Will Jamaica go into recession in 2026?

In 2024, Hurricane Beryl caused J$32 billion worth of damage to the island. That was about 2% of the country’s GDP. It also caused two quarters of negative growth.

Preliminary estimates for Hurricane Melissa puts the damage at almost a TRILLION JMD or US$6 to 7 billion. That’s 28-32% of our GDP – at least 14 times worse!

So it’s very likely that Melissa will result in more than two quarters of negative growth, which is the general metric used to determine a recession.

Now, if you remember after Beryl, there was some back and forth about whether the country was actually in a recession because, despite the negative growth, unemployment was very low and inflation was relatively controlled.

In this case, Hurricane Melissa hit the island’s tourism and agriculture industries hard.  These are two of Jamaica’s largest employers.

The agriculture industry suffered major setbacks, displacing workers and slowing the flow of money through communities that rely on seasonal jobs and farming. Taking Stock Analyst Julian Morrison said it would result in what’s known as “stagflation”.

Because the shortages are supply-driven, the Bank of Jamaica has limited tools available. Interest rate hikes can cool demand, but they can’t replace lost crops or rebuild damaged hotels. 

So it’s highly likely that the country will enter a technical recession next year.  The challenge will be to recover as quickly as possible.

And that’s the bottom line.