• BMI now expects Jamaica’s economy to contract by 0.9% in 2026, better than its previous forecast of a 1.1% decline, before rebounding by 2.3% in 2027 as recovery from Hurricane Melissa continues.
• Real GDP fell 4.1% year over year in Q1 2026 amid broad-based sectoral weakness, following a 7.1% contraction in Q4 2025 after the hurricane’s October landfall. The contraction was less severe than BMI and official forecasts had anticipated, supporting the upward revision. Seasonally adjusted data also showed Q1 2026 growth improving relative to Q4 2025, signalling early recovery momentum. Consumption remained comparatively resilient. Wholesale and retail trade were nearly flat, with sequential improvement from the previous quarter and inflation still relatively contained – despite supply-side disruptions.
• BMI expects growth to resume in Q4 2026 and continue into 2027, supported by a broad-based recovery across industries. Fiscal stimulus should provide an additional tailwind, while the Bank of Jamaica is expected to gradually lower interest rates in 2027 as inflationary pressures fade.
• BMI remains moderately upbeat on domestic demand despite near-term inflation pressure. Remittances should continue to support household spending, even as inflows normalise from post-hurricane levels. A stable labour market, including nearly 30,000 jobs added in Q2, together with fiscal stimulus and steady monetary policy, should help limit the depth of the downturn.
• The newly established National Reconstruction and Resilience Authority should help mobilise private investment and public projects. In addition, the restoration of power to nearly the entire island is an important recovery milestone, while the marginal rise in electricity consumption in July 2026 points to improving activity.
• Risks remain tilted to the downside despite the less severe-than-expected contraction. Renewed tensions between Iran and the U.S. have pushed oil prices higher, raising the risk of stronger domestic inflation and potentially tighter monetary policy. Ongoing hurricane recovery also leaves the economy vulnerable to another major storm, while El Niño-related drought and hotter temperatures could weigh on agriculture and overall output in the near term.

• Jamaica’s foreign policy remains anchored by its longstanding relationship with the United States, even as the government continues to broaden ties with China, regional partners and other international counterparts.
• Deep economic links with the U.S. span tourism, remittances and trade, while security cooperation has strengthened following the August 2026 signing of a Status of Forces Agreement. The agreement establishes the legal framework for U.S. military personnel and activities in Jamaica. It reinforces the countries’ longstanding security partnership and signals closer cooperation on defence and regional security.
• In a January 2026 call, Prime Minister Andrew Holness and U.S. Secretary of State Marco Rubio reaffirmed their commitment to sustained cooperation. Discussions covered hurricane recovery assistance, U.S. support for reconstruction, Jamaica’s progress in reducing crime, the country’s role in anti-gang operations in Haiti and the upgrade of the U.S. travel advisory from Level 3 to Level 2 – a positive development for Jamaica’s storm-affected tourism sector.
• At the same time, China remains an important infrastructure and trade partner. Chinese investment continues to support Jamaica’s infrastructure ambitions, while rising imports of machinery and other capital goods point to a deeper trade relationship. This balancing act extends beyond the two major powers, with the Holness administration also strengthening ties across the Caribbean and with other global partners.
• Jamaica has also entered regional agreements designed to improve security cooperation and economic integration. These include the Alliance for Security, Justice and Development, an Inter-American Development Bank-backed initiative involving 18 Latin American markets to strengthen cooperation against transnational crime. In July 2025, Jamaica also signed an agreement with Barbados, Belize, Saint Vincent and the Grenadines, and Dominica to permit the free movement of Caribbean nationals under the CARICOM Single Market and Economy.
• Overall, Jamaica’s approach points to continuity rather than a major foreign-policy shift. The country is likely to preserve its close U.S. relationship while continuing to welcome Chinese investment and deepen regional partnerships, giving it more room to pursue economic opportunities across multiple fronts.

