Economic Report
Local Update
Prime Minister Holness Explains Use of NHT Funds, Emphasizes Economic Responsibility and Commitment to Housing
Prime Minister Andrew Holness reaffirmed the Government’s commitment to affordable housing while explaining why J$11.4 billion was taken from the National Housing Trust (NHT) to support Jamaica’s broader economic stability. He emphasized that the decision was grounded in national interest and economic responsibility, not political convenience.
Holness noted that using NHT resources for non-housing national priorities has historical precedent, referencing:
- The 1990s education reform initiative under former Prime Minister P. J. Patterson, which used NHT funds.
- Decisions around 2013, when NHT funds were again accessed to close fiscal gaps during a difficult economic period.
These examples, he argued, show that the NHT has been previously used to support critical national development needs.
Holness stressed that Jamaica’s fiscal reality requires “prudent and sometimes difficult choices.” When deficits arise, the Government has few options:
- Cut essential services
- Raise taxes
- Reallocate available national resources responsibly
He asserted that the public increasingly understands that there are no hidden funds and that international rescue or increased borrowing is not feasible.
The Prime Minister also highlighted that Jamaica’s housing challenges are not solely due to financing shortfalls, and he praised the NHT as an institution that has played a transformative role for 50 years. He maintained that although NHT contributors expect funds to be used for housing, temporary reallocation helps strengthen the wider economy so the Government will not need to continue drawing from the NHT in the future.
| Indicator | Latest Verified Value |
|---|---|
| Inflation (YoY) | 3.9% (Jan 2026) - previously 4.5 |
| GDP Growth (YoY) | +5.1% (Q3 2025) |
| Policy Rate | 5.50% (effective Feb 24, 2026) - BOJ cut from 5.75% |
| Unemployment Rate | 3.3% (Dec 2025) |
The 2026/27 Budget Presentation – Minister Fayval Williams
Finance Minister Fayval Williams opened the 2026/27 Budget Debate on March 10, 2026, outlining a budget shaped heavily by the massive economic and social impact of Hurricane Melissa, which caused an estimated US$8.8 billion (41% of GDP) in damage. The Minister emphasized that the government would pursue fiscal responsibility, economic resilience, and reconstruction, while maintaining Jamaica’s strong international credit ratings (Moody’s (Ba3), S&P (BB), and Fitch (BB)) all with stable outlooks even after the hurricane, which she described as Jamaica’s “oil and gold.”
Major Expenditure Priorities
Minister Williams highlighted several critical allocations totaling billions of dollars, representing “non-hurricane work that must be done,” including:
- $18.8 million to reduce the massive backlog of unaudited public sector financial statements.
- $121 million for relocation of the Office of the Children’s Advocate and $372 million for relocating INDECOM.
- $1.86 billion for rollout of the National Identification System (NIDS).
- $1.5 billion for Rural Economic Development Initiative II.
- $225.5 million for Integrated Community Development Project II.
- $150 million for national cybersecurity strengthening.
- $5.5 billion for secondary road maintenance.
- $760 million for the HOPE housing programme.
- $50.3 billion for pension payments.
Revenue, Fiscal Position & New Measures
The government tabled J$1.441 trillion in expenditure and J$1.338 trillion in revenue and loan receipts, leaving a fiscal gap of J$103 billion. Additional revenue of J$29.6 billion is expected from newly announced tax measures, with the remaining gap to be financed via borrowing.
Notably, after ten years of avoiding net new taxes, the Minister confirmed that new tax measures were unavoidable due to massive post hurricane costs and the need to rebuild essential services.
Key measures include:
- Higher General Consumption Tax (GCT) on tourism (moving from 10% to 15% in 2027).
- New Special Consumption Tax (SCT) on sugary drinks and increased SCT on cigarettes.
- Increase in the Environmental Protection Levy.
Financial Sector Reforms
A major reform proposal was the increase in pension fund investment limits in private companies—
- From 5% to 7.5% initially,
- Then to 10% by April 2027.
This policy could unlock over J$21 billion in private sector financing, catalyzing investment and reconstruction.
