Jamaica’s Growth Outlook Improves for 2026, but Inflationary Pressures Intensify

• The International Monetary Fund (IMF) has revised Jamaica’s 2026 growth forecast upward to 0.0%, from a projected contraction of 1.2% in April, reflecting a better near-term outlook. However, the 2027 forecast was lowered to 2.4% from 3.1%, signalling a slower recovery than previously anticipated. The projected growth remains slightly below the regional forecast of 2.5%, although it is expected to outperform several Caribbean peers including The Bahamas (1.9%), Belize (2.0%), and Barbados and Trinidad & Tobago (2.2%).
• Jamaica’s economic performance remained weak in the first half of 2026, following the disruption caused by Hurricane Melissa in October 2025. Real GDP contracted by 4.1% year-on-year in Q1 2026 and 2.9% in Q2, although the pace of contraction moderated as economic activity gradually recovered. Mining and Quarrying (-26.1%), Agriculture, Forestry & Fishing (-15.3%) and Accommodation & Food Service Activities (-12.3%) were among the hardest-hit sectors in Q2, reflecting lingering damage to productive capacity and subdued tourism activity.
• Domestically, the recovery is expected to gain momentum as reconstruction spending increases and productive capacity is restored. The deployment of international financing of up to US$6.7Bn since Hurricane Melissa, and the anticipated ramp-up in expenditure through the National Reconstruction and Resilience Authority (NaRRA) should support construction activity, employment and the recovery of key sectors from late 2026 onwards. However, elevated energy prices, drought conditions and the pace of tourism and agricultural recovery remain key risks to the growth outlook.
• Meanwhile, inflation accelerated to 8.6% in September from 7.9% in August, driven primarily by higher food prices amid drought conditions, alongside elevated transport and housing costs. The persistence of inflation above the Bank of Jamaica’s (BOJ’s) 4.0%–6.0% target range reinforces expectations of further monetary tightening, with Fitch BMI analysts anticipating a further 50-basis-point policy rate increase at the November 18 meeting. As such, higher borrowing costs and persistent price pressures are expected to constrain consumption and weigh on the pace of the economic recovery.

(Sources: Radio Jamaica News Online, IMF, STATIN, BOJ, and NCBCM Research