Political Stability To Improve In Jamaica, As Inflation Comes Down And Government Tackles Drug Crime

• Fitch Solutions expects that falling inflation, stable employment, a rebounded tourism industry, and efforts to reduce crime, will improve political stability in Jamaica in 2023.
• According to the agency, inflation will average 4.5% y-o-y, from 10.4% in 2022, supporting social stability. Unemployment remains low at approximately 6.2%, and the latest tourism data suggests that arrivals are back to pre-Covid levels, which will further support earnings, and limit social unrest.
• It is anticipated that the tourism industry will stay strong through most of 2023 and that the sector will employ about 30.0% of the workforce in 2023, up from 23.0% in 2021 as arrivals continue to rebound.
• Crime rates are expected to remain low due to government measures, for example, states of emergency in several municipalities to tackle gang violence and highly visible drug seizures and arrests, which will also support social stability.
• As a result, the Short-Term Political Risk Index (STPRI) increased from 72.7 out of 100 to 73.5 and its ‘social stability’ component from 52.5 to 55.0.
• Risks to the forecast include a stronger-than-expected shock to tourism, ongoing structural problems with gang-related violence, and a potential uptick in crime which can weigh on business activity and tourism.

(Source: Fitch Solutions)