Slow Rebound in Jamaica's Economy Anticipated in 2025

• While the Jamaican economy is estimated to have contracted by 0.5% in 2024, according to Fitch Solutions, expectations are for the country to grow by 1.0% in 2025, with sluggish external demand offset by steady domestic demand amid the continued economic recovery from Hurricane Beryl.
• Favourable domestic economic conditions influence the growth outlook, including a record-low unemployment rate of 3.5% in the fourth quarter of 2024 (Q4 2024) and 3.7% in Q1 2025, well anchored inflation rates within the BOJ’s target range, and an expected 6.7% minimum wage increase and rise in the income tax threshold from J$1.7Mn to J$1.8Mn in April 2025 that will help to boost disposable income.
• While domestic demand will help growth recover in 2025, Jamaica remains vulnerable to external shocks and challenging global economic conditions. These external factors include flagging U.S. demand, a challenging trade policy environment following Trump’s tariff announcement, and a potentially damaging hurricane season in 2025.
• Concerning the U.S., Fitch anticipates that it will fall into a modest recession over the second half of 2025 (H2 2025), which will have meaningful implications for Jamaica. The U.S. accounted for 47.2% of Jamaica’s total exports in 2023 and 40.9% of total imports. A slowing US economy will, therefore, impact remittances to Jamaica, which made up 18.5% of GDP in 2023 and an estimated 16.9% in 2024.  
• Additionally, slowing economic activity in the U.S. will impact investment levels in Jamaica, as evidenced by sharp declines in foreign direct investment inflows in 2024.

(Sources: Fitch Connect)