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<span style="font-weight: bold">BOJ governor paints grim outlook for Ja</span>
IN the context of the deepening global recession, the Jamaican economy is unlikely to register growth this year continuing the trend since the June 2008 quarter, according to Governor of the Bank of Jamaica (BOJ) Derick Latibeaudiere.
The governor, who was speaking at his quarterly press briefing yesterday at the BOJ's Nethersole Place offices in downtown Kingston, painted a grim prognosis for Jamaica.
"In light of the decline in external and domestic demand, both the tradable and non-tradable sectors are estimated to have contracted in the December quarter. The main sectors that are estimated to have either declined or recorded weak growth were hotel and restaurants, mining and quarrying and transportation services. However, agriculture, electricity and water are estimated to have grown," said the bank's BOJ governor.
He added: "The bank's forecast suggests that the economy will continue to experience negative growth in the March quarter. This forecast is underpinned by the continued recession of the global economy into at least the middle of 2009. Given the forecast for the March quarter, GDP growth for the fiscal year is projected to decline in the range of zero to two per cent."
The governor is also anticipating a rise in inflation and for the March quarter is forecasting inflation in the range of 1.5 to 2.5 per cent. From November of last year, inflation was on a downward trajectory with the out-turn for January 2009 coming in at minus 0.3 per cent, but for the March quarter the BOJ is still expecting some lagged effect from the recent depreciation of the Jamaican dollar, hence its projections for an increase in inflation in the March quarter relative to the December quarter.
However, the rise in inflation should, to some extent, be mitigated by the continued moderation in domestic food price, the lagged effects of declining international commodity prices and a general reduction in demand.
"Given the lower than anticipated out-turn for the December quarter and the forecast for the March quarter, the projection for inflation for the fiscal year has been revised downwards in the range of 12.5 per cent to 13.5 per cent. This revision is relative to the bank's earlier forecast of 14 per cent to 16 per cent," said Latibeaudiere.