Jamaica’s trade deficit for the period January to December 2018 increased by 1.8% to US$4.25B relative to the US$4.17B recorded in 2017. The widening of Jamaica’s trade deficit was attributable to an increase in imports which rose by 10.7% to US$6.13B, due largely to an increase in Mineral Fuels, Chemicals, Machinery and Transport Equipment, Chemicals and Manufactured Goods and Foods. Meanwhile exports rose by 37.8% to US$1.88B, due primarily to the continued expansion in traditional domestic exports, as result of an increase in receipts from the bauxite industry. Crude Oil and its by-products continue to be one of Jamaica’s largest import items and as such has been a primary driver in the widening of the country’s trade deficit during 2018. The average West Texas Intermediate (WTI) crude oil price was US$64.94 in 2018 relative to the average of US$50.83 recorded in 2017.
Since the start of 2019 oil prices has increased by 24.42%, supported by sanctions imposed by the US on Venezuela and Iran, as well as the Organization of the Petroleum Exporting Countries (OPEC) agreement for production cuts for six months starting January 1, 2019. We believe that OPEC during its next policy meeting in April 2019 is not likely to change its reduction policy for the remaining six months due to uncertainty surrounding global economic growth. Given this, we anticipate that oil prices will continue to rise at a moderate pace in the first half of 2019 and as such may contribute to a further widening in Jamaica’s current account deficit.