H221 Recovery To Continue Into 2022 As Tourism Activity Approaches Pre-Pandemic Levels In Jamaica

• Renewed tourism activity in Jamaica will drive real GDP growth of 4.6% in 2021 and 4.1% in 2022, up from a 9.9% contraction in 2020 according to Fitch Solutions. This is an upward revision from its previous 2021 forecast of 4.4%. It follows the Q2 2021 data which showed quarterly growth of 14.2% y-o-y (seasonally adjusted 2.4% q-o-q).
• The modest easing of travel restrictions and more limited overnight curfew in Q2 2021 supported tourism arrivals and commercial activity. Tourism historically accounts for roughly one-third of economic activity. Foreign arrivals increased 5,065.1% y-o-y in Q2 2021, a figure that is inflated by the near-complete shutdown of the tourism industry in Q2 2020 amid the onset of the COVID-19 pandemic. Q2 2021 arrivals were 61.2% below Q2 2019, suggesting that the Jamaican economy remains well below its pre-pandemic level. Fitch forecasts Jamaican real GDP will not return to pre-pandemic levels until 2023.
• Real export is expected to grow 8.2% in 2021 and 3.8% in 2022 as high levels of COVID-19 vaccinations in key source markets will support tourism inflows to Jamaica and services exports. The US, UK and Canada, key tourism source markets, ramped up their vaccination campaigns in H1 2021, with at least 65.0% of their respective populations receiving at least one dose of a coronavirus vaccine as of October 2021. This is expected to underpin greater demand for overseas travel.
• Moreover, airline and cruise ship companies have announced plans to increase travel options to Jamaica. American Airlines announced that it would resume direct flights to Jamaica in December 2021, with 17 nonstop flights per day. Meanwhile, Carnival announced that 110 cruises will stop in Jamaica from October 2021 to April 2022, while Royal Caribbean announced that it would resume cruises to the country beginning in November 2021.

(Source: Fitch Solutions)