BMI Lifts Jamaica’s Growth Forecast as Post-Hurricane Recovery Gains Traction
BMI Lifts Jamaica’s Growth Forecast as Post-Hurricane Recovery Gains Traction
BMI now expects Jamaica’s economy to contract by 0.9% in 2026, better than its previous forecast of a 1.1% decline, before rebounding by 2.3% in 2027 as recovery from Hurricane Melissa continues.
Real GDP fell 4.1% year over year in Q1 2026 amid broad-based sectoral weakness, following a 7.1% contraction in Q4 2025 after the hurricane’s October landfall. The contraction was less severe than BMI and official forecasts had anticipated, supporting the upward revision. Seasonally adjusted data also showed Q1 2026 growth improving relative to Q4 2025, signalling early recovery momentum. Consumption remained comparatively resilient. Wholesale and retail trade were nearly flat, with sequential improvement from the previous quarter and inflation still relatively contained – despite supply-side disruptions.
BMI expects growth to resume in Q4 2026 and continue into 2027, supported by a broad-based recovery across industries. Fiscal stimulus should provide an additional tailwind, while the Bank of Jamaica is expected to gradually lower interest rates in 2027 as inflationary pressures fade.
BMI remains moderately upbeat on domestic demand despite near-term inflation pressure. Remittances should continue to support household spending, even as inflows normalise from post-hurricane levels. A stable labour market, including nearly 30,000 jobs added in Q2, together with fiscal stimulus and steady monetary policy, should help limit the depth of the downturn.
The newly established National Reconstruction and Resilience Authority should help mobilise private investment and public projects. In addition, the restoration of power to nearly the entire island is an important recovery milestone, while the marginal rise in electricity consumption in July 2026 points to improving activity.
Risks remain tilted to the downside despite the less severe-than-expected contraction. Renewed tensions between Iran and the U.S. have pushed oil prices higher, raising the risk of stronger domestic inflation and potentially tighter monetary policy. Ongoing hurricane recovery also leaves the economy vulnerable to another major storm, while El Niño-related drought and hotter temperatures could weigh on agriculture and overall output in the near term.