(Source: BMI, A Fitch Solutions Company)

• The Bahamian economy maintained positive momentum in Q2 2026, supported by stronger tourism activity and ongoing construction-related investment.
• According to the Central Bank of The Bahamas’ (CBOB) Quarterly Economic Review, growth was led by a rebound in high-value stopover arrivals and continued expansion in cruise tourism.
• Tourism sector output maintained healthy gains during the quarter. In the private vacation rental market, total room nights sold increased by 7.7% to 170,989, with bookings for hotel-comparable listings rising 12.5% to 66,155 and entire-place listings increasing 5.0% to 104,834.
• Performance indicators also strengthened, with the average occupancy rate for hotel-comparable listings increasing by 2.9 percentage points to 51.8%, while occupancy for entire-place listings moved higher by 1.1 percentage points to 51.6%. Average daily rates rose 6.8% to US$760.39 for entire-place listings and 1.7% to US$175.68 for hotel-comparable listings.
• According to data from Nassau Airport Development Company Limited, quarterly total departures, net of domestic passengers, rose by 5.4% year-over-year to 0.5Mn. Non-US international traffic expanded by 24.5%, while US departures, which accounted for 83.9% of total passengers, grew by 2.4%.
• Small- to medium-scale foreign investment projects also supported construction activity through residential, resort and private cruise destination developments. Broader economic indicators remained aligned with medium- to long-term trends.
• Meanwhile, the latest labour market data for Q4 2025 showed that the unemployment rate decreased relative to both the previous quarter and Q4 2024. However, inflationary pressures increased, reflecting the pass-through effects of higher global oil prices on imported fuel and other goods and services.
• The Bahamas’ positive growth momentum appears to have extended into Q3, with the CBOB’s July 2026 data showing that tourism output growth strengthened. Total departures from Nassau, net of domestic traffic, increased by 7.1% year-over-year, while vacation-rental room nights sold rose 10.5%. However, the CBOB continues to flag geopolitical pressures and higher imported fuel costs as headwinds to the outlook.

(Sources: The Nassau Guardian & Central Bank of The Bahamas)

• Panama’s economy appears to be entering a stronger growth phase as confidence improves and the major sources of uncertainty that weighed on activity over the past two years begin to fade, according to UBS.
• UBS estimates that Panama’s real GDP will grow by around 5% in 2026, driven by increased household consumption, the recovery of the construction sector, tourism and activities related to the Panama Canal. The firm highlighted that growth reached 5.5% in H1 2026, the strongest performance among major Latin American economies during the period.
• The report also highlighted an improvement in Panama’s fiscal accounts. UBS described the adjustment made by the authorities as “one of the firmest and deepest in recent years among the economies of the Americas,” supported by a reduction in the fiscal deficit and a more stable debt trajectory.
• Panama maintains a favourable position due to the strength of its dollarised system and the increase in private deposits. Since 2024, private sector deposits have increased by approximately US$5Bn to US$6Bn annually, equivalent to about 5% of GDP. However, UBS noted that this liquidity has not yet translated into greater local credit growth.
• Although President José Raúl Mulino’s popularity has declined significantly, UBS noted that the administration has advanced key reforms, improved fiscal performance and maintained strong relations with the United States.
• The Panama Canal also remains a core source of support for the economy. It is expected to remain an important contributor to economic and fiscal activity. Notably, the Panama Canal Authority is projecting US$5.56Bn in revenue and US$3.61Bn in contributions to the national treasury for FY2027, US$414Mn above the amount approved for FY2026. However, potentially difficult water conditions and the possibility of a strong El Niño present downside risks to Canal activity, which could temper one of the key drivers of Panama’s stronger growth outlook.

