IMF expects Jamaica's economy to grow 1.3% this fiscal year as Hurricane Melissa recovery continues

KINGSTON, Jamaica. Jamaica's economy is recovering gradually from Hurricane Melissa and should grow by 1.3 per cent in the 2026/27 fiscal year after contracting by 1.2 per cent in 2025/26, the International Monetary Fund said on Wednesday.

An IMF team led by W. Raphael Lam met Jamaican officials, the private sector, civil society and development partners in Kingston from 27 October to 4 November for the fund's annual Article IV consultation.

"Jamaica's strong policy frameworks and sustained reforms have underpinned its resilience in the aftermath of hurricane Melissa, the strongest in Jamaica's recorded history," Mr Lam said in a statement at the end of the mission.

Outlook

The IMF expects output to return to its pre-hurricane level by mid-2027, helped by reconstruction and a recovery in tourism. Inflation, driven largely by higher energy and food prices, has risen above the Bank of Jamaica's target band of 4 to 6 per cent but is projected to return within it by mid-2027.

The current account deficit is expected to widen this fiscal year, though reserves remain adequate. The fund said risks to growth were tilted to the downside, citing energy and food prices linked to conflict in the Middle East, drought from El Niño, tighter global financial conditions and possible delays in reconstruction and in restoring tourism capacity.

Fiscal and monetary policy

The mission said the government was right to ease fiscal policy after the hurricane and to activate the escape clause in its fiscal rule. It welcomed the new National Reconstruction and Resilience Authority but said procurement, contract management and coordination between agencies needed strengthening to speed up rebuilding.

Public debt reached about 66 per cent of GDP in 2025/26. The authorities expect it to fall to about 60 per cent by 2031/32, although the IMF said a faster path could be considered.

The fund backed the central bank's rate rise in September and said monetary policy should stay tight. It also called for greater exchange rate flexibility and a gradual scaling back of foreign exchange interventions.

The IMF described the financial system as resilient, with strong bank capital and liquidity, but urged attention to cyber risks and progress on the "Twin Peaks" supervisory framework.

It said stronger energy security, a faster move to renewables, lower crime, lighter regulation for businesses and better education and skills would help lift Jamaica's growth potential.