Governor of the Bank of Jamaica (BOJ), Brian Wynter says the institution will be assessing the impact of torrential flood rains which lashed the island last week to determine whether its inflation forecast needs to be revised.
While indicating that the general target was not expected to change, Wynter said the bank would be better able to determine whether the forecast range needs to be adjusted, when the assessments are completed and the data is submitted.
The Governor, who was speaking at Central Bank’s quarterly press briefing in the western city of Montego Bay on Friday, said that for the 2017/18 financial year, inflation is projected within the range of four to six per cent. This outlook reflects a one-off price increase for fuel, electricity and transportation, associated with the recently announced tax measures.
In addition, consumer prices rose by 0.3 per cent in the month of April, bringing annual inflation to 4.8 per cent.
Wynter also pointed out that inflation in April partly reflected the impact of taxes on the cost of transportation and alcoholic beverages and that for the rest of the fiscal year, barring the unforeseen, the BOJ expects monthly inflation rates similar to what was seen in April.
He said the current account deficit for fiscal year 2016/17 is at 1.8 per cent of Gross Domestic Product (GDP), which is below the two per cent for the previous fiscal year.
The Governor noted that experts would have had to go back about 20 years in Jamaica’s history to find another deficit this low.
“Furthermore, if we subtract imports financed by direct foreign investment inflows, this will be the second consecutive year when Jamaica earns more in foreign exchange than it spends,” Wynter added.
He also informed that goods exports for the January to March quarter rose strongly by about 9 per cent, (US$26 million) for the first time in nearly four years, reflected almost entirely in non-traditional exports.
“Food exports from a wide variety of items, including ackee, fruits, baked products and sauces, rose by 26 per cent, while earnings from tobacco and beverages not including rum rose by 112 per cent. Earnings from an already strong tourism sector also rose significantly by 5.4 per cent during the quarter, on the back of a 6.1 per cent improvement in stopover arrivals,” Wynter explained.
Wynter further noted that the economic improvements were due to the implementation of structural reforms over the years.
“Along with corrections in external price-competitiveness, the improvements we are seeing in the current account are undoubtedly, the fruit of that sacrifice,” he argued.