BOJ projects gradual recovery of economy

The Bank of Jamaica (BOJ) is projecting a gradual recovery of the economy for financial years 2026/27 and 2027/28, with real gross domestic product (GDP) growth forecast to be within the range of one to three per cent.

The forecast was given by Governor Richard Byles during the Quarterly Monetary Policy Press Conference at the Garden Hotel in Mandeville, Manchester, on Tuesday, May 26.

Governor Byles said real GDP is also projected to grow at an average of one to two per cent over the medium term.

He noted that Jamaica’s Gross International Reserves also remain robust, standing at US$6.5 billion as of May 19, 2026, representing about 139.6 per cent of the sum considered adequate.

Byles affirmed that this strong level of reserves provides an important buffer against external shocks. 

“Going forward, Jamaica’s foreign reserve levels are expected to remain adequate over the medium term and will support the orderly functioning of the foreign exchange market, helping to limit volatility and thereby containing imported inflation,” he outlined.

The Governor emphasised that the domestic financial system remains sound with adequate capital and liquidity. 

Meanwhile, Governor Byles noted that despite the temporary fall-off in tourism earnings, so far, the foreign exchange market has remained relatively stable.

“On the 19th of May 2026, the exchange rate had appreciated on a year-over-year basis by 0.5 per cent, compared with a depreciation of 1.7 per cent over a year earlier,” he disclosed.

The Central Bank Governor noted that this stability occurred in the context of the Bank’s continued actions to reduce volatility in the foreign exchange market, as part of its strategy to lower inflation expectations and contain inflation within the target range.

He said the BOJ sold US$1.3 billion via its B-FXITT facility over the 12 months ending in April 2026. This was US$200 million more than the US$1.1 billion sold over the previous 12 months.

“Notwithstanding these sales, however, the bank purchased US$906.4 million more than it sold in the 12 months to April 2026,” the Governor informed.

He also stressed that the recent geopolitical tensions have introduced significant uncertainty and challenges to the economic outlook. 

“The negative impact of the conflict on the country’s external accounts is projected to be significant, with the current account balance expected to deteriorate over the near term,” Byles informed.

He said this deterioration will be largely underpinned by higher imported fuel prices, increased importation to facilitate the economy’s infrastructure rebuild post-Hurricane Melissa and the adverse impact of Hurricane Melissa on the tourism industry.

“In this context, the bank anticipates that the current account balance will fall within a range of a deficit of 0.5 per cent of GDP to a surplus of 0.5 per cent for the financial year 2025/26, compared with a surplus of three per cent of GDP recorded in 2024/25,” Governor Byles stated.