• The Ministry of Health and Wellness has been provided with a capital budget of approximately $6.43Bn for the fiscal year 2023/24. This represents a 31% increase over last year’s allocation, according to Portfolio Minister, Dr. the Hon. Christopher Tufton. He made the disclosure during his 2023/24 Sectoral Debate presentation in the House of Representatives, on Wednesday (May 3).
• Tufton, in providing a breakdown of programmed engagements in progress, said work on the Western Children and Adolescent Hospital in St. James has advanced to the fifth floor, with more than $450 million spent, so far, through a grant provided by the People’s Republic of China. “We are slated for completion in 2025. When completed, the facility will boast the only adolescent hospital in the English-Speaking Caribbean and the second paediatric facility on the island,” he informed.
• Regarding the Spanish Town Hospital, ground-breaking is scheduled for July 2023 at a contract price of some $6.4 billion to be spent over two years. He noted that consequent on these investments, the Spanish Town Hospital’s services will be expanded to include Cardiology, Haematology/Oncology, Ophthalmology, and Otolaryngology (ENT).
• Tufton also advised that the Cornwall Regional Hospital’s renovation is in the final stages of completion. “The final phase will commence in a month or two. There is a $14-billion expenditure associated with that and we expect that will begin to reoccupy the main building by the end of this year, right through the year 2024,” the Minister said.
• The Minister informed that since 2018, more than 100 health facilities islandwide have benefited from significant investments totalling approximately $4.4 billion, which have served to right-size and renew primary healthcare institutions.

(Source: JIS)

• Mexican economic activity remained robust in Q123, with real GDP growth picking up from 0.5% q-o-q (3.6% y-o-y) in Q422 to 1.1% q-o-q (3.9% y-o-y). This was well above both Fitch’s and consensus estimates, which sat below 1.0%.
• No expenditure breakdown is available as of yet, but preliminary output data from the National Institute of Statistics and Geography (INEGI) suggest that growth was broad-based.
• Helped by the continued resilience of the US economy, the export-oriented secondary sector grew by 0.7% on a q-o-q basis (2.6% y-o-y), while a 1.5% (4.3% y-o-y) expansion of the tertiary sector pointed to strength in domestic demand.
• In response to the Q123 results, Fitch has revised up its average annual forecast for real GDP growth in 2023 even further from 1.8% to 2.2%. Fitch remains considerably more bullish than consensus, which has pencilled in a 1.4% expansion this year.
• Mexican real GDP growth is being underpinned by three key factors, namely, significant FDI inflows, linked to the near-shoring phenomenon (close proximity to the USA); persistent strength in US economic activity that has helped to support Mexican export growth and remittances and; the government’s move in January to raise the minimum wage by 20% and the public pension by 25% that has boosted domestic demand.
• Notably, the apparent resilience in domestic demand also poses some upside risks to the interest rate forecast. Currently, Fitch sees the Bank of Mexico’s (Banxico) policy rate rising by a final 25bps to 11.50% in June, before being cut to 11.00% by year-end.

(Source: Fitch Solutions)

• The Chilean peso is set for a period of stability as economic and political worries continue to fade, validating the central bank's decision to unwind an intervention programme implemented last year to calm market turmoil, a Reuters poll showed.
• The foreign exchange and dollar liquidity intervention programme was implemented in mid-July 2022 to help the proper functioning of the foreign exchange market and facilitate the adjustment of the economy and financial markets to external and internal conditions.
• In July last year, the peso plunged to a record low of 1,050 per U.S. dollar in reaction to a sharp drop in the price of copper, Chile's top export, that added to concerns over a proposed reform of its market-friendly constitution.
• However, the peso recovered in the second half of 2022 and has settled close to 800 since the start of this year due to better demand for metals after China reopened its economy.
• The currency is forecast to remain near 800 in coming months, trading at 811 per dollar in one year, where it was on Tuesday, May 2, according to the median estimate of 14 foreign exchange experts surveyed on April 28 to May 3.

(Source: Reuters)

• European savers are pulling more of their money from banks, looking for a better deal as lenders resist paying to hold on to deposits some feel they can currently live without.
• This trend emerged as some of the region's biggest lenders outlined a profitable start to the year, in results that also offered a glimpse of a phenomenon dubbed a "bank walk" - a slow but notable outflow of customer cash.
• Lenders wasted little time in charging more for loans when interest rates rapidly rose from an almost 15-year slumber around zero last year, but most have dragged their feet on boosting deposit rates paid to millions of their customers. That has boosted profits at many major banks beyond many analysts' expectations but left savers disgruntled, raising fresh questions over the longer-term stability of the sector.
• "Traditional banks need to decide whether to maximise their return by keeping rates on deposits as low as possible or to prioritise their liquidity and stability by increasing rates and retaining customers' funds," Nicola Marinelli, assistant professor of finance at Regent's University London, said.
• Money market funds are proving popular among savers seeking bigger returns on their cash as high levels of inflation persist. In recent years, returns on these funds have only narrowly beaten bank deposit rates but the Crane sterling-denominated Money Market Fund index reported a 7-day annualised yield of 4.12% as of April 25, compared with some bank interest rates still stuck below 1%. The euro-denominated equivalent was 2.81%.

