Jamaica Economic Intelligence | Q2 2024 | April–June 2024
Key Findings
- The Federal Reserve holds rates at 5.25–5.50 percent through Q2 as inflation resumes its Q4 2023 trajectory after Q1’s stall: the April CPI print of 3.4 percent breaks the three-month reacceleration pattern, May’s 3.3 percent confirms resumed progress, and the Fed’s June meeting dot plot reduces its 2024 rate cut projection from three to one — signalling patience without abandoning the easing direction
- Nvidia’s stock reaches valuations that make it, briefly in June 2024, the world’s most valuable publicly traded company — surpassing both Microsoft and Apple at a market capitalisation above three trillion dollars — as the AI infrastructure buildout that the company’s data centre GPU revenues are quantifying becomes the defining investment narrative of the first half of 2024 and the clearest evidence that the 2023 AI narrative was not a bubble but a structural shift in capital allocation
- Iran launches a direct drone and ballistic missile attack on Israel on April 13–14 in retaliation for an Israeli strike on the Iranian consulate in Damascus, marking the first time Iran has directly attacked Israeli territory and escalating the Middle East conflict that began with the October 2023 Hamas attack into a new and more structurally dangerous phase for the region’s stability and global energy markets
- The June 27 presidential debate between Joe Biden and Donald Trump — held unusually early in the election calendar — produces a performance from the incumbent president so widely described as halting and confused that calls for Biden to withdraw from the race begin within the Democratic party within hours, beginning the most significant disruption to an incumbent-led presidential campaign in modern American political history
- The Bank of Jamaica continues its easing cycle through Q2, with additional policy rate reductions that are beginning to produce visible transmission into NHT mortgage terms and commercial lending rates, providing the domestic financing tailwind to Jamaica’s property market that the BOJ’s Q4 2023 pivot had promised but whose transmission to consumer-facing rates required multiple quarters to materialise
- Jamaica’s summer 2024 advance booking data through Q2 — the reservations placed through April, May and June for the July–August peak season — show volumes consistent with maintaining 2023’s record baseline, a booking pattern that eliminates the most pessimistic post-record-year correction scenarios and sets the stage for the fourth consecutive year of near-2019 or above-2019 arrival performance
It is June 28, 2024. The morning after the presidential debate that much of the United States watched with something between alarm and disbelief. Joe Biden, the incumbent president seeking a second term, delivered a performance that was immediately described by allies and opponents alike as disqualifying — halting responses, lost trains of thought, a voice strained to the point of near-inaudibility. Donald Trump, whom the debate format was supposed to constrain, spent ninety minutes looking composed by comparison. By midnight, calls for Biden to step aside had begun from within the Democratic coalition. The election whose outcome Jamaica’s economic planning had been modelling as a binary — Biden policy continuity versus Trump policy disruption — had, in ninety minutes of primetime television, become a question about whether that binary still described the race. Meanwhile, two weeks earlier, Nvidia had briefly become the world’s most valuable company. Three trillion dollars. More than the entire GDP of the United Kingdom. All of it predicated on the proposition that the artificial intelligence buildout is not a speculative narrative but a capital expenditure reality whose hardware requirements are, for now, constrained by the availability of Nvidia’s chips. The world is moving fast. Jamaica watches both stories with different stakes but equal attention.
The Fed’s One: Patience as Policy
The Federal Reserve’s June 12, 2024 meeting produced the most hawkish dot plot of the current cycle’s transition period: the median FOMC member’s projection for 2024 rate cuts fell from three (the March projection) to one, reflecting the Q1 inflation data’s upside surprises and the Fed’s assessment that it needed more confidence in inflation’s return to target before easing could begin. The decision to hold at 5.25–5.50 percent was unanimous. The dot plot’s message was not that cuts were off the table — it was that cuts required more data, and that the Fed would provide them when the data warranted rather than when the calendar or the market preferred.
The inflation data through Q2 provided a partial basis for optimism: April’s CPI print of 3.4 percent stopped the three-month reacceleration pattern that Q1 had produced, May’s 3.3 percent confirmed the resumed downward trend, and the underlying shelter CPI — the component that had most frustrated Q1’s progress by reflecting the lag between actual rent conditions and CPI methodology — showed signs of beginning to roll over toward the improvement that the real-time rental market data had been pointing toward for months. The Fed’s patience was calibrated to this trajectory: not rejecting rate cuts, but conditioning them on the sustained progress that one or two months of resumed disinflation could not alone establish.
