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After decades of weak macroeconomic performance, Jamaica implemented an austerity program in 2013 which helped to reduce the public debt-to-GDP ratio by more than 50 percentage points. Fiscal discipline and prudent macroeconomic management sped up post-pandemic recovery amidst the challenging external environment of inflationary pressures and tightening global financial conditions. The social protection system has been strengthened, which has contributed to increased equity, social resilience, and poverty reduction. Notably, during the peak of the pandemic, the government was able to provide temporary assistance to vulnerable households and businesses to offset income losses, protect jobs, and stimulate demand. Additional assistance was provided to vulnerable households to mitigate the potential impact of rising prices. The public debt to gross domestic product (GDP) ratio increased by 15 percentage points to 110 percent of GDP in FY2020/21 but has since declined to 79.7 percent of GDP in FY2022/23 and is expected to gradually fall below 70 percent over the medium term. In this context, Jamaica improved its credit rating from Standard & Poor’s (BB-) and maintained its high rating from Fitch (B+).

The government has demonstrated the capacity to break the cycle of indebtedness, with broad public support, and is committed to continuing its program of fiscal consolidation and reform. However, debt-service costs remain relatively high, crowding out other government spending, including capital investment, which is critical to boost growth. Jamaica has been among the slowest growing economies in Latin America and the Caribbean given its concentration in low productivity services, limited technology adoption and innovation,  high connectivity costs, a weak business environment, and pervasive crime. Disruptions in learning during the pandemic will have longer-term effects on growth and human capital and the future earning potential of students, if not addressed adequately.

Furthermore, Jamaica is highly vulnerable to external developments given its reliance on imports and tourism. Tourism and agriculture, which account for more than a third of available jobs, are vulnerable to external shocks, especially climate related, which could undermine economic growth and poverty reduction efforts. While the financial sector is well-capitalized and liquid, it remains susceptible to various shocks. To strengthen fiscal, financial, and social resilience to climatic shocks, Jamaica has gradually integrated climate change adaptation into its policy framework. Progress on addressing anti-money laundering and counter terrorism financing, combined with improved financial supervision is necessary to attract private investments.

Economic Recovery

Jamaica’s real GDP is estimated to have expanded by 2.9 percent in the first half of 2023, reaching its pre-crisis level. Growth was driven by net exports from an expansion in tourism and mining, whilst agriculture declined due to an extended drought. Rising economic activity brought the unemployment rate to 4.5 percent in April 2023 – the lowest level in history. The national poverty rate is estimated to have declined to 12.6 percent in  2022. Nevertheless, the quality of employment remains a concern given high informality and fewer average hours worked relative to pre-pandemic levels.

Annual inflation decelerated to 6.6 percent in July 2023 – down from its peak of 11.8 percent in April 2022, approaching the Bank of Jamaica (BOJ)’s reference range (5 ±1 percent). Inflation was influenced by lower global commodity prices, as well as the effects of tight monetary and fiscal policies. Nonetheless, food inflation remained elevated at 11.3 percent in July 2023 amid droughts, undermining household purchasing power. According to the Food Insecurity Experience Scale, 33 percent of Jamaicans were severely food insecure in May 2023. The BOJ has kept its key policy rate at 7.0 percent since end-2022 and announced it would maintain that rate for the rest of the year amid seasonal increases in agricultural prices.

The fiscal deficit of 0.9 percent of GDP in the Q1 of 2023 brought fiscal account to a surplus of 0.3 percent of GDP in FY2022/ 23 – smaller relative to a surplus of 0.9 percent of GDP in FY2021/22. This was a result of increased spending on wages and salaries, consistent with the recently approved three-year compensation cycle. Higher spending also reflected transfers (0.25 percent of GDP) to vulnerable families to counter inflation pressures, and fuel, and food subsidies.

The current account recorded a deficit of 0.8 percent of GDP in 2022 as high commodity prices offset increasing earnings from tourism and remittances. Reserves remain adequate, at US$4.1 bn (about 6 months of imports and 24 percent of GDP) as of July 2023. In this context, the exchange rate remained relatively stable.


Real GDP growth is expected to average only 1.8 percent over the medium term as global growth weakens.  Manufacturing on the supply side and consumption and net exports on the demand side are expected to drive growth. Higher public wages, a historical increase in minimum wages, and increases in communication services are anticipated to generate inflationary pressures. Monetary policy is expected to remain supportive of growth, ensuring adequate liquidity in the financial system; minimizing pressures on the currency, and returning inflation to its target range by end-2023. Poverty is projected to decline to or below pre-pandemic levels by 2024 as incomes improve with the economic recovery.

The fiscal account is expected to record an average annual surplus of 0.6 percent of GDP over the medium term, with stronger revenues underpinned by continued economic recovery. Spending is expected to decline slightly due to lower interest payments. As such, public debt is projected to remain on a downward trajectory with an expected 74.5 percent of GDP for FY2023/24, declining to 71.3 percent of GDP by FY2025/26. External account balances are expected to slightly deteriorate due to deceleration in remittance inflows and tourism amid weaker economic conditions in the US and UK, partially offset by the reduced spending on imports given lower commodity prices. Gross reserves are expected to remain at healthy levels, averaging more than 5 months of imports.

There are significant downside risks to the economic outlook including a possible deeper-than-expected slowdown in the global economy. Further tightening of financial market conditions could raise the cost of borrowing, curtail private investments, and derail longer-term growth, climate change, and debt objectives. Worsening crime, social unrest, and potential natural hazards could also impair growth and poverty reduction efforts.

Last Updated: Oct 09, 2023


Jamaica: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Country Office Contacts

Penny Bowen
3rd Floor,
Courtleigh Corporate Centre,
6 St. Lucia Avenue,
Kingston 5
+1 (876) 960-0459