Jamaica’s financial stability remains largely resilient coming out of the major shock caused by COVID-19.
That’s according to the Bank of Jamaica’s latest report from it’s Financial Policy Committee released over the weekend.
However, the report identified climate change and inflation as two of the most significant threats to the country’s financial systems.
Chevon Campbell has that story.
The Bank of Jamaica says the recovery of the economy in 2021 and positive developments in the financial sector were reflected in improvements in macro-financial stability.
It says the financial sector remained liquid, profitable and well capitalized, notwithstanding the shocks suffered due to the Pandemic.
The improvements in the macro-financial environment reflected gains in the stock market and overall economic growth.
However, the stability report says there remains an ongoing risk associated with climate change.
While a stress test conducted by the BOJ showed that the financial sector continued to be resilient to selected hypothetical adverse shocks to the economy, there was some reduction in resilience given the stresses already weathered by the sectors in 2021.
But, the central bank concluded that there is not enough data currently on the financial system’s exposure to climate related risks.
Nonetheless, it says hypothetical scenarios, in which credit quality and GDP fell following a significant adverse weather event, suggest that the financial sub-sectors would remain resilient to these shocks.
However, while the economy is poised to register further growth, the report says inflation pressures are likely to remain strong or be amplified throughout the year.
It says these pressures are likely to remain for the next 10 to 12 months without action.
It comes as global tensions continue to rise due to the war in Ukraine and further shocks to the international supply chains.
The Central Bank says in response to these risks it’s developing tools aimed at limiting systemic damage.
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