In brief
The ruling Jamaica Labour Party (JLP) has started to slip behind the opposition People's National Party (PNP) in opinion polls, as confirmed by the February 2024 local elections, which showed a clear shift in support towards the PNP. The PNP will be keen to carry this momentum into the next general election, which is due to be held before February 2025. However, given the JLP's large majority, the PNP will still need to extend its lead in the polls and win a number of important constituencies to take power.
In the meantime, the current government's main policy challenge will be to support households that are struggling amid cost-of-living pressures while at the same time continuing a strong track record of consolidating the public finances so as to reduce public debt. We expect inflation to return to the 4-6% target range set by the Bank of Jamaica (BoJ, the central bank) in the second quarter of 2024. However, Jamaica's vulnerability to weather-related inflationary shocks remains an underlying risk. As a result, the BoJ will keep interest rates on hold at 7% (they have been at that level since November 2022) until mid-year, when we expect upward price pressures to ease. This should contain any further unexpected price increases and prevent the Jamaican dollar from depreciating sharply against the US dollar.
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Economic growth
(% unless otherwise indicated) | |||
2023 | 2024 | 2025 | |
---|---|---|---|
US GDP | 2.5 | 2.0 | 1.6 |
Developed economies GDP | 1.6 | 1.5 | 1.6 |
World GDP | 2.5 | 2.4 | 2.6 |
World trade | -0.3 | 2.5 | 3.5 |
Source: The Economist Intelligence Unit |