Janiel McEwan

As Jamaica awakens to the first days of 2026 the country carries the unmistakable marks of a year that demanded much and gave back hard truths in return.

Last year offered no dramatic turning points or bold new visions. It was, instead, a year of quiet endurance, when established policies faced sudden shocks, institutions proved their mettle under real strain, and chronic weaknesses ceased to be matters for academic debate and became immediate realities for ordinary people.

This is no time for unqualified optimism. Jamaica enters 2026 with macroeconomic foundations stronger than at many junctures in its independent history, yet acutely vulnerable to climate threats, external volatility, and inequalities that no headline can fully capture.

Macroeconomic Conditions: Credibility Preserved Amid Strain

Jamaica began 2025 with a macroeconomic reputation that was painstakingly rebuilt over years of discipline. That reputation withstood the year’s tests, though not without visible pressure.

Inflation stayed generally within manageable bounds through most of the period, underpinned by Bank of Jamaica’s (BOJ) measured approach. By November 2025 the annual rate had climbed to around 4.4 per cent, edging towards the upper limit of the four to six per cent target corridor as food prices and core services absorbed the impact of hurricane-related supply disruptions. Essentials grew noticeably dearer in the closing months, heightening worries about household purchasing power as the new year began.

The central bank kept its policy rate steady at 5.75 per cent through the second half of the year, a deliberate signal that anchoring expectations took precedence while still leaving scope for growth support. The BOJ’s public communication maintained a credible equilibrium between inflation vigilance and economic encouragement. That institutional trust remains among the country’s most vital assets for 2026.

Unemployment held at a remarkably low 3.3 per cent, a marker that would have appeared unattainable only 10 years earlier. Yet such labour market tightness laid bare persistent structural issues, notably skills shortages, sluggish productivity, and patchy income protection. More jobs did not uniformly mean better lives.

Economic Growth: Early Gains, Sharp Reversal

Economic performance in 2025 displayed a clear two-phase character: The opening nine months delivered moderate expansion propelled by tourism recovery, construction activity, transport, electricity supply, and a modest agricultural rebound. Third-quarter growth registered between three and four per cent, continuing the gradual return to pre-pandemic patterns.

The fourth quarter brought abrupt interruption with Hurricane Melissa. Extensive damage to roads, farmland, hotels, and port facilities produced a clear output contraction in the December period. Consequently, full-year estimates were markedly revised, and fiscal year 2025 to 2026 projections now indicate an overall contraction of four to six per cent.

The outlook for 2026 points to gradual recovery, led by reconstruction expenditure, resilient tourism inflows, and agricultural restoration. Forecasts currently centre on growth of one to three per cent, though much will turn on execution efficiency and weather outcomes.

Fiscal Policy: Restraint Combined with Pragmatism

Fiscal management throughout 2025 blended discipline with necessary adaptability. For most of the year authorities remained faithful to the fiscal responsibility framework established over the previous decade. Debt ratios continued to improve, supported by earlier nominal growth and statistical revisions.

The hurricane necessitated temporary deviation. Urgent spending on relief, social assistance, and infrastructure repair required additional resources. Rather than erode the broader framework, the Government pursued concessional borrowing and multilateral partnerships, obtaining substantial external support explicitly geared towards resilient reconstruction.

The central task for 2026 will be reconciling pressing reconstruction and social priorities with medium-term fiscal sustainability. Climate-proofing investments, housing provision, and expanded social safety nets will all press against constrained resources. The quality of prioritisation and delivery will profoundly influence Jamaica’s longer term prospects.

Tourism and Economic Structure

Tourism once more affirmed its pivotal contribution to national resilience. Visitor arrivals recovered swiftly despite the late-year setback, reaffirming the enduring global appeal of Jamaica’s offering.

Yet 2025 also highlighted the perils of heavy sectoral concentration. Climate shocks exposed weaknesses in supporting infrastructure and supply networks. Emerging areas, including logistics, digital services, creative industries, and higher value agriculture continue to show potential, though they lack consistent scale.

The decisive question for 2026 is whether the recovery effort merely rebuilds what existed before or actively promotes diversification and productivity advancement.

Crime, Social Fabric, and Public Mood

Among the year’s most encouraging developments was the sustained decline in violent crime. Homicide numbers reached levels unseen in decades, yielding palpable improvements in community safety and collective confidence.

These advances owe more to cumulative institutional strengthening than to any single initiative. Sustaining them will demand continued investment in prevention programmes, community partnerships, and durable trust between citizens and State agencies.

Social challenges persist undiminished. Late-year price surges and hurricane impacts weighed heaviest on lower income families. Access to decent housing, quality health care, and education remains central to public discourse and policy demands entering 2026.

Politics and Governance

The September 2025 General Election produced continuity at a moment of considerable external uncertainty. Turnout, though modest, did not undermine the result’s legitimacy, and the outcome bolstered policy consistency and institutional steadiness.

With the new parliamentary term now under way, public sentiment increasingly emphasises delivery over mere stability. Governance in 2026 will be assessed primarily by visible enhancements in daily living conditions rather than by macroeconomic aggregates alone.

Key Markers for 2026

Several factors will define the country’s trajectory this year:

1) Inflation movements will dictate the timing and nature of any monetary policy adjustments. Interest rate settings will continue to matter deeply for borrowers, savers, and enterprises.

2) Growth prospects will rest on reconstruction pace, tourism strength, and broader productivity trends.

3) Fiscal results will reveal the success of integrating recovery spending within sustainable parameters.

4) Labour market dynamics, especially productivity and youth inclusion, will determine how employment gains feed into household welfare.

5) Climate adaptation measures will shift from concept to concrete action as the frequency of shocks becomes normalised.

6) Demographic currents, notably emigration patterns and youth opportunities, will exert growing influence on long-term potential.

A New Year Reflection

Jamaica was not remade in 2025, yet it sharply defined the choices now at hand. Institutions stood firm when tested. Policy structures absorbed significant stress. Communities demonstrated extraordinary adaptability. The country’s immediate challenge is no longer simply to endure, but to advance with purpose.

As Jamaicans mark the start of another year, there is justifiable pride in proven resilience, tempered by sober awareness of unresolved vulnerabilities. In 2025 Jamaica confirmed what it can withstand; 2026 must demonstrate what it can achieve. The decisions made in boardrooms, Cabinet meetings, classrooms, and households throughout this year will settle whether hard-won stability becomes genuine shared progress or merely another interval before the next trial.

Janiel McEwan is an economic consultant. Send comments to the Jamaica Observer or janielmcewan17@gmail.com.

Janiel McEwan