(Sources: News Room Panama & Reuters)

• UK finance minister John Healey used his first major speech since taking office to present a more optimistic economic message ahead of a difficult budget that is expected to involve tough tax and spending decisions.
• Speaking at a manufacturing hub in central England, Healey announced plans to give city regions more power to attract private investment as part of Prime Minister Andy Burnham’s devolution agenda. He also reiterated his commitment to fiscal discipline and pledged to reduce regulatory costs by 25% before the next election, due in 2029.
• However, much of Healey’s agenda echoes the priorities of his predecessor, Rachel Reeves, and former prime minister Keir Starmer, including a focus on growth, lower regulation and easing the cost of living.
• Healey’s challenge was underscored during the speech by news that Jaguar Land Rover plans to cut 4,000 jobs worldwide over the next two years. Asked about the threat to employment, he said the announcement showed why the government must broaden growth across Britain rather than rely on a few major economic centres.
• Healey declined to comment on tax plans before his October 28 debut budget. Investors remain concerned about inflation risks from higher oil prices, shrinking fiscal headroom and rising spending commitments.
• Healey and Burnham have pledged to keep the fiscal rules adopted by Starmer and Reeves, including a target to balance day-to-day spending with tax revenues by the end of the decade. However, Burnham’s plans for expanded social care and higher defence spending are likely to keep pressure on Healey to raise additional tax

(Source: Reuters)

• Iran’s latest warning that S.-linked energy infrastructure in the Gulf could be targeted highlights the risk of further escalation and renewed disruption to global energy flows. The threat followed another exchange of attacks over the weekend, with no clear sign of diplomatic progress after more than six months of conflict.
• Iran has tightened restrictions on shipping through the Strait of Hormuz, a critical artery for global oil and gas supplies, since the war began with U.S. ​and Israeli strikes on February 28.
• On Sunday, senior Iranian security official Mohsen Rezaei said Tehran would soon announce a new restricted zone in the Gulf and unveil a new shipping corridor through the Strait of Hormuz. He said the zone would begin where a U.S. naval blockade of Iran starts and extend into parts of the Gulf, with any vessel entering the area placed on an Iranian sanctions list.
• The attacks have fuelled fears of a ​renewed Israeli military campaign despite a June ceasefire with the Iran-backed Hezbollah group. They also complicate efforts to end the wider conflict, with Tehran insisting that any lasting agreement with Washington must ​include an end to Israeli attacks in Lebanon.
• Tehran’s clerical rulers remain in power and aim to emerge from the war in a stronger position. They continue to demand sanctions relief and hope eventually to collect fees from ships using the Strait of Hormuz, which carried about one-fifth of global oil and liquefied natural gas shipments before the war. After a relative lull through much of August, hostilities have intensified again following the collapse of an interim ceasefire reached in June, while diplomatic efforts have made little headway.

 (Source: Reuters)

• Jamaica welcomed 2.34Mn visitors and generated approximately US$2.50Bn in tourism earnings as at August 31, 2026. However, arrivals and earnings remained 17.0% and 18.0% below the corresponding 2025 levels, respectively, reflecting the lingering effects of Hurricane Melissa on the sector’s operating capacity and softer demand amid elevated travel costs.
• The decline in arrivals primarily reflects the combined impact of reduced accommodation and airlift capacity, although higher airfares have likely also weighed on demand. Approximately 70.0% of the country’s room stock is currently operational, with several high-demand properties among the remaining 30.0% that are still offline.
• Demand for Jamaica has nevertheless remained relatively firm, with visitor arrivals recovering faster than room inventory. Airlines have maintained their routes to the island, with available flights reportedly operating at high load factors, which has helped preserve the country’s relationship with airline partners
• However, airlift remains below pre-hurricane levels and continues to face both domestic and global constraints. Reduced service on key US routes and the loss of Spirit Airlines have limited lower-cost seat availability to Jamaica. More broadly, delayed aircraft and engine deliveries, spare-parts shortages and constrained maintenance capacity are restricting airlines’ ability to expand fleets and routes. These pressures, together with elevated fuel costs, have raised operating expenses and contributed to higher airfares.
• The recovery also faces external headwinds from the global aviation industry, where elevated oil prices, due to the US-Iran conflict, have translated into higher airfares and limited airlift capacity. Elevated travel costs could temper demand, particularly among price-sensitive visitors, and slow the conversion of restored room inventory into stronger arrivals and tourism earnings.
• The restoration of the remaining room stock is expected to extend from late 2026 into Q1 2027, limiting the pace at which visitor arrivals and earnings can return to pre-hurricane levels. This timeline is consistent with the Government’s earlier expectation that room capacity would approach 95.0% by December 2026 and be fully restored during Q1 2027.
• Near-term tourism activity is therefore likely to remain below its 2025 performance, as accommodation shortages, reduced airlift and elevated travel costs constrain the recovery. However, average expenditure per visitor remained relatively stable at approximately US$1,068, compared with US$1,082 in the prior year, indicating that the decline in tourism earnings has been driven primarily by lower arrivals rather than weaker visitor spending. The phased reopening of major properties should support a stronger recovery through late 2026 and into 2027, providing an important lift to services exports and broader economic activity.