For Jamaica’s external borrowing cost environment, the Fed’s one-cut dot plot meant that the 10-year Treasury yield, which had briefly rallied on the Q4 2023 rate cut optimism and then sold off on Q1’s inflation surprise, remained in the 4.3–4.5 percent range through most of Q2 — elevated relative to 2023’s highs in the mid-3s, but stable enough to allow the planning assumptions that Jamaica’s sovereign debt management and development financing depend on to be made with some confidence about the range. The uncertainty was not about whether rates would eventually decline — the direction remained clear — but about the pace and the trigger points that would determine the descent’s steepness. For a small open economy whose external financing costs track US rates at a spread, the difference between one cut in 2024 and three cuts was not merely a market abstraction; it was the difference between meaningfully improved refinancing terms in 2024’s second half and a further delay into 2025.
Nvidia at Three Trillion: The Infrastructure Reality
The artificial intelligence investment narrative that GPT-4 had ignited in March 2023 and Nvidia’s May 2023 earnings shock had quantified reached a new valuation landmark in June 2024: Nvidia’s market capitalisation briefly exceeded three trillion dollars, placing it ahead of Microsoft and Apple as the world’s most valuable publicly traded company. The number was striking as an absolute — three trillion dollars is larger than all but five national economies’ annual GDP — but it was the trajectory that was most analytically significant: Nvidia’s market cap had been under one trillion dollars as recently as May 2023, thirteen months earlier. A more-than-tripling in thirteen months, driven by revenue growth that had matched the market’s most aggressive expectations and guidance that implied the trajectory would continue, was not speculative excess by the conventional definitions the tech sector’s 1999–2000 period had established. It was a reflection of actual capital expenditure by the largest technology companies in the world — Microsoft, Google, Meta, Amazon — on the data centre infrastructure that their AI strategies require, and Nvidia’s H100 and A100 GPUs were the constrained supply that those capital expenditures were competing to access.
The AI infrastructure reality that Nvidia’s valuation expressed had labour market implications that the Q1 2024 review had identified as the series’ primary medium-term monitoring variable for Jamaica’s diaspora. Q2 2024 produced data that complicated the straightforward “AI is disrupting diaspora employment” thesis: the US labour market’s aggregate resilience continued, with unemployment ticking only modestly from 3.8 percent in March to 4.0 percent in May — still historically low by any standard that predated the pandemic’s labour market reshaping. The technology sector’s layoffs, while continuing, were not producing aggregate unemployment data that suggested broad-based demand destruction. What they were producing was a labour market composition shift: the aggregate numbers looked stable because job creation in sectors less exposed to AI displacement — healthcare, construction, government, leisure and hospitality — was offsetting job elimination in the technology and professional services categories where AI deployment was most rapid. Jamaica’s diaspora, concentrated in healthcare, logistics, hospitality and professional services, was experiencing this composition shift in its most acute form: the hospitality and healthcare workers were in the strongest labour market of their careers; the professional services workers were navigating the most uncertain environment in a decade.
The Nvidia moment was also the series’ first direct intersection with a Jamaica-adjacent story that the broader AI investment boom was beginning to generate: data centre development in the Caribbean basin. The infrastructure requirements of the AI buildout — power-hungry, heat-generating, requiring abundant and reliable electricity supply — were producing site evaluation processes that included Caribbean jurisdictions with renewable energy capacity, submarine cable connectivity, and tax treaty structures that made them attractive compared to saturated North American data centre markets. Jamaica’s institutional framework, its developing renewable energy sector and its proximity to both North American internet exchange points and the Latin American market were elements in this evaluation. The story was prospective rather than confirmed through Q2 2024; the series flagged it as the economic development intersection with the AI infrastructure build that deserved monitoring through the second half of the year.
Iran, Israel, and the Geopolitical Ratchet
The April 13–14 Iranian drone and ballistic missile attack on Israeli territory — 170 drones, 120 ballistic missiles, and 30 cruise missiles launched directly from Iranian soil, the most direct military confrontation between the two countries in their decades-long shadow conflict — was contained, in the immediate military sense, by a layered air defence operation involving Israel, the United States, the United Kingdom and Jordan. But containment of the specific attack did not contain the structural escalation its occurrence represented: for the first time since the modern Middle East’s post-1979 architecture was established, Iran had acknowledged and executed a direct military strike on Israeli territory. The threshold that had previously existed as a deterrence boundary had been crossed, and the post-October 7 conflict whose broader regional escalation the series had flagged in Q4 2023 had moved from threat to reality.
