External Sector Under Pressure as Exports Fall in Q1 2026

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)