Kingston, Jamaica – The Bank of Jamaica (BOJ) now forecasts a faster economic recovery. This follows the severe impact of Hurricane Melissa. The nation’s economy should fully rebound within two to three years. This outlook is an improvement. Previous estimates placed recovery at three to four years. BOJ Governor Richard Byles shared this positive news. He spoke at a recent press conference. This marks a significant development for Jamaica’s business sector.
Hurricane Melissa’s Devastating Toll
Hurricane Melissa struck Jamaica in late October 2025. It was a powerful Category 5 storm. The hurricane caused widespread destruction across the island. Initial damage estimates were high. Some models suggested losses could exceed US$20 billion. This amount is nearly Jamaica’s entire 2024 GDP. The storm hit agriculture and infrastructure hard. Western parts of the country were particularly affected. Many communities are still recovering from its impact.
Faster Recovery Forecasted
Governor Byles highlighted key reasons for the improved outlook. He noted an anticipated quicker rebound in agriculture. Electricity and telecommunications services are also recovering faster. These sectors are crucial for economic activity. Therefore, the BOJ expects less severe economic contraction. The fiscal year 2025/26 anticipates a GDP decline of -1 to -3 percent. This is a smaller contraction than initially feared. For fiscal year 2026/27, growth is projected at 1 to 3 percent.
Sectoral Drivers of Growth
Agriculture is expected to be a strong contributor to recovery. It faced a significant decline post-hurricane. However, it is projected to partially recover by 5 to 10 percent next year. This follows an estimated 15 to 20 percent drop. Rebuilding efforts will also boost construction. Electricity and telecommunications services are vital. Their rapid restoration supports business operations. Tourism, while impacted, is also expected to see a rebound.
Economic Resilience and Reserves
Jamaica’s current account balance is expected to weaken. This is due to reduced tourism and higher import costs. Rebuilding efforts require significant imports. However, remittances and insurance receipts will temper this. The current account may see a deficit of 0.5% to a surplus of 0.5% of GDP for FY2025/26. Despite this, Jamaica’s international reserves remain exceptionally strong. As of February 19, 2026, reserves hit a historic high of US$6.8 billion. This provides about 155.8 percent of the benchmark adequacy. These reserves offer a robust buffer against shocks. They were strengthened by catastrophe bonds and IMF support.
Fiscal Policy and Inflation
The government temporarily suspended fiscal rules. This allows increased spending for recovery. Reconstruction spending is vital for rebuilding. However, it can pose inflation risks. The BOJ believes the new tax package will not hurt growth. Deficit-financed rebuilding will inject sufficient demand. This should offset potential demand compression from taxes. Inflation initially rose after the hurricane. However, it has cooled faster than expected. Annual inflation was 3.9 percent in January 2026. The BOJ recently cut its policy rate to 5.50 percent. This signals confidence in easing price pressures. Inflation is expected to stay within the 4-6 percent target range. Temporary breaches might occur in mid-2026.
Cautious Optimism for Jamaica
The Bank of Jamaica projects a path toward full economic recovery. This recovery will happen within two to three years. Key sectors are showing signs of resilience. Strong international reserves provide a safety net. Fiscal policy aims to support rebuilding. While challenges remain, the outlook is cautiously optimistic. This news offers a hopeful sign for Jamaica’s business and economic future. It is a testament to the nation’s determination.