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Research Paper | Business Economics | Jamaica | Volume 12 Issue 10, October 2023 | Rating: 5.2 / 10
Correlation Analysis between Gross Domestic Product (GDP) Growth Rates and Performance of the Jamaica Stock Exchange Indices
Shaneille Samuels
Abstract: This study investigated any potential correlation between Jamaica?s economic growth, as measured by its Gross Domestic Product (GDP) growth rates, and the Jamaica Stock Exchange (JSE) indices? performance over the period of 2012 to 2022. The study employed a quantitative analysis in exploring whether periods of positive GDP growth are mirrored by increased performance in the JSE indices. The analysis of the data was done using a correlation analysis with use of statistical software SPSS and Microsoft Excel employing the statistical test Pearson Product Moment Correlation coupled with statistical significance testing of each calculated correlation coefficient. The findings from the study showed that there is practically no correlation between each JSE index and GDP because it was uncovered that each of the correlation coefficient was less than 0.1. Moreover, none of these correlation measures is statistically significant enough, sincep>0.05, to indicate that GDP impacted JSE indices and vice versa. The changes in GDP and JSE indices were influenced mainly by external events and economic shocks during the period of 2012 to 2022. A closer look at these indices and GDP was done over the period 2020 to 2022, which indicated a high correlation of at least 0.97 but marginally less than 1, whose almost perfect linear relationships were not found to be of significance. There was nothing to indicate that their relationships were impactful but only revealed that there were commonalities between GDP and these indices that influenced their growth and performance. Economists, investors, business owners would find this study useful because GDP and JSE indices both have common drivers in achieving economic growth. The awareness of the common drivers must be understood and utilized effectively coupled with their response to external events and economic shocks to develop the economy in the long run.
Keywords: Correlation, GDP Growth Rates, Performance, Stock Exchange Indices, Economic Growth
Edition: Volume 12 Issue 10, October 2023
Pages: 509 - 516