Caribbean & Central America - March 2025

Not unusually, Jamaican politicians cannot agree on what is happening in the local economy. Output looks to have contracted in the last two quarters of 2024, signalling a technical recession, but there is little consensus on what caused it.

GDP fell by 3.5% in the third quarter of 2024 and the Planning Institute of Jamaica (PIOJ), a government office, is projecting a 1.8% contraction in the fourth quarter (definitive numbers are expected by the end of March). The fall comes as politicians continue to disagree. In February Prime Minister Andrew Holness of the Jamaica Labour Party (JLP) said the economy was “strong, resilient, and fiscally fit”. Improved fiscal management meant that for nine consecutive budgets, the government had not had to introduce any new taxes. He also highlighted the strength of the freely floating Jamaican dollar and government policies to increase investment, productivity, and prosperity.

Not so, seems to be the response from leaders of the opposition People’s National Party (PNP). Senator Peter Bunting accused the government of operating a plantation style economy marked by “low skills, low wages, low productivity, and high job insecurity as contract work predominates”.

Recession?

PIOJ director Wayne Henry acknowledged that there had been a fall in output but suggested that this fell short of a recession, particularly if other indicators such as income and unemployment were considered. Metry Seaga of the Private Sector Organisation of Jamaica (PSOJ) said the GDP data did point to a slowdown, but unemployment, at 3.5%, remains at its lowest level ever, and the strong dollar reflects underlying business confidence. Bank of Jamaica governor Richard Byles suggested that there might be a short-term downturn due to the effects of last year’s Hurricane Beryl, impacting an otherwise strong economy.