Slowing Jamaican Economy Likely to Increase Political Risks Prior To 2025 Elections

• Jamaican growth appears to be slowing in 2024, undershooting prior downbeat projections of 2.4% (previously 2.6%), which raises some downside risk to social stability and, in turn, the popularity of the ruling Jamaica Labour Party (JLP) ahead of next year’s general elections, according to Fitch Solutions.
• Data from the Planning Institute of Jamaica (PIOJ) suggests that growth may have slowed to just 0.1% y-o-y in Q2 2024, following a real GDP growth of 1.4% in Q1 2024. Additionally, the PIOJ’s Q2 report found that July air arrivals were down 7.7% y-o-y, which indicates a slowdown in the tourism sector. The sector accounted for 29% of employment in Jamaica before the pandemic, according to the World Travel and Tourism Council. Against that background, Q3 2024 is unlikely to have brought much relief, given the onset of Hurricane Beryl in July.
• Crime will likely be a central topic in the 2025 elections, given Jamaica's high regional violent crime rate, notes Fitch Solutions. However, data from Jamaica's Constabulary Force indicates that from January 1 to August 31, murders have decreased by 15.8% y-o-y and shootings by 3.0%. Still, a slowdown in economic activity in the coming months may reverse these positive trends.
• Crime levels have been mostly consistent and may even be declining, but are still quite high relative to the rest of Latin America and the Caribbean, which also slightly increases social stability risks.
• Fitch notes that economic activity is likely to slow further than its previous expectations, influenced by the slowing US economy. Given the strong economic ties between Jamaica and the US, Fitch expects that this development could hinder JLP’s campaign in 2025. It went on to highlight that a moderating Jamaican economy can lead to higher crime rate, especially as unemployment increases (5.4% as at January 2024).

(Source: BMI Fitch Solutions)