Jamaica’s economy contracted 5.9% January to March — PIOJ

Jamaica's economy experienced a significant downturn in the first quarter of 2026, with a contraction of 5.9% in GDP, according to preliminary estimates from the Planning Institute of Jamaica (PIOJ).

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The hurricane’s impact was further compounded by weakened demand, largely reflecting the intensification of geopolitical tensions in the Middle East, which disrupted supply chains, drove up energy prices, and curtailed trade flows, thereby dampening external demand.

The primary driver of this economic decline was the devastating impact of Hurricane Melissa, a Category 5 storm that struck the island in October. The hurricane severely affected both the goods-producing and services industries, which contracted by 11.2% and 4.1% respectively. The mining sector bore the brunt, shrinking by 26.6%, followed closely by agriculture at 20.3%.

Compounding these domestic challenges, global factors such as weakened demand, intensified geopolitical tensions in the Middle East, and rising energy prices further hampered economic performance. These external pressures disrupted supply chains and curtailed trade flows, dampening external demand.

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This revised projection compared with an initial projection for growth of 1.9 per cent indicating that the shock of Hurricane Melissa resulted in a loss of 3.5 percentage points in real value added output for FY2025/26.

Looking ahead, the PIOJ forecasts continued economic contraction of 3-4% for the April-June quarter. However, there is cautious optimism for a recovery, with projections indicating growth between 1% and 3% for the fiscal year 2026/27. This outlook is contingent on favorable weather conditions and a stabilization of global economic factors. The PIOJ Director General, Dr. Wayne Henry, emphasized that despite the current challenges, there is no immediate threat of a recession.

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Notwithstanding the challenges, Henry said the expectation is for the economy to grow within the range of one to three per cent for FY 2026/27 tied to anticipation for there to be faster growth during the latter half of the current fiscal year.