The Planning Institute of Jamaica (PIOJ) is warning Jamaicans to brace for a recession.

Jamaica is about to experience its sharpest economic fall since the COVID-19 pandemic.

According to the PIOJ, the devastation left behind by Hurricane Melissa is expected to shrink the economy by 11 to 13% in the October to December quarter alone. 

For the full financial year, which ends in March 2026, the PIOJ said it expects the economy to decline by 3 to 6%. 

They’re not expecting growth to return until the October to December 2026 quarter. That’s a whole YEAR of economic decline. 

That’s bad news all around, but especially when you look at the path Jamaica was on before.  The economy grew by about three percent in the first half of the financial year. That trend was expected to continue into 2026. 

The country was also on track to meet the target of having debt to GDP below 60% by financial year 2027/2028.

But now, those gains have been wiped out by a weather event that the PIOJ described as unprecedented in its scale and cost.

The World Bank’s estimate puts the damage at around US$8.8 billion or roughly 41% of Jamaica’s 2024 GDP.  So GDP is going to fall, and at the same time debt is going to rise.  The government has already indicated that they will need to borrow some of the money.  

And the thing is, the estimates only include physical damage to infrastructure and agriculture. It doesn’t include broader economic losses that will come from things like hotels and business closures.

The seven hardest-hit parishes account for about 74% of Jamaica’s agricultural output. Those same parishes also have nearly 90 percent of the country’s hotel rooms. It will take months and in some cases years to rebuild those parishes.

As for what this means for you and your money? Well, it means job losses.  It also means slower wage growth and higher prices, especially for food.  It means a possible decline in the Jamaican dollar, so imports will get more expensive.  Lower business activity could also mean less tax revenue for the Government, so there’s that.

The PIOJ said it could take three to five years for the economy to return to pre-Hurricane Melissa output levels, roughly twice the time it took to recover from COVID-19. 

But as they say, in every crisis, there is opportunity.  Billions of dollars are going to be flowing for the rebuild.  So businesses in construction and road contractors will fare well.  Lots of people are now looking to make their homes and businesses more resilient, so solar solutions are flying off the shelves.  

It won’t take a lot of thinking and research to see where the opportunities are in the recovery.  With a little bit of effort, we can all come out of this crisis stronger.

And that’s the bottom line.