Private Consumption and Investment Growth Expected in 2022, However, Pandemic Poses Risks to Recovery

• Private consumption will grow by 4.2% in 2021 and 3.5% in 2022 as the return of the tourism industry boosts employment in Jamaica, according to Fitch Solutions. The tourism industry represented approximately 29.0% of employment in 2019. As activity in the industry gathers pace in the coming quarters, it is expected that firms will re-hire workers, driving down unemployment. 
• Unemployment was 9.0% in Q221, below the 12.6% in Q320 but still above the average of 7.7% in 2019. Unemployment is forecast to average 7.9% in 2022, which will boost household incomes and private consumption. 
• At the same time, a strong labour market in the US, where the majority of Jamaican expatriates work, will bolster continued remittance inflows. Remittances accounted for 15.2% of GDP in 2019, and in the year through July 2021, increased 30.4% y-o-y. Strong remittance inflows will further support household incomes and private consumption. 
• A brighter outlook for tourism will drive a 4.0% increase in investment in 2021 and 3.5% in 2022. In Q221, Tourism Minister Edmund Bartlett announced the economy would benefit from approximately USD2.0bn in investment in the tourism industry in 2021 and 2022. Additionally, the government passed the Casino Gaming Amendment Act in July, which will facilitate the construction of casinos in the years ahead. The continued global spread of COVID-19 poses downside risks to Jamaica’s recovery. It increases the possibility that more vaccine-resistant variants of COVID-19 will develop and weaken the demand for global travel and threaten Jamaica’s recovery.

(Source: Fitch Solutions)