BOJ’s Financial Stability Report Reveals that Jamaican Economy Fully Recovered in 2022

• The Bank of Jamaica’s Financial Policy Committee (FPC) issued a statement on April 30, 2023, regarding its review of the financial system’s performance for 2022 published in its annual financial stability report.
• According to the committee, the Jamaican economy had recovered to its pre-pandemic output levels towards the end of 2022, with real economic activity for the year was estimated to have expanded between 4.5% and 5.5%.This was mainly due to the strong recovery in the tourism and manufacturing sectors. The recovery contributed to improvements in key macroeconomic indicators such as the unemployment rate and public sector indebtedness.
• Furthermore, in an effort to stem rising inflation, central banks across the world, including the BOJ, tightened monetary policy in 2022. “Stress tests were carried out on the various financial sub-sectors in order to evaluate their resilience to adverse scenarios involving further increases in interest rates and the spill-over effects of an external recession on the Jamaican economy. The results showed that the financial system remained broadly resilient to these shocks.”, the statement noted.
• In addition, the committee indicated that despite the highly interconnected interbank funding network, simulation results suggested a low level of spill-over and contagion risks in response to the recent international bank failures.
• Overall, the BOJ's Financial Policy Committee's statement provided a positive outlook on the state of Jamaica's economy and financial system while also acknowledging the need for continued vigilance and proactive measures to maintain stability and promote growth.

(Source: BOJ)