Economy set to shrink up to 13 per cent, warns PIOJ

Jamaica is bracing for a major economic hit, with the Planning Institute of Jamaica warning that the economy could shrink by 11 to 13 per cent in the October to December 2025 quarter. It would be the worst fall since the COVID 19 pandemic.

PIOJ boss Dr Wayne Henry said the impact of Hurricane Melissa has been far reaching and is expected to push up unemployment and weaken spending across the island.

He explained on Tuesday that the damage to homes, the electricity grid, roads, and water systems is a major factor behind the expected slump.

For the full fiscal year ending March 2026, the economy is projected to decline between 3 and 6 per cent. Henry said the estimate could change as assessments continue.

Seven parishes that were hit hardest by Melissa produce most of the island's agriculture and livestock and nearly all of its tourism infrastructure.

Before Melissa struck on October 28, Jamaica had been on track for strong growth of 3.1 per cent as the country recovered from Hurricane Beryl in 2024 and Tropical Storm Raphael.

GDP grew 4.6 per cent in the July to September quarter this year compared with 2024. Growth was seen in both goods and services. Damage from Hurricane Beryl last year had reached 56.7 billion dollars across several key sectors.

From January to September 2025, the economy grew 2.4 per cent. Goods grew by 5 per cent and services by 1.6 per cent. Unemployment stood at 3.3 per cent, one of the lowest levels on record.

Price increases are also expected after Melissa. The Bank of Jamaica said inflation is likely to rise above its 4 to 6 per cent target band. The BOJ expects inflation to return to normal levels by 2027.

Current estimates place the damage from Hurricane Melissa at 9 billion United States dollars, which is double the earlier figure.

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