KINGSTON, Jamaica, CMC – The Jamaican economy contracted by an estimated 5.9 percent during the January to March 2026 quarter, compared with the corresponding quarter of 2025, the director general of the Planning Institute of Jamaica (PIO), Dr Wayne Henry, said on Wednesday.
He told reporters that the performance for the review quarter largely reflected the lingering impact of Hurricane Melissa, which hit the island in October last year, on productive activities. He said that the hurricane’s impact led to an estimated contraction across all industries, except financial & insurance activities and public administration & defense, as well as a reduction in the employed labor force and lower levels of business and consumer confidence, which constrained domestic demand.
The hurricane’s impact was compounded by weakened external demand, largely reflecting the intensification of geopolitical tensions in the Middle East. The resulting disruptions to supply chains and surging energy prices curtailed trade flows and dampened external demand,” he added.
The mining sector suffered the largest impact, contracting by 26.6 percent, followed by agriculture at 20.3 percent, manufacturing at 7.7 percent, and construction at 1.3 percent.
The usually dominant accommodation and food services or tourism sector also experienced a sharp 20.4 percent downturn, negatively impacted by a 17 percent decline in visitor arrivals and a 27.5 percent reduction in total stopover arrivals. Total visitor expenditure for the period declined by 21.3 percent, amounting to US$976.4 million.
Henry said that for the fiscal year 2025-26, real value added is estimated to have declined by 1.7 percent, that the outturn reflected a contraction across all industries, and that the downturn largely stemmed from the negative impact of Hurricane Melissa.
Regarding the employment outturn, the Statistical Institute of Jamaica (STATIN) reported in the January 2026 Labor Force Survey that the unemployment rate was 3.6 percent, down 0.1 percentage point from January 2025. The number of persons employed decreased by 30,100 persons to 1,389,400 relative to January 2025.
Henry said that for the period April–June 2026, prospects for the economy are generally negative.
“This is based on the expectation for lower output as industries continue to recover from the adverse effects of the hurricane. It is projected that the economy will contract within the range of three to four per cent relative to April–June 2025.”
Henry said that GDP performance is anticipated to be influenced by continued geopolitical tensions in the Middle East, which have driven up energy and fertilizer prices.
In addition to prices, the conflict has adversely affected investor and consumer sentiments that may impact overall demand for goods and services in the short term. Lower production, as industries are still within the recovery process, which may take up to three years.”
He said for agriculture, while certain short-term crops have already rebounded, the overall recovery of the industry will not be fully realized in the short term, given the extended period required for other crop varieties to reach maturity.
Henry said that preliminary data for the quarter indicate that airport arrivals for April 2026 declined by 22.5 percent relative to April 2025, adding that this outcome was in part due to the lingering effect of Hurricane Melissa.
For the mining & quarrying industry, data for April indicate that the heavier weighted alumina production contracted by 27.3 percent, while crude bauxite production increased by 0.6 percent.
The PIOJ director general said that the projection for fiscal year 2026/27 is for growth within the range of one to three per cent and that most industries are forecast to record growth, as the recovery from the weather-related shock in 2025 will become more pronounced in the latter half of the fiscal year, October 2026-March 2027.
But he acknowledged that there is “upside potential and downside risks to this forecast.”
He said the upside potential for growth includes an early resolution of the ongoing conflict in the Middle East and favorable weather conditions, which will support continued strengthening of agricultural output and water production.
The downside risks include unplanned factory downtime associated with aged production plants, particularly in the mining & quarrying and manufacturing industries.
He said weather-related shocks, largely associated with the start of the hurricane season, and lower-than-anticipated external demand for Jamaican goods and services, resulting from slower-than-expected growth in Jamaica’s main trading partners, particularly the United States.
Henry said that Jamaica’s economic structure makes it highly sensitive to global shocks, especially those affecting major trading partners.
The rise in commodity prices, particularly oil prices, driven by the ongoing conflict in the Middle East, is exerting pressure on trade and output performance. The duration of the conflict will determine the scale of the impact. Given oil’s central role in production, price volatility has significant implications for inflation, the trade balance, and real GDP.
He said that, with respect to inflation, rising oil prices directly increase electricity and petroleum costs.
Additionally, businesses pass higher energy costs onto consumers, further fuelling inflationary pressures. This cycle may lead to a rise in nominal wages and further entrench higher price levels.”
Regarding the trade balance, Henry said higher global prices for energy products, grains, and fertilizers, as well as higher shipping costs, will inflate import costs.
“Rising input costs will result in higher prices for domestically produced goods, reducing competitiveness on the global market. Consequently, Jamaica’s current account deficit is expected to widen as import values outpace export values.
Henry said that the preliminary data presented on economic performance for the January to March 2026 quarter indicates that the economy continued to recover from the effects of Hurricane Melissa, which occurred during the last quarter of 2025.
For the April–June 2026 quarter, the economy is expected to continue contracting, albeit at a lower rate, as industries continue to recover. Given the preliminary outturn for January to March 2026, the economy is now estimated to have contracted by 1.7 percent for the fiscal year 2025/26. “”
He said this revised projection compares with an initial projection for growth of 1.9 percent, indicating that the shock of Hurricane Melissa resulted in a loss of 3.6 percentage points in Real Value Added output for the financial year 2025/26.
“The economy was previously projected to grow strongly during the latter half of the fiscal year, October 2025 to March 2026, attributable to the low levels of output in the corresponding period of 2024/25 due to Hurricane Beryl,” Henry said.
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