Jamaica’s economic recovery from the novel coronavirus pandemic induced contraction could take up to two years, the Bank of Jamaica (BOJ) said.

Dr Wayne Robinson, the senior deputy governor at the BOJ, however, said the recovery “will depend on how we manage the COVID-19 crisis and the roll-out of vaccination” in the coming months. He was speaking on Wednesday at the Sterling Asset Management Investor Briefing.

Speaking specifically about the recovery, Robinson said, “our expectation is that the economy won’t return to pre-COVID levels until 2023”.

Jamaica’s economy contracted by 11 per cent in the 2020/21 fiscal year which ended on March 31, 2021, reflecting the impact of COVID-19, according to the Statistical Institute of Jamaica (Statin), the agency which produces final figures for economic activity in Jamaica.

Recovery is, however, already taking place, though not enough to replace the fallout in 2020. The economy is estimated to have recorded 0.6 per cent growth in the January to March period of 2021, following on the 0.9 per cent expansion recorded in the October to December quarter of 2020. Before 2020, the economy recorded six consecutive years of expansion.

Further expansion is expected in the coming years with the Ministry of Finance forecasting the period between April 1, 2021 to March 31, 2022 to have growth reaching 5.2 per cent. The expectation is that from 2021 to 2025, the economy will grow at an average annual rate of 4.1 per cent.

Dr Robinson, however, stressed that there are still uncertainties surrounding the projections, chiefly due to the COVID-19 crisis, but added that “the worst is behind us”.

Inflation to overshoot target

On the matter of inflation, Robinson said prices could exceed the central bank’s target this year.

“Our baseline projection still sees inflation in the four to six per cent range, but closer to the upper end,” he continued, “and we think that there is some risk that inflation could go above the six per cent”. He, however, said the “good news is that we believe that these inflationary pressures will be temporary”, citing BOJ projections. The expectation is that price levels will remain high, but the rate of increase will taper off in the four to six per cent range before the end of 2021 as commodity prices, chiefly wheat and corn, moderate.

Still, Dr Robinson said there are uncertainties and concerns.

“We are concerned about shipping costs which have gone up by over 300 per cent. We think it is going to take some time for that to adjust,” he said, reciting worries expressed by Jamaican manufacturers and retailers about the cost of getting imported goods as logistical issues push up the cost of shipping goods across the globe.