Reconstruction Needs to Push Jamaica’s Current Account into Deficit

• In the aftermath of Hurricane Melissa, Jamaica’s current account is expected to return to a deficit in the near and medium term as exports fall and imports rise.
• Jamaica’s recovery effort will require imported construction materials, machinery, fuel, food and medical supplies, which will raise the import bill and widen the trade deficit in the near term.
• Additionally, expectations are for Jamaica’s exports to fall, with service exports declining due to disruptions to tourism, and goods exports decreasing on the back of reduced bauxite production and shipment, as seen in the months following Hurricane Beryl.
• However, the current account will be supported by a likely surge in remittances, with the Jamaican diaspora increasing transfers in response to Hurricane Melissa. Remittances as a percentage of GDP rose from 15.3% in 2019 to 24.4% in 2021 as inflows surged in response to the pandemic, and remittances are expected to accelerate again in 2025 and 2026, buttressing Jamaica’s external position. Additionally, increased foreign aid will also support Jamaica's current account.
• That said, the external sector poses limited downside risk to macroeconomic stability, buttressed by a relatively benign and declining external debt profile, composition and healthy reserve levels. Overall external debt declined to 60.1% of GDP in Q1 2025 from 64.9% in Q1 2024, with short-term debt as a percentage of overall external debt falling from 18.6% to 17.1% over the same period. Nevertheless, while Jamaica has a strong track record of external debt reduction, the expected contraction in GDP, the impact of Hurricane Melissa on revenue inflows and a potential increase in foreign debt to fund recovery efforts could stall this downward trend.
• Additionally, remittances and tourism have supplied the central bank with ample reserves, acquired through surrender requirements, which reached US$6.1Bn in October 2025, covering an estimated 7.3 months of imports. These reserves will be a vital buffer during Jamaica's recovery, helping the central bank to support the local currency while ensuring that the island has the foreign currency necessary to pay for imports.
• Additionally, Jamaica’s net international investment position (NIIP) continued to improve, easing to -100.8% of GDP in Q1 2025, from an estimated -154.7% in Q1 2019, a positive development flagged by the International Monetary Fund (IMF). Furthermore, the composition of Jamaica’s NIIP helps to mitigate risk: direct investment accounted for 52.0% of total liabilities in Q1 2025, up from 48.5% in Q1 2021, while portfolio investment declined from 24.7% of total liabilities in Q1 2021 to just 20.6% in Q1 2025, underscoring Jamaica’s stable external position.

(Source: BMI, a Fitch Solutions Company)