Additional reforms:
- Amendments to insurance regulations to make it easier for life insurers to invest in corporate debt, stimulating capital-market deepening.
Global Market Snapshot
United States
The U.S. economy continues to show strong but uneven momentum, with growth supported by fiscal stimulus, tax cuts, and robust AI driven investment even as inflation remains above target and the labor market softens. At the same time, the Middle Eastern war has sharply escalated since March 4, with U.S. and Israeli forces launching intensive strikes across Iran—including Tehran, Qom, Isfahan, and major IRGC compounds—triggering significant Iranian retaliation through widespread missile and drone attacks across the region, airspace disruptions, and soaring regional instability. The U.S. military has sunk Iranian naval vessels, targeted missile infrastructure, and conducted thousands of strikes, while Iran has hit U.S. bases, Gulf states, and attempted to disrupt shipping and energy flows; these developments have intensified oil price volatility and geopolitical risk, adding pressure to U.S. inflation expectations and global markets.
Europe
Europe enters 2026 with gradually improving but still fragile economic conditions, as underlying euro area activity strengthens despite ongoing headwinds from U.S. tariffs, geopolitical tensions, and structural challenges. GDP growth is expected to slow slightly, with higher U.S. trade barriers shaving growth, while inflation stabilizes near 2% and the ECB maintains a steady policy stance; policymakers remain cautious amid global instability and a shifting labor market shaped by AI adoption and competitiveness concerns.
Asia
Asia’s economic outlook is mixed but resilient, with regional markets pressured by oil price shocks, Middle East conflict driven volatility, and weakened external demand, even as AIdriven exports, semiconductor sector strength, and ongoing supply chain diversification support growth in East and Southeast Asia. China faces tempered but still positive momentum amid structural headwinds and cautious investor sentiment, while Japan shows fragile recovery signals and policymakers across the region move carefully as inflation pressures persist and global trade patterns shift.
Impact on Jamaican Investors
Jamaican Local Outlook:
Macro Stability Support: Reallocating NHT funds helps contain fiscal deficits, reducing pressure on interest rates and supporting a more stable environment for bond investors.
Europe:
- Tourism Sensitivity: Slower European growth may dampen outbound travel, posing mild downside risk for Jamaican tourism linked investments (hotels, airlines, attractions).
- Export Demand Softness: Weaker EU economic activity can reduce demand for Jamaican goods and services, affecting companies with Europe exposed revenue streams.
Asia
- Tech Sector Opportunity: Strong semiconductor and AI driven export performance in East Asia offers upside for Jamaican investors with exposure to Asian tech markets.
- Oil & Geopolitical Volatility: Region wide sensitivity to oil shocks and Middle East conflict spillovers can amplify risk in emerging Asian markets, affecting globally diversified portfolios.
United States:
The escalation of U.S.–Iran conflict and broader geopolitical volatility could heighten global market uncertainty and energy price instability, which may translate into increased investment risk and potential capital‑market turbulence for Jamaican investors as global shocks ripple through emerging economies and small open markets like Jamaica’s.
What Jamaican Investors Should Do Now Using MoneyMasters Products
If you want growth:
✔ MoneyMasters Growth Fund — Use the fund to benefit from predictable income streams and potential price appreciation if yields soften.
✔ Equity Fund — Despite U.S. volatility, sectors may outperform. Clients can selectively increase exposure through MoneyMasters’ international equity strategies.
If you want safety + returns:
✔ MoneyBuilder Fund — protects you from global volatility while earning stable income.
✔ Structured Notes (real estate backed) — hedge against global uncertainty with guaranteed or enhanced yields.
If you want long-term real asset protection:
✔ Real Estate Fund — positioned to benefit from Jamaica’s reconstruction boom and global inflation trends.
If you want liquidity:
✔ Repos (Short Term Cash Management) – Use repos for liquidity
Disclaimer: Please note the statements above do not reflect the opinions of MoneyMasters Ltd or its subsidiaries and were attained from sources such as BOJ, STATIN, Yahoo Finance, Jamaica Observer, Trading Economics, IMF, ABC New, CNBC, Global Banking and Finance, Bloomberg.