Jamaica’s Economy Contracted in Q1 as Hurricane Impacts Linger

• Jamaica’s economy contracted sharply in the first quarter (Q1) of 2026, with real GDP falling 4.1% year-over-year. That marks a second straight quarterly decline following the landfall of Hurricane Melissa in October 2025, which drove a 7.1% contraction in Q4 2025.
• In Q1 2026, only the financial (+2.9% y-o-y) and manufacturing (+0.6%) sectors expanded, while mining (-25.3%), agriculture (-18.3%), and food and accommodations (-16.6%, a key proxy for tourism) remained weak.
• Higher-frequency indicators echoed the weakness². Bauxite production fell 22.1% y-o-y, passenger arrivals dropped 27.5%, and hectares of domestic crops reaped declined 15.2%. Consumption held up better, however. Wholesale and retail trade slipped just 0.1% y-o-y, an improvement on the 2.2% contraction in Q4 2025, while unemployment slid modestly and price growth stayed relatively contained. The unemployment rate was at 3.7% for Q2 2026. This was 40 basis points higher than the 3.3% seen in both Q2 2025 and Q1 2026.
• Looking ahead, BMI expects the economy to contract 1.1% in 2026, revised from an earlier 1.5% forecast, with the economy contracting through Q3 before turning positive to close the year. Weaknesses in tourism, mining, and agriculture are set to persist: mining output fell again in April (-16.6%) and May (-9.8%), and stopover arrivals dropped 20.4% y-o-y in April. Rising inflation, linked partly to the US-Iran conflict and elevated oil prices, is also expected to weigh on consumption. Additional strong storms, geopolitical uncertainty, and higher-for-longer inflation remain the key downside risks.

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²The Bridgetown Initiative is a Barbados-led proposal to reform the global financial system and improve access to climate and development finance, particularly for small island developing states and other vulnerable countries.

(Source: BMI, A Fitch Solutions Company)