Jamaica’s 2023 Outlook – Fitch

  • Fitch Solutions expects real GDP growth in Jamaica will slow to 2.8% in 2023, from an estimated 3.9% in 2022, due to a slowdown in key tourist markets, elevated inflation, and less favourable base effects.
  • Despite slower growth than the previous year, Fitch expects private consumption to remain robust in 2023 as employment and the tourism sector continue to recover from the pandemic.
  • After keeping its policy interest rate fixed at 7.00% at its meeting in December 2022, the agency expects that the Bank of Jamaica will keep the policy rate steady in H123 before cutting it in the second half of the year to 6.50%. It is expected that the Bank will not hike further in 2023 as inflation has shown signs of moderating in Q322, and the pace of US Federal Reserve hiking has slowed.
  • Fitch also kept Jamaica's Short-Term Political Risk Index score at 72.7 out of 100. This is because a high degree of policy continuity is anticipated, given the ruling Jamaican Labour Party's majorities in the Senate and House of Representatives until 2025.
  • The risks remain to the downside, as slower US growth than expected and high crime rates could weigh more heavily on the travel sector. The outlook for monetary policy is for generally higher interest rates in 2023. Furthermore, limits on government spending amid a sharp rise in the cost of living and a high incidence of violent crime will pose risks to social stability.

(Source: Fitch Solutions)