The GLEANER: By Steven Jackson – The Jamaican economy expanded by 1.9 percent in the January-March quarter, stymied by slowing housing starts, according to preliminary estimates from the Planning Institute of Jamaica.

Real estate, a star performer during the start of the pandemic, has now entered into a slow slide.

“Higher prices do impact demand, so we are suspecting it does have an impact on new investment,” said PIOJ Senior Director James Stewart, the official who led the agency’s quarterly briefing on Tuesday.

Construction dipped 4.5 percent during the quarter.

“There was a 56.5 percent contraction of housing starts by the National Housing Trust,” James added.

Housing prices and mortgage rates have risen since 2020, partly due to the benchmark interest rate hikes by the Bank of Jamaica, which moved in increments from 0.5 per cent to 7.0 percent.

Stewart said that while “interest costs are significant determinants for any mortgage, PIOJ did not have enough data to determine specifically to what level it might have impacted demand.

“We do not have that information; we could not say,” said the PIOJ official, who heads up the PIOJ’s economic planning, research and policy logistics unit.

The broad goods producing industry grew by an estimated 3.0 percent, driven by improved performances in three industries – mining and quarrying grew 25 percent, agriculture, forestry and fishing grew by 8.0 percent, manufacturing grew 2.0 percent. Construction was the only main goods sector that declined.

The services sector grew 1.6 percent, led by electricity and water supply, up 7.0 percent; hotels and restaurants up 6.0 percent; finance and insurance, up 1.5 percent; and transport storage and communication, also up 1.5 percent.

“The improved performance related to travel and tourism and a general increase in demand for electricity,” said Stewart.

Within the tourism market, visitor arrivals by plane, January to March, increased by 7.5 percent to over 788,000 passengers; cruise arrivals were up 18 percent to 563,000 visitors; and total passenger spend increased by over nine per cent US$1.3 billion.

For the full fiscal year ending March, PIOJ estimates that the economy expanded by 2.0 per cent. A final call on the performance will come from the Statistical Institute of Jamaica, which is scheduled to release its report on the March quarter at the end of June.

Looking forward, the PIOJ forecasts growth of 1.5 per cent to 2.5 per cent for the June quarter.

“It is based on the continuation of the growth momentum, the continued strengthening of the mining industry, increased domestic demand, and the continued strengthening in the global economy which augurs well for external demand for Jamaica’s goods,” said Stewart.

For FY2025 is projected at 1.0 to 3.0 percent.

Feature Photo: James Stewart, senior director, Planning Institute of Jamaica