分类： business

KINGSTON, Jamaica — The aftermath of Hurricane Melissa, which struck the island on October 28, has left Jamaica grappling with unprecedented economic challenges. Preliminary estimates from the Planning Institute of Jamaica (PIOJ) indicate a potential 13 per cent decline in the country’s gross domestic product (GDP) for the final quarter of this year. This marks one of the most severe economic contractions since the COVID-19 pandemic in 2020.

KINGSTON, Jamaica — Jamaica’s economy was on a robust upward trajectory in the third quarter of 2025, as revealed by the latest JCC/GK Capital Management Business and Consumer Confidence Indices. The data, collected before Hurricane Melissa struck, highlights a significant surge in both consumer and business confidence, marking the strongest economic performance in over two decades.

The Bank of Jamaica (BOJ) has issued a stark warning to households and businesses, urging them to prepare for a significant rise in inflation driven by the aftermath of Hurricane Melissa. The central bank projects that inflation will exceed its target range of four to six per cent in the near term, with price stability not expected to return until 2027. This comes despite Jamaica enjoying relatively low inflation below six per cent over the past two years, as reported by the Statistical Institute of Jamaica (Statin).

Hurricane Melissa, a Category 5 storm that struck Jamaica’s south-western coast on October 28, has caused extensive economic disruption, damaging infrastructure and disrupting productive activities. The BOJ anticipates that annual headline inflation will rise sharply from 2.9 per cent in October 2025, with core inflation—excluding volatile food and fuel prices—also breaching the target range by mid-2026. This inflationary pressure is expected to ripple across various sectors, including food, utilities, transport, and personal care services.

Early signs of inflation are already evident in the October Consumer Price Index (CPI), which recorded a 1.5 per cent increase in food prices, driven by significant surges in vegetables, tubers, and pulses. Electricity costs also rose, contributing to a 0.8 per cent increase in housing-related expenses. The government’s decision to temporarily suspend fiscal rules to fund relief and reconstruction efforts is expected to inject more money into the economy, further exacerbating inflationary pressures.

In response, the BOJ has adopted a cautious approach, maintaining its key interest rate at 5.75 per cent while implementing measures to stabilise the foreign exchange market. The central bank has already sold US$210 million to the market since the hurricane and plans to provide foreign currency directly to energy sector entities. These steps aim to prevent a depreciating Jamaican dollar from worsening inflation by increasing the cost of critical imports for reconstruction.

The BOJ remains committed to its inflation target and is prepared to adjust its monetary policy stance if inflationary risks escalate further. The next policy decision announcement is scheduled for December 18, 2025, as the central bank continues to monitor price movements closely.

The Jamaican Government has pledged a $150 million loan to the Jamaica Public Service Company (JPS) to aid in the reconstruction of its power grid, severely damaged by Hurricane Melissa. However, the Andrew Holness Administration has declined JPS’s request to extend its current licence, set to expire in 2027, which the company sought to secure additional funding for the restoration efforts. Energy Minister Daryl Vaz announced the decision during a House of Representatives session, emphasizing the need to address two critical issues separately: the immediate funding for grid restoration and the ongoing negotiations for a new electricity licence. The Government has approved a conditional bridging loan to JPS, ensuring the company can proceed with restoration without extending its licence. This move will enable 300 overseas line workers and specialized equipment to arrive in Jamaica by December, aiming for full customer restoration by early 2026. Vaz highlighted that the Government has safeguarded its interests, with provisions ensuring repayment of the loan if a new licence is not agreed upon. The Government has also finalized a consultancy contract to support negotiations with JPS, ensuring a structured and protected approach to the process.

The latest economic data from the United States reveals a slowdown in retail sales growth for September, as consumers grapple with rising prices and businesses face escalating costs. According to the Commerce Department, retail sales increased by a modest 0.2 percent month-on-month, falling short of analyst expectations and marking a deceleration from August’s 0.6 percent gain. Concurrently, the Labor Department reported a 0.3 percent rise in producer prices for September, driven primarily by a 0.9 percent surge in goods costs, particularly energy and food. These trends highlight the growing economic pressures stemming from President Donald Trump’s tariffs, which have begun to ripple through the economy. Some businesses have already reported higher operational costs due to these duties, prompting the administration to expand tariff exemptions for certain agricultural products. The release of these reports was delayed due to the record-long government shutdown between October and mid-November, which disrupted the collection and publication of key economic data. Year-on-year, retail sales in September were up 4.3 percent, though specific sectors such as motor vehicles, clothing, and electronics experienced declines. The data underscores the challenges facing both consumers and businesses as they navigate an increasingly complex economic landscape.