For Jamaica’s economic environment, the Iran-Israel escalation’s primary transmission channel was energy prices. The Brent crude oil price, which had been tracking in the mid-$80s through early Q2, spiked on the April attack news before partially retreating as the immediate military containment became clear — the market’s initial read that an Iran-Israel direct confrontation would escalate toward Strait of Hormuz closure or significant supply disruption proved premature, but the risk premium that the new direct-conflict reality introduced into oil pricing did not fully reverse. Energy costs that Jamaica imports at world market prices were thus carrying a higher geopolitical risk premium through Q2 than the macroeconomic disinflation narrative would have implied. The pass-through to domestic energy prices was moderated by the Petrojam refinery’s procurement and storage cycle but was not eliminated: Jamaican consumers and businesses were absorbing an energy cost that was slightly higher than the US CPI disinflation story alone would have suggested.
The Debate and the Election’s New Shape
The June 27 debate’s political consequences — which would fully unfold in July when President Biden announced his withdrawal from the race and endorsed Vice President Kamala Harris — were, through Q2, still unresolved: by June 30, the Democratic party was in open debate about whether the incumbent should continue, but no decision had been made. The economic significance for Jamaica was the introduction of a third scenario into the US election matrix that had previously been modelled as a binary: a Harris candidacy, with its own distinct policy profile on trade, immigration, fiscal policy and geopolitical engagement, represented a set of planning assumptions distinct from both a Biden second term and a Trump return. The uncertainty that Q1’s review had noted as the election year’s primary planning challenge had not resolved; it had deepened, with the range of outcomes now spanning three distinct policy environments rather than two.
The series maintained its position that the appropriate response to political uncertainty is not to pick a winner and plan for it, but to identify the Jamaica-specific economic variables most sensitive to each scenario and monitor them for signals as the uncertainty resolves. Tourism demand remained the least policy-sensitive of those variables: US consumer income, employment and confidence are primary tourism demand determinants, and those variables are driven by economic forces that persist across administrations. Remittances remained the most policy-sensitive: both Trump’s stated immigration enforcement positions and the regulatory environment for money transfer operators are directly affected by administration policy choices in ways that tourism demand is not. The diaspora’s planning horizon, as Q2 ended with the race’s shape still being determined, was characterised by a degree of immigration policy uncertainty that exceeded anything the series had documented in its prior six years of publication.
Jamaica’s Summer 2024: Baseline Holding
The advance booking data through Q2 for Jamaica’s summer 2024 season eliminated the most concerning of the post-record scenarios that the tourism sector’s Q1 review had identified: a demand normalisation from 2023’s exceptional year that would produce a visible decline in occupancy and arrival rates before the new structural baseline could be confirmed. The bookings placed through April, May and June for the July and August peak months were tracking at levels consistent with maintaining near-2019 arrival performance — not necessarily matching or exceeding the record, but sustaining the baseline rather than correcting sharply from it. The US consumer whose willingness to spend on Jamaica travel was the primary demand driver was, through Q2’s data, still spending: the discretionary travel budget that had absorbed student loan resumption, credit card delinquency normalisation and two years of real wage erosion without collapse in 2023’s data was continuing to fund Jamaica travel in 2024’s advance booking data.
The Bank of Jamaica‘s continuing easing cycle was adding a domestic tailwind to the external demand story. The policy rate reductions that had begun in Q4 2023 were, by Q2 2024, producing visible changes in the NHT’s mortgage terms — the financing vehicle through which the tourism sector’s workforce translates sustained employment into homeownership — and in the commercial banks’ lending rates, which had been slower to transmit the BOJ’s direction than the monetary policy channel’s theory predicted but were beginning to follow the signal. The property market that Jamaica’s resort-adjacent communities were experiencing through Q2 was the most constructively positioned it had been since the 2021–2023 tightening cycle began: demand confirmed by the tourism employment story, supply constrained by the deferred pipeline, financing terms improving with each BOJ cut. The Jamaica Tourist Board‘s Q2 data confirmed that the sector whose performance underpins this property market story was holding its structural baseline.
What This Means
Homeowners in Jamaica are, through Q2 2024, experiencing the first quarter in which the BOJ’s easing cycle’s transmission to consumer-facing mortgage rates is meaningfully visible. The NHT’s periodic rate adjustments, which track the BOJ’s policy rate with a lag, are beginning to reduce the monthly payment burden for new loans and to improve the qualification math for applicants whose income had been sufficient at 2021’s rates but insufficient at the cycle’s 2022–2023 peak. Each subsequent BOJ cut — and the easing cycle through Q2 had not exhausted itself; more reductions were expected if the domestic inflation data continued its convergence toward the target band — adds incremental improvement to the financing terms that the market has been waiting for since the tightening cycle began. The homeowner’s position through Q2 is the most favourable since 2021: the direction is right, the pace is arriving, and the supply constraint that limits options is being addressed by the development pipeline that 2023’s demand confirmation has begun to activate.