(Source: Reuters)

• Britain's services sector kicked off the second quarter with its fastest growth in a year, boosted by new orders, but it passed the cost of rising wage bills on to consumers, adding pressure on the Bank of England to keep raising interest rates.
• The final S&P Global/CIPS UK Services Purchasing Managers' Index (PMI) rose to 55.9 from 52.9 in March, above the 50 threshold for growth and higher than a provisional reading of 54.9.
• The reading added to a series of improved measures of the economy which had appeared to be heading for a recession in early 2023. Official mortgage and consumer lending data also surprised to the upside on Thursday. "A strong rate of service sector growth meant that the UK economy started the second quarter of 2023 in a positive fashion," Tim Moore, economics director at S&P Global Market Intelligence said.
• However, prices charged by businesses picked up pace after rising by the smallest amount in 22 months in March, and are still increasing noticeably faster than before the COVID-19 pandemic as firms rebuild profit margins. A BoE survey of companies on Thursday showed expectations for selling prices refused to budge lower in April, although their predictions for wage growth and inflation in the coming year cooled.
• The BoE, which is expected to lift its Bank Rate to 4.5% next week, is closely monitoring wage-setting and businesses' profit margins as it attempts to return double-digit inflation to its 2% target.

(Source: Reuters)

• Image Plus Consultants Limited (IPCL) recorded a net profit of $236.43Mn for the year ended February 28, 2023, representing a 150.7% increase in profitability when compared to the $94.29Mn recorded over a similar period in 2022.
• Revenue for the year was up by 40.7% y-o-y to $1.09Bn mainly attributed to higher case count which increased by 18.3% (or 8,469 cases) to 54,840 over FY 2022. This increase was driven by the addition of on-call services in Q4 FY 2023 in Kingston and Ocho Rios as well as increases in interventional studies and high-value CT scans.
• Cost of sales increased by 38.7% (or $105.29Mn) in line with revenue growth, moving to $377.49Mn. However, the growth in COGS was outpaced by revenue growth resulting in a marginal increase in the gross margin to 65.5% up from 65.0% in 2022. Administrative expenses were 14.4% (or $52.46Mn) higher when compared to the $364.72Mn recorded in the same period of last year. This was largely due to expenses associated with one-off costs from its recent IPO (January 2023) and the relocation expenses of its Ocho Rios branch.
• IPCL’s stock price has increased by 8.0% since its IPO in January. The stock closed Wednesday’s trading session at $2.16 and currently trades at a P/E of 9.4x which is below the Junior Market Heath Sector Average of 16.0x.
• The outlook for the company is optimistic as it anticipates that it will be able to add two new modalities (mammography and MRI) by Q3 FY2024. This along with further growth in interventional studies is expected to contribute to the continued growth in its case count. Having listed on the Junior Market of the Jamaica Stock Exchange in 2023, IPCL benefits from a full tax holiday for the first five years and a 50% tax holiday in years 6 to 10. This should bode well for its bottom line and drive shareholder value over the next 10 years.

(Sources: JSE and NCBCM Research)

• The Ministry of Industry, Investment, and Commerce, through the Trade Board Limited, will be establishing an export academy. This facility is designed to provide free, online information and training for businesses, to boost their confidence to seek out export opportunities. Work on this facility is expected to commence in July 2023.
• Prime Minister, the Most Hon. Andrew Holness, made the announcement while delivering the keynote address during the opening ceremony for Expo Jamaica 2023 at the National Indoor Sports Centre in Kingston, on Thursday (April 27). Meanwhile, Mr. Holness said, the Trade Board is working to digitise its services and initiatives, with the aim of supporting exporters and facilitating ease of access to its provisions.
• Other initiatives in the pipeline include the Step-Up initiative and a market intelligence and trade compliance information platform. Mr. Holness said this online resource will facilitate the registration of businesses around the world while adding that “the Trade Board is working to support exporters”. Noting recent data indicating a 6% increase in local manufacturing, the Prime Minister said this signals the sector’s revival.
• Expo Jamaica, the Caribbean’s trade show, made its return after a two-year hiatus due to the COVID-19 pandemic. This year, it connected local manufacturers, producers, tourism industry players, and service providers with 660 local and international buyers from almost 30 countries.
• “We have a broad-based manufacturing industry here in Jamaica and I am certain that as a result of this expo and the exposure, this broad base of Jamaica’s manufacturing will increase even greater,” Mr. Holness said.

