Jamaica: Economy in recession during 1st quarter of 2013 – trend expected to improve

Latest statistics released by the Bank of Jamaica
indicate that the island-nation’s economy remained in recession during the first quarter of 2013, however, the economy was predicted to stabilize during the second quarter of the year.

The Central Bank estimated that the economy shrank in a range of 0.2 percent to 1.2 percent in the first quarter of 2013, however, conditions are expected to improve in the second quarter as growth rate is forecast to be flat in a range of negative 0.5 percent to positive 0.5 percent.

“The outturn for the first quarter reflected the impact of drought conditions as well as weak domestic and external demand,” Bank of Jamaica governor Brain Wynter told a press conference.

“Continued uncertainty about the prospects for the economy had a debilitating impact on investments and economic activity in general,” he added.

The island-nation’s economy is expected to improve as a result of spinoff from the recent approval of an Extended Fund Facility by the International Monetary Fund (IMF) yielding positive results later in the year

The IMF approved a four-year loan plan of US932 million for Jamaica earlier this month. The loan plan is part of a US$2 billion loan package from multilateral institutions such as the World Bank and the Inter-American Development Bank.

Inflation figures remained within projections at 2.7 percent during the first quarter. The inflation rate was driven mainly by price increases in agricultural products as a result of prevailing drought conditions and the depreciation of the Jamaican dollar. The depreciation also had an impact on domestic food prices as well as the cost for importing crude oil for energy generation.