Jamaica Economic Outlook
Annual economic growth eased to 3.8% in Q4 (Q3: +5.9% yoy) due to softer expansions in the services and agricultural sectors. Within the former, hospitality and retail growth decelerated significantly amid a dwindling recovery in tourist arrivals. That said, the industrial sector saw a stronger expansion in Q4, thanks to mining output almost doubling due to the reopening of the Jamalco alumina refinery. In Q1, available data shows a positive picture: In January–March, inflation continued to decline, while in January–February, net remittances continued to increase—likely boosting private spending. Moreover, year-on-year tourist arrivals jumped by 152% in January, reaching 88% of their pre-Covid January 2020 level. This ongoing recovery bodes well for services activity in both Q1 and the year as a whole.
Inflation waned to 6.2% in March (February: 7.8%), the lowest rate in twenty months, due to lower energy prices. However, food prices continued to rise. In 2023, inflation should rise slightly from current levels and average above the Central Bank’s target range of 4.0–6.0%. A wage-price spiral amid labor shortages is the main upside risk.