Jamaica Economic Forecast

After expanding more strongly in Q1 due to improvements in both the services and goods-producing sectors, the economy likely continued to grow in Q2. In April–May, total visitor arrivals rose nearly 20% year on year, boding well for the recovery in tourism. Additionally, mining and quarrying output rose over 160% annually in Q2, according to early estimates, amid robust activity at the Jamalco alumina refinery. Q2 also saw inflation decelerate from Q1, and the unemployment rate hit an all-time low, while private-sector wages reportedly rose in April. These factors point to firm household spending. In other news, Jamaica unlocked a USD 866 million disbursement from the IMF on 31 August, following the first review of two loan programs signed in March. The funds will support climate resilience and green transition projects and help shield the economy from external shocks.

Inflation rose to 6.6% in July (June: 6.3%) on higher food price growth. However, the Central Bank left interest rates at 7.00% at its 16–17 August meeting on lower core inflation. Price pressures should moderate from 2022 in 2023 but will remain above the 4.0–6.0% target. A tighter-than-expected labor market and potential commodity price spikes pose upside risks.