Economic Report Jan 09,2026
written by Paul Hall
Executive Summary
Jamaica’s economy showed strong growth in early 2025, with GDP rising 1.1 % in Q1, 1.6 % in Q2, and 5.1 % in Q3, but Hurricane Melissa in October caused severe disruption, leading to an estimated 11–13 % Q4 contraction and a projected 3–6 % decline for FY 2025/26, with modest recovery expected in 2026. Inflation climbed to 4.4 % in November, driven by food and energy shortages, while the Bank of Jamaica held its policy rate at 5.75 % to contain pressures. Tourism rebounded to 80 % of pre-hurricane levels by December, generating US $475 million, though air traffic remained down, and trade deficits persisted with imports rising and exports falling.
Globally, the U.S. capture of Venezuela’s President Maduro on January 3, 2026—citing narcoterrorism and drug trafficking charges—sparked geopolitical tensions, raised questions of sovereignty, and shifted control over Venezuela’s vast oil reserves. For Jamaica, this event amplifies regional uncertainty, potentially increasing borrowing costs, FX volatility, and inflation risks, while creating opportunities for closer U.S. alignment and strategic positioning.
| Indicators | Jamaica's Statistics |
|---|---|
| Inflation (YoY) | 4.4 % (Nov 2025) |
| GDP Growth | +5.1 % YoY (Q3 2025) |
| Policy Rate | 5.75 % (Dec 2025) |
| Unemployment Rate | 3.3 % (Q3 2025) |
Macroeconomic Performance
GDP Growth
- Strong rebound early in the year: +1.1 % YoY in Q1 2025, driven by goods and services sectors.
- Q2 growth stronger than expected at +1.6 % YoY.
- Q3 2025 recorded robust +5.1 % YoY, surpassing earlier estimates.
- However, Hurricane Melissa (Oct 28, 2025) triggered a sharp contraction of 11–13 % in Q4, with fiscal year 2025/26 expected to contract by 3–6 %. Forecasts point to modest recovery in 2026 (+1–3 %).
Inflation
- Rose to 4.3–4.4 % in Nov 2025—driven partly by hurricane-related food and energy supply disruptions.
- Monthly CPI climbed 2.4 % in Nov, the highest since 2013, led by sharp increases in food prices (+6 % MoM).
Monetary Policy
- Bank of Jamaica held the policy rate steady at 5.75 % in December 2025 to manage inflationary pressures from hurricane disruptions.
- Core inflation is projected to rise due to second-round effects, prompting the central bank to remain vigilant.
Tourism Recovery After Hurricane Melissa
- Approximately 80 % tourism rebound observed by December 2025, generating US $475 million from over 445,000 visitors.
- All airports and nearly all hotel corridors reopened.
- Air traffic at Sangster International Airport still down ~44 % YoY in Dec 2025; Norman Manley Airport also slightly weaker.
Trade Balance
- Persistent trade deficit: approximately –US $1.14 billion in Q2 2025.
- January–July 2025: imports grew 3.8 % to US $4.52 billion while exports fell 2.9 % to US $1.06 billion.
JMD Currency Market
- The Jamaican Dollar (JMD) is currently trading at approximately J$158.4 per US$1.
- Over the past year, the JMD has slightly depreciated (~1–1.3% against USD), though volatility remains low day-to-day.
- BOJ continues to monitor and intervene as necessary to maintain stability
Jamaican Real Estate Market
- The Jamaican market remains segmented: the luxury segment (Northern Corridor including Hanover, St. James, St. Ann, parts of St. Andrew) remains strong due to foreign investment and tourism.
- A mid-2025 snapshot notes a median residential listing price of J$41 million, with variations: townhouses ~J$65M, apartments ~J$46M, and houses at ~J$38M.
- Key dynamics: luxury demand remains robust, while the affordable housing segment lags, challenged by rising borrowing costs and construction expenses.
International Steel Futures
- S. Midwest Hot‑Rolled Coil (HRC) steel futures are currently trading around US$938–940 per metric ton as of January 16, 2026. This is up ~3.4% over the past month and ~35% higher year‑over‑year, reflecting sustained strength in the steel market.
- Physical U.S. sheet-market spot prices for HRC are higher, ranging US$900–950/ton as of early January 2026, supported by tight supply and firm scrap expectations.
International Lumber Futures
- Lumber futures (near‑dated) climbed above US$600 per 1,000 board feet, reaching US$610.50 on January 15, 2026—the highest level in nearly three months.
- January 2026 CME Lumber (LBRF26) shows ~US$530/MBF in recent sessions on financial platforms, suggesting contract‑month variation.
- Framing lumber (physical) entered January 2026 at US$872/MBF, down 3.44% from Q4 2025 but up 1.5% year‑over‑year
Global and Domestic Impact of US Capturing Venezuela’s President
On January 3, 2026 CNN reported, the United States executed a highly coordinated military operation to capture Venezuelan President Nicolás Maduro. Acting on U.S. indictments charging Maduro with narcoterrorism, drug trafficking, and weapons offenses. In a pre-dawn raid on Caracas, elite U.S. forces launched airstrikes on key sites to disable defenses before swiftly seizing Maduro and his wife, Cilia Flores. Subsequently, CNN reported that both were flown to the United States and appeared in a New York court on January 5, where they pleaded not guilty to multiple narcotics-related charges, including narco-terrorism and conspiracy to import cocaine.
Geopolitical Implications
- Violation of international law & sovereignty norms
The unilateral US military operation—airstrikes in Caracas followed by the forcible extraction of President Maduro—constitutes a clear breach of Venezuela’s sovereignty and the UN Charter, raising legal and diplomatic alarms globally.
- Reassertion of Monroe Doctrine
This marks the most assertive US intervention in Latin America since the Panama invasion (1989), reinforcing Washington’s willingness to project hard power in its hemisphere and sway regional diplomatic alignments.
- Regional backlash & global condemnation
Governments across Latin America, including Brazil and the UN Secretary-General, condemned the action as a “grave affront” and “dangerous precedent.” China and Russia have also denounced it, signaling rising tensions in great power dynamics.
- Oil and strategic asset control
With Maduro removed, the US may gain direct influence over Venezuela’s vast oil reserves, potentially reversing previous Sino–Venezuelan agreements. China’s significant investments—about $60 billion—are now at risk.
Impact on Jamaican Investors
- Global market volatility & investor sentiment
The operation has amplified geopolitical risk, benefiting safe-haven assets (US dollar and gold), boosting defense stocks, and triggering rallies in Venezuelan bonds — reflecting investor re-evaluation of risk across emerging markets.
- FX and currency concerns
Strengthening US dollar demand during this crisis may challenge offshore currencies. A weaker dollar could support gold prices but may pressure small economies tied to the greenback.
- Heightened risk premia and borrowing costs
Jamaica and other Caribbean nations might face tighter risk premiums and costlier debt servicing, especially if investors demand greater compensation amid broader US–Latin America tension.
- Commodity price fluctuations
Short-term disruptions in Venezuelan oil could lift global prices; medium-term normalization may lead to increased crude supply and downward pressure on prices, affecting energy-sensitive sectors.
- Regional financial stress signals
The Central Bank of Trinidad flagged that US–Venezuela instability fosters regional uncertainty, keeping inflation, credit and liquidity under scrutiny. Similar strains in Jamaica could emerge, especially in trade and cross-border banking.
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, CNN, CBS, Trading Economics, Morgan Stanley.