Strong Tourism Rebound To Support Growth In Jamaica, But Outlook For 2023 Weakening  

 

• Fitch Solutions revised up Jamaica’s real GDP growth forecast for 2022 to 3.6% from a previous 2.9%, on the back of a strong rebound in international tourism. Latest data show real growth came in at a relatively robust 4.8% y-o-y in Q222, following a 6.5% print in Q122.
• On a seasonally-adjusted quarter-by-quarter basis, real GDP growth accelerated to 1.3% in Q222, from 0.6% in Q122, driven by a recovery in services. Despite this robust performance, Fitch expects growth to slow over the coming quarters amid rising economic headwinds and less favourable base effects. Consequently, it has revised down its growth forecast for 2023 from 5.2% to 2.9% due to elevated inflation, tighter financing conditions and a substantial slowdown in US growth.
• Additionally, it is expected that private consumption will add 2.5pp to growth in 2022, down from an estimated 3.2pp in 2021, as elevated inflation erodes real household disposable incomes. Inflation stood at 9.3% y-o-y in September 2022, down from a peak of 11.8% y-o-y in April but still at multi-year highs and comfortably above the Bank of Jamaica (BOJ)'s 4.0-6.0% target range.
• On the other hand, the positive follow-through effects of the recovery in tourism on jobs and incomes will prevent a sharper slowdown in household spending in H222. Indeed, consumer confidence improved slightly during Q322 according to the latest quarterly survey conducted for the Jamaican Chamber of Commerce (JCC).

(Source: Fitch Solutions)