(Sources: JIS & NCBCM Research)

• Jamaica’s external position continued to show weakness to start 2026 as the current account surplus narrowed dramatically compared with a year earlier, driven primarily by falling goods and services exports in the aftermath of Hurricane Melissa.
• Goods exports contracted 22.1% year-on-year in Q1 2026 on substantially lower mining production and shipments, while services exports, driven largely by tourism, fell by 20.1% year-on-year as visitor expenditures saw a sharp contraction. Imports fell only moderately, supported by a significant expansion of capital goods and transport imports aligned with ongoing storm recovery efforts.
• Meanwhile, inbound remittances, though slowing from Q4 2025, still grew by a healthy 7.4% year-on-year, which helped prevent a more severe deterioration of the current account. Even so, the surplus barely remained in positive territory, a notable result for a historically strong quarter. This weakness in Q1 2026 is a continuation of trends seen to end 2025. (see fig 1).
• Continued weakness from Jamaica’s external sector is expected for the remainder of 2026, with the current account projected to flip from a surplus of 1.5% of GDP in 2025 to a deficit of 3.8% in 2026. This deterioration will be driven by a broad continuation of the forces that narrowed Jamaica's trade and current account surpluses in Q1, with weakening goods and services exports and rising imports underpinning this view.
• Visitor arrivals will continue to weigh on services receipts – especially as higher crude prices push travel costs up and tourism demand down. Furthermore, sluggish bauxite and alumina production portends continued goods export weakness. Finally, while strong remittance inflows will continue to support the current account in the near and medium term, growth of these crucial flows has continued to slow after surging post-Melissa, a trend that will coincide with the current account changing to deficit through year-end 2026.
• As a net energy importer, the economy is acutely vulnerable to changes in global energy costs, with monthly fuel imports rising dramatically in March (+20.1% y-o-y) and April (+12.3% y-o-y) in tandem with surging fuel costs following the onset of the Iran-US conflict. While energy prices eased in June and July, a resumption of tensions in the Middle East has driven prices back up, which will again weigh on Jamaica's trade balance for the year. Therefore, as seen in Q1, rising capital goods imports for ongoing reconstruction efforts, along with the resurgence in fuel prices will further pressure the trade balance.
• External debt and investment positions continue to pose limited risks to macroeconomic stability. External debt increased modestly from US$14.2Bn (64.9% of GDP) to US$14.6Bn (65.1% of GDP), driven by higher long-term borrowing alongside a slight decline in short-term liabilities. Consequently, short-term debt accounted for just 20.1% of total external debt in Q1, down 0.6 percentage points from Q4, and remained more than twice covered by Jamaica’s robust foreign reserves. Jamaica's net international investment position also remains sound, with direct investment accounting for the majority of IIP liabilities. That said, quarterly current account deficits are expected in the near and medium term, which will likely widen the Net International Investment Position (NIIP) as a (negative) percentage of GDP – as seen in Q4 2025 – especially as nominal GDP growth takes a hit post-Melissa in 2026.
• Risks tilted toward a wider current account deficit over the near term, particularly if the Iran-US conflict intensifies and keeps oil prices elevated for a protracted period, driving both stronger imports and weaker tourism demand.

