PIOJ cuts recovery timeline as economy contracts 2.9 per cent in June quarter

Jamaica’s economy contracted 2.9 per cent in the April to June quarter, but the Planning Institute of Jamaica (PIOJ) has shortened its projected recovery timeline to two years, from three.

“Given the pace of recovery so far, the current expected timeline for attaining pre-Melissa output levels is now within one and a half to two years of the event, that is, as early as the April to June quarter of 2027,” PIOJ Director General Dr Wayne Henry said at the organisation’s quarterly media briefing yesterday.

The PIOJ had initially projected that the economy would not return to pre-hurricane output until fiscal year 2028-2029. That estimate has now been brought forward by roughly a year.

Henry cautioned, however, that a return to pre-Melissa output is not the same as full recovery. Rebuilding housing stock, public infrastructure and livelihoods would take three to five years, he said.

The 2.9 per cent year-over-year decline in the June quarter was driven by the lingering effects of the hurricane, compounded by El Niño conditions that brought hotter, drier weather and heightened risks to agriculture and water supply.

The goods-producing sector contracted 6.4 per cent. Mining and quarrying fell 23.9 per cent, with alumina production down 30.8 per cent and capacity utilisation dropping to just 27.3 per cent. Agriculture, forestry and fishing declined 17 per cent, led by a 72 per cent collapse in banana production and a 77.5 per cent fall in plantains. Construction showed modest growth of 0.3 per cent, supported by a 56.8 per cent surge in cement production.

The services sector contracted 1.7 per cent. Accommodation and food service activities fell 12.2 per cent, consistent with a 19.6 per cent decline in stopover arrivals for April and May. Visitor expenditure dropped 17 per cent to US$578 million over the same period. Electricity, water supply and waste management declined 4.1 per cent.

COUNTERWEIGHT

Government capital spending provided a counterweight, rising 55.8 per cent to $13.7 billion in the quarter, led by the National Works Agency’s expenditure on the SPARK programme and the Grange Lane dualling in Portmore, and the National Road Operating and Construction Company’s spending on the Montego Bay Perimeter Road.

Unemployment edged up to 3.7 per cent in April, from 3.3 per cent a year earlier. Youth unemployment rose 1.6 percentage points to 11.7 per cent. The employed labour force decreased by 25,700 persons year over year, with women accounting for two-thirds of the decline.

For the six months from January to June, the economy contracted 3.5 per cent overall, with goods-producing industries down 6.8 per cent and services down 2.4 per cent.

Preliminary data for July suggest continued pressure: alumina and crude bauxite production fell 18.1 per cent and 55.7 per cent, respectively, while airport arrivals contracted 22.4 per cent.

The PIOJ expects a further contraction of 0.5 per cent to 1.5 per cent in the July to September quarter, but projects the economy to return to growth in October to December. For the full fiscal year 2026-2027, the PIOJ is forecasting growth of one to three per cent, supported by reconstruction led by the National Reconstruction and Resilience Authority (NaRRA), accelerating public investment and easing weather conditions.

editorial@gleanerjm.com

Economic output:

December quarter ▼ -7.3 per cent

March quarter ▲ 3.3 per cent

June quarter ▼ -2.9 per cent

luke.douglas@gleanerjm.com