KINGSTON, Jamaica — Jamaica’s economy contracted by an estimated 3.5% during the first six months of 2026, but economic planners are projecting a gradual recovery that could return the country to growth by the end of the year.

The Planning Institute of Jamaica (PIOJ) said the contraction reflected continued disruption from Hurricane Melissa, which affected production, employment, business confidence and domestic demand.

The latest forecast provides a mixed picture: significant economic damage remains, but recovery is expected to strengthen during the second half of 2026.

The goods-producing sector contracted by 6.8%, while services declined by 2.4% during the first half. Mining and quarrying recorded a particularly sharp 23.7% decline, while agriculture, forestry and fishing fell by 17.6%.

Accommodation and food-service activities also declined by 14.4%, highlighting the continued impact on tourism-related businesses.

For Jamaican businesses, the speed of the recovery will be critical as companies rebuild operations, restore employment and respond to changing consumer demand.

PIOJ estimates that the economy could contract between 0.5% and 1.5% during July–September, but expects the rate of contraction to become progressively smaller as recovery accelerates.

For the full 2026/27 fiscal year, real GDP growth is projected within a 1% to 3% range.

The outlook nevertheless remains vulnerable to external pressures, including elevated energy costs and geopolitical tensions. The Bank of Jamaica has also warned that July inflation reached 7.5%, while maintaining its policy rate at 5.50%.

Jamaica’s economic recovery will therefore depend on rebuilding damaged industries while managing inflation, energy costs and global uncertainty.

The latest PIOJ assessment gives businesses a cautious reason for optimism as the country moves deeper into the recovery phase.

If the projected rebound continues, Jamaica could enter 2027 with stronger economic momentum after one of its most challenging periods in recent years.