(Source: BMI, a Fitch Solutions Company)

• Trinidad and Tobago (T&T) could emerge as a major regional oil and gas processing hub over the next decade, provided it successfully develops new deepwater resources and secures additional Venezuelan gas supplies. Former Energy Minister Kevin Ramnarine identified BP’s Calypso project, Venezuelan gas developments such as Dragon and Loran, and a potential ExxonMobil ultra-deepwater discovery as the key pillars underpinning this opportunity.
• The prospect represents a potential reversal of T&T’s prolonged decline in natural gas production. Gas output has fallen by about 40% from its 2010 peak of 4.3 billion cubic feet per day (bcf/d) to below 2.5 bcf/d. This has contributed to weaker energy-sector Gross Domestic Product (GDP), the closure of industrial plants at Point Lisas and underutilisation of Atlantic LNG. Against this backdrop, the expected start-up of new projects could provide a significant boost to production.
• Manatee is expected to be central to that recovery, with first gas targeted for the fourth quarter of 2027 and production estimated at about 610 million cubic feet per day (mmcf/d), equivalent to roughly 25% of current national output. Together with EOG Resource’s Coconut and BP’s Ginger projects, Manatee could help lift national gas production towards 3 bcf/d in 2027, although the full economic impact is expected to become more evident in 2028.
• Beyond domestic production, Venezuelan gas could further strengthen T&T’s position as a regional processing hub. Projects including Dragon, Loran and potentially Coquina-Manakin could provide additional supplies, while T&T’s existing processing infrastructure and available capacity offer an attractive base for handling Venezuelan gas. This, however, would make the country’s ability to capture the broader economic benefits of these projects increasingly important.
• In this regard, greater local participation could determine how much of the anticipated investment translates into domestic economic activity. Ramps Logistics Limited, executive Javed Razack estimated that T&T could capture US$400–500Mn of the roughly US$2Bn Manatee investment but argued that stronger enforcement of local-content rules is needed to ensure more spending reaches domestic businesses and workers. Such participation could generate wider benefits through employment, taxes, business activity and foreign-exchange earnings.
• Nevertheless, the expected energy revival should not be viewed as an immediate fiscal windfall, highlighting the need for T&T to plan beyond the next gas cycle. Economist Indera Sagewan cautioned that government revenues will initially be constrained as energy companies recover their capital investments, while weaker production in 2026 continues to pressure foreign-exchange earnings and the country’s debt-to-GDP ratio remains elevated at about 84%. Consequently, the country has been urged to use the coming energy upswing to develop new economic sectors and industries that can generate jobs, foreign exchange and government revenue long after its natural gas resources decline.

(Source: Trinidad & Tobago Guardian)

• St Lucia is set to become the latest Caribbean country to participate in the United States’ (U.S.) third-country nationals (TCN) programme, with the first six migrants arriving this week under an agreement that will see the island receive up to 10 people per quarter over the next two years. The government said the individuals will either be voluntarily repatriated to their countries of origin or supported in integrating into St Lucia if they choose to remain.
• The arrangement forms part of a broader regional trend, with several Caribbean countries pursuing similar agreements with Washington, albeit under different terms. Jamaica has agreed to receive up to 25 TCNs every two weeks, while Panama and Costa Rica have also accepted transfers, with Costa Rica so far receiving hundreds of people under its agreement (25 deported migrants a week). Meanwhile, Antigua and Barbuda has stressed that its non-binding understanding with the U.S. has not yet been operationalised.
• For the smaller Caribbean states involved, however, the issue extends beyond migration policy to questions of capacity, security and the potential economic and diplomatic benefits of closer cooperation with the U.S.
• CARICOM leaders have acknowledged the importance of the US relationship while cautioning that third-country arrangements must not overwhelm national resources, undermine security or divert services from citizens. They have also emphasised that the agreements are intended primarily to facilitate transit to migrants’ home countries rather than permanent settlement.

(Sources: Caribbean Today, JIS, The Guardian, Third Party Deportation Watch)