Jamaica's Current Account Surplus to Narrow As Imports Grow

• Jamaica’s current accounts surplus is expected to grow to 0.8% of GDP in 2021 and 0.6% of GDP in 2022, from a 0.1% deficit in 2020. In Q121, remittance inflows brought in USD742.0mn, which was enough to offset most of the goods trade deficit of USD770.1mn. It is expected that this trend will continue throughout 2021, resulting in Jamaica’s first current account surplus since 1994. However, moving into 2022, sustained import demand will begin outweighing the impact of service exports and remittances, narrowing the current account surplus. 
• The goods trade deficit is expected to continue to widen in 2022 as rebounding economic activity leads to import growth of 8.5%. Real GDP growth of 4.1% is expected in 2022, with a rebound in private consumption boosting goods import demand. In the year through May 2021, goods imports have grown 24.0%. Import growth should decelerate in the coming months as base effects fade, though Fitch still expects it to outweigh the 5.5% growth that it forecasts for goods exports. 
• Overall, the goods trade deficit will widen to USD3.6bn in 2022, up from USD3.2bn in 2020 and USD2.9bn in 2021, and will be the largest contributor to the narrowing of the current account surplus in the coming quarters.

(Source: Fitch Solutions)