Renters in Jamaica’s resort parishes are navigating a housing market whose pricing has risen materially through four years of recovery demand, creating a gap between what sustained tourism employment supports in wages and what resort-adjacent property costs at Q2 2024’s prices. The BOJ’s rate cuts help at the NHT qualification margin; they do not compress property prices that have risen on the supply-constrained demand the tourism recovery has sustained. The renter who has maintained continuous employment through the recovery — four years of near-record arrival seasons — is in the strongest financial position the recovery has produced, but the property market entry point that position makes accessible has risen alongside the wages it took to reach it. The affordability gap is structural rather than cyclical, and its resolution requires new supply rather than rate cycle management.
Developers reading Q2 2024 are in the most constructively positioned quarter the series has documented for pipeline activation. The demand case: confirmed through four years and now tracking into a fourth consecutive summer at or near the record baseline. The rate environment: domestic easing underway, external rates stable. The political uncertainty: present, but the scenarios that most directly affect Jamaica’s resort development thesis — US consumer income and travel willingness — are the least sensitive to the electoral outcome’s range. The AI data centre opportunity, still prospective, is the emerging story for developers with capital and institutional capacity to position for infrastructure-adjacent development rather than purely hospitality assets. Q2 2024’s developer calculus is the most positive since the series began tracking development economics in Jamaica’s resort parishes.
Businesses across Jamaica operating in tourism and tourism-adjacent sectors are, through Q2 2024, in the strongest revenue environment the recovery has produced for the summer booking period. Advance data suggest the fourth consecutive strong summer; the cost environment has normalised; and the BOJ’s rate easing is reducing the financing cost burden that had constrained the capital investment programs that tourism recovery’s strength made arguable. The Q2 story for Jamaica’s tourism businesses is one where every variable that was adverse in 2022 — commodity costs, supply chain premiums, tight labour market, rate cycle pressure on financing — has either reversed or is reversing, and the revenue confirmation that three years of near-record arrivals established has provided the earnings visibility to plan investments that the 2022 uncertainty had deferred. The risk entering the second half is whether the US election’s policy uncertainty, and its potential resolution in directions adverse to the travel and remittance channels, represents a medium-term headwind that the current strength does not fully price.
Diaspora Jamaicans in the United States are entering the second half of 2024 in the most uncertain political environment in the series’ history: an election whose shape changed in ninety minutes of June television, whose outcome now spans a wider policy range than any prior year’s analysis had needed to model, and whose immigration and trade implications for the diaspora are the most directly policy-sensitive variables the series tracks. The aggregate economic picture for diaspora workers remains constructive: unemployment at 4.0 percent, real wages positive, consumer spending resilient. The specific disruption affecting professional diaspora workers in AI-exposed employment categories is ongoing but not yet aggregate in its effect. The political uncertainty is the variable that Q3 — when Biden’s replacement decision will be confirmed or reversed — will begin to resolve.
Outlook
Q3 2024 will be defined by three resolutions. The first is political: Biden’s decision on whether to remain in the race, and its consequence for the Democratic nominee who will face Trump in November, was still formally unresolved on June 30 but was clearly in its final days of that formal status. The resolution — which arrived in July — restructured the electoral contest and its implications for Jamaica’s US policy exposure in ways that Q2 could only identify, not analyse.
The second is the Fed’s first cut. With May’s CPI data showing resumed progress and the June CPI (to be released in July) widely expected to show further improvement, the September FOMC meeting became the market’s primary candidate for the first rate reduction of the easing cycle. A September cut would begin the external rate environment improvement that Jamaica’s sovereign debt refinancing and development financing have been positioned to benefit from since the BOJ’s own pivot in Q4 2023. The third is summer 2024’s actual arrival data: the advance bookings that Q2 had confirmed as baseline-consistent would either be converted into actual arrivals at the volumes and revenue performance the bookings implied, or would not. The Jamaica Tourist Board’s preliminary July data will be the first confirmed read on whether the fourth consecutive summer at the structural baseline is being delivered.
Jamaica Economic Intelligence is an independent data-driven journalism series tracking Jamaica’s economic performance across the housing, tourism, fiscal and monetary sectors. Historical data drawn from Bank of Jamaica, Statistical Institute of Jamaica, International Monetary Fund and Jamaica Tourist Board publications. This report covers Q2 2024: April–June 2024.
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