> FY 2010/11.<br />

3. Impact on Balance <strong>of</strong> Payment<br />

The Goods sub-account will be negatively impacted by the effect <strong>of</strong> TS <strong>Nicole</strong> on the Agriculture<br />

and Mining & Quarrying industries. Domestic agricultural crops which were destroyed are expected<br />

to be partially replaced by imports in an effort to prevent a shortage in the market.<br />

4. Upside potential and downside risks to estimates.<br />

With the exception <strong>of</strong> the Construction & Installation industry, which saw a tempering <strong>of</strong> the<br />

decline forecasted prior to the tropical storm, growth figures for the other industries will either<br />

remain unchanged or be impacted negatively in 2010. Consequently, a GDP contraction <strong>of</strong> 0.6 per<br />

cent is anticipated, a detraction <strong>of</strong> 0.1 percentage point from the forecast pre TS <strong>Nicole</strong>. There,<br />

however, exists both upside and downside risks that may impact these estimates. Included in the<br />

upside potentials are:<br />

• Faster than anticipated recovery in the Agriculture, Forestry & Fishing industry; and<br />

• Greater than anticipated growth in Construction & Installation.<br />

Among the downside risks are:<br />

• Additional devastation due to subsequent weather systems; and<br />

• Delayed recovery in the economies on <strong>Jamaica</strong>’s main trading partners.<br />

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