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The Planning Institute of Jamaica, PIOJ, says said that while the country should expect a recession, steps are being taken to strengthen the economy’s ability to withstand future weather shocks.
The agency is forecasting economic decline in the range of 11 to 13 per cent in the December 2025 quarter, due to the ravages of Hurricane Melissa that has caused, based on the latest preliminary count, US$8.8 billion in damage.
The economy is expected to remain depressed for at least a year, and take even longer to fully recover.
“The country should brace for a recession, but our focus is on restoring livelihoods and protecting the vulnerable to get things up and running from a humanitarian perspective,” said PIOJ Director General Dr Wayne Henry during his quarterly briefing on Tuesday.
The PIOJ’s projection of an 11-13 per cent contraction for the December quarter, if realised, would be the steepest drop since the pandemic.
Prior to the hurricane, the Jamaican economy was expected to deliver growth for the fiscal year ending March 2026. But now the PIOJ is forecasting a contraction within the range of 3.0 per cent to 6.0 per cent. Henry noted that the estimate may change as more information becomes available.
“This shock provides the opportunity to reassess our individual and collective existence, to ensure this level of devastation is never repeated,” said the PIOJ director general.
Recovery, he explained, should not only restore what was lost but also rebuild in ways that are stronger, more resilient, and better prepared for future challenges.
Economic growth is not expected to resume until the December 2026 quarter, while recovery to pre-Hurricane Melissa levels is “conservatively projected” to take three to five years. The projection reflects significant loss of productive assets, which will require extended time to rebuild.
“Given that recovery from COVID-19 took two years with productive assets in place, we anticipate at least twice the time will be required for full recovery from Hurricane Melissa,” Henry said.
The PIOJ, United Nations, and World Bank will collaborate and deliver a full damage assessment by year end. The World Bank’s preliminary estimate places losses at US$8.8 billion, equivalent to 41 per cent of GDP.
“It is unprecedented and far-reaching. It is expected to result in increased unemployment and weakening demand,” Henry said of the storm’s devastating impact.
The unemployment rate is currently at 3.3 per cent, while food poverty is also among the lowest ever recorded, he said.
But Melissa is expected to deliver a setback to gains made by the country in the aftermath of the COVID-19 pandemic, which reached Jamaica in March 2020.
Last year, rating agency Fitch described Jamaica as one of the world’s top three recovery case studies since the pandemic, citing the country’s debt reduction and macroeconomic stability.
Henry said on Tuesday that Melissa will cause Jamaica to experience its “worst quarterly performance since April to June 2020”, in the early months of the pandemic.
The seven most affected parishes ravaged by the Category 5 storm account for three-quarters of Jamaica’s agriculture and livestock output, and nearly 90 per cent of tourism infrastructure, he said.
“The frequency of weather-related and other shocks has hindered the country’s ability to achieve sustained economic growth,” said the PIOJ head, while underscoring the need to prioritise resilience across the economy, society, and environment.
The economy was projected to record “strong growth” of 3.1 per cent for the fiscal year ending March 2026. Growth was evident in the July-September quarter, when the economy expanded by 4.6 per cent, as well as the nine-month horizon, January-September, over which growth was estimated at 2.4 per cent – based on PIOJ’s preliminary estimate – but Melissa has now flipped those projections.
The size of the damage overwhelms both Hurricane Beryl, which caused $56.7 billion in damage, and the effects of Tropical Storm Raphael.
The Bank of Jamaica also said on Monday that inflation is expected to rise above the 4 to 6 per cent policy band due to the price impacts of Hurricane Melissa, but projected to return to the target range by 2027.
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