05.06.2026
Jamaica’s economy was severely disrupted in 2025 by Hurricane Melissa, which reversed the recovery seen earlier in the year and damaged key tourism and agricultural regions. Growth is expected to contract again in 2026 as reconstruction bottlenecks, lower tourism receipts and higher import needs weigh on activity, before rebounding in 2027 as affected sectors gradually normalise. Inflation is projected to rise in 2026 due to supply constraints, reconstruction demand and higher energy prices. Fiscal policy has shifted temporarily away from debt reduction to emergency and reconstruction spending, but Jamaica’s strong pre-crisis fiscal framework and debt-reduction record provide important resilience.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | -0.4 | -1.0 | 3.2 |
| Inflation (%, yoy) | 3.9 | 6.4 | 5.5 |
| Upper-middle-income poverty rate ($8.30, 2021 PPP, %) | 19.7 | 19.9 | 18.7 |
| Fiscal balance (% of GDP) | -3.8 | -5.1 | -3.4 |
| Gross public debt (% of GDP) | 68.5 | 67.1 | 65.5 |
| Current account balance (% of GDP) | 1.3 | -5.5 | -4.0 |
Hurricane Melissa reverses the recovery
Jamaica’s real GDP is estimated to have contracted by 0.4% in 2025. Economic activity had expanded in the first three quarters of the year, but Hurricane Melissa caused severe damage in October, especially in western and central parishes that are important for tourism and agriculture. The shock followed earlier disruptions from Hurricane Beryl and Tropical Storm Rafael in 2024.
GDP is projected to contract by a further 1.0% in 2026 before rebounding by 3.2% in 2027. Reconstruction, tourism recovery and the gradual normalisation of agriculture and services should support the rebound. However, uncertainty remains high because rebuilding could be slowed by logistics constraints, labour shortages, high construction costs and additional weather shocks.
Inflation rises after a moderate 2025
Inflation averaged 3.9% in 2025, remaining within the Bank of Jamaica’s target range despite some acceleration after the hurricane. Price pressures were contained by anchored expectations, earlier tight monetary policy and exchange-rate stability.
Inflation is projected to rise to 6.4% in 2026, reflecting supply shortages, higher food, housing and utility costs, reconstruction demand and higher global energy prices. It is expected to ease to 5.5% in 2027, but remain above the 2025 level. The main risks come from fuel prices, food supply, construction-material costs and further climate-related disruptions.
Fiscal balance weakens due to reconstruction needs
Jamaica entered the shock with a strong macro-fiscal record, having reduced public debt from very high levels over the previous decade. However, the fiscal balance deteriorated in 2025 as emergency response and reconstruction needs increased. The fiscal rule has been suspended under its escape clause to allow post-hurricane spending.
The fiscal deficit is projected to widen to 5.1% of GDP in 2026 before narrowing to 3.4% in 2027. Public debt is expected to remain elevated, at 68.5% of GDP in 2025, before declining gradually to 65.5% in 2027. Maintaining revenue mobilisation and disciplined budget management will be important for restoring the debt-reduction path after the rebuilding phase.
External position shifts into deficit
The current account surplus narrowed to 1.3% of GDP in 2025 as lower tourism receipts were only partly offset by remittances. Net international reserves remained comfortable, providing support for exchange-rate stability.
The current account is projected to move into a deficit of 5.5% of GDP in 2026, reflecting reconstruction-related imports, weaker tourism receipts and higher energy costs. The deficit should narrow to 4.0% in 2027 as tourism and agriculture recover, but Jamaica will remain exposed to oil prices, tourism demand, remittance flows and climate shocks.
Overall outlook
Jamaica’s outlook has become more uncertain after Hurricane Melissa. The economy is expected to contract in 2026 before rebounding in 2027, while inflation and fiscal pressures will rise temporarily. Jamaica’s strong fiscal institutions, monetary credibility and disaster-risk financing framework provide resilience, but reconstruction must be efficient and transparent. The main medium-term priorities are rebuilding climate-resilient infrastructure, restoring tourism and agriculture, protecting vulnerable households, maintaining fiscal discipline and accelerating diversification beyond weather-sensitive sectors.
Sources:
World Bank, Jamaica Macro Poverty Outlook, April 2026.
International Monetary Fund, Jamaica: 2025 Article IV Consultation and Staff Report, June 2025.
International Monetary Fund, Jamaica: Request for Purchase Under the Rapid Financing Instrument, January 2026.
International Monetary Fund, World Economic Outlook, April 2026.
Bank of Jamaica, Monetary Policy Reports and Policy Decisions, 2025–2026.
Government of Jamaica, Fiscal Policy Paper FY2026/27.