(Source: JIS)

• After decades of consistent deficits, Fitch expects Guyana's current account balance will maintain a wide surplus over the coming years, underpinned by strong growth in oil exports.
• Fitch estimated that the current account surplus reached 30.6% of GDP in 2022 (from a deficit of 28.9% of GDP in 2021) as the start of production at ExxonMobil’s second offshore operation in the Stabroek block in February 2022 drove a 159.4% increase in goods exports.
• The current account surplus will narrow to 24.9% of GDP in 2023 as oil-related capital investment, rising government spending and stronger household purchasing power fuel robust import growth.
• Nonetheless, with several new offshore projects due to come online, fueling greater oil exports, Fitch expects Guyana will post a wide current account surplus averaging 26.7% of GDP over 2023-2027.
• Additionally, the country’s capital account will remain in deficit over the coming years (the capital account flipped from a surplus of US$2.1Bn in 2021 to a deficit of US$3.7Bn in 2022) as oil companies recover costs, but healthy foreign direct investment (FDI) inflows and growing international reserves should minimise risk to Guyana’s external account stability over the coming years. 

(Source: Fitch Solutions)

• Brazilian President Luiz Inacio Lula da Silva's government published an executive order aimed at increasing revenue by taxing the capital income from financial investments obtained abroad by individuals who reside in Brazil.
• Income earned from January 1, 2024, will be considered for that purpose, said the text of the measure published on Sunday night that takes effect immediately. It must be voted on by Congress within four months to become permanent law.
• According to the text, income obtained abroad from financial investments will be taxed upon the sale or maturity of assets, while profits and dividends from controlled entities will be taxed on December 31^st of each year. The measure also includes the taxation of assets in trusts.
• Income up to 6,000 reais (US$1,203) will be tax-exempt, while income above that but below 50,000 reais will be taxed at 15%. Income exceeding 50,000 reais will be taxed at 22.5%.
• The Finance Ministry said the measure has the potential to collect around 3.2 billion reais (US$641Mn) in 2023, close to 3.6 billion reais in 2024 and 6.7 billion reais in 2025.
• The measure was published in an extra edition of the official gazette, but Lula did not mention it during his Labour Day speech last Sunday, where he pledged to introduce a new policy of real increases in the minimum wage and announced plans to raise the income tax exemption for lower-income earners.
• Leftist Lula's economic team has emphasized that the government will seek to balance public accounts by taxing those who should but are not paying taxes. However, Sunday's measure was not disclosed on official government channels.

(Source: Reuters)

• A fight between Republicans and Democrats over the debt limit ceiling could send the U.S. economy into a recession. Even if the standoff doesn't actually trigger a debt default, analysts say a much worse downturn could occur with perhaps 7.5 million people thrown out of work.
• Already some corners of the vast market for U.S. debt are feeling a sharp pinch after Treasury Secretary Janet Yellen on Monday said that by early June the government may run short of the money to stay current on its bills - whether they are payments owed to foreign or domestic investors in Treasuries, federal employees and contractors or Social Security pensioners.
• Total government spending on average is about $525 billion a month. A big chunk of that, about $225 billion on average in the first quarter, is deficit spending. Hitting the debt ceiling would mean the government could no longer run that budget shortfall, delivering an immediate blow to millions of Americans who rely on government money directly or indirectly.
• The market reaction from an unprecedented U.S. default would bludgeon away billions more in wealth, and while analysts have floated a few workarounds to keep money flowing, including invoking a constitutional provision that would likely face challenges in court, all are untested.
• Investors are taking the risk seriously. Yields on as much as $650 billion of Treasury securities maturing in the first half of June rocketed to record highs after Yellen's announcement, reflecting the increased chance that they may not be paid off on schedule. The cost to insure U.S. government debt against default has shot to the highest since the 2007-2009 financial crisis.
• Nationwide Chief Economist Kathy Bostjancic was already expecting a recession later this year, as the Federal Reserve's rapid-fire interest-rate hikes aimed at battling inflation raise borrowing costs for households and businesses and slow bank lending. All of that takes air out the economy's tires and could start to push up the unemployment rate, now at a historically low 3.5%.

(Source: Reuters)