• Prime Minister,  Andrew Holness, indicated that the Business Process Outsourcing (BPO) industry is on a continuous growth path, with the number of persons employed increasing from approximately 48,000 prior to the onset of the coronavirus (COVID-19) pandemic, to over 54,000 to date. 
• The country has had a strong track record in attracting investments in the sector through consistently demonstrating the capacity to provide high-quality service in areas such as customer care, human resource outsourcing (HRO), receivables management, technical helpdesk support, outbound sales, and lead generation. 
• Prime Minister Holness also noted that the job opportunities go beyond call centre operations to incorporate knowledge services, which require advanced analytical and technical skills. He said Jamaica is “well placed” to deliver the various services, which include back-office operations such as the reviewing of legal and medical documents, booking of flights, high-value programming and coding, and data operations.

(Source: JIS)

• The Barbadian government has embarked on a number of policy initiatives to breathe new life into the local manufacturing sector. 
• Speaking at the launch of the Barbados Manufacturers’ Association’s Trade and Innovation Summit 2022 at the Hilton Barbados Resort on June 8th, Minister of Industry, Innovation, Science and Technology, Davidson Ishmael, said these initiatives were aimed at improving the competitiveness and export readiness of Barbadian enterprises, with the goal of achieving an export target of US$1 billion by 2030. 
• “One of these initiatives is the corporate reform and rebranding of the Barbados Investment and Development Corporation with a strategic focus on exports. Government is seeking to establish a strong export brand by building a national export culture.  We will globally position Barbados’ industrial brands in the international market to appeal not only to the diaspora, but to consumers across various cultures and borders,” the Industry Minister stated. 
• They are also seeking to establish a subsidiary entity, an Export Bank, through a public-private partnership model. It is intended for this facility to provide a suite of export finance and insurance offerings, such as buyer finance, purchase order financing, project financing, an export guarantee programme, and credit insurance. 
• The overarching goal of this agency is to enable the growth of the export sector through creative export financing solutions utilising a model which is profitable and sustainable.

(Source: Barbados GIS)

• U.S. inflation could remain above the Federal Reserve's targets for a long time based on current projections, and there is a risk of inflation expectations "de-anchoring," International Monetary Fund First Deputy Managing Director Gita Gopinath said on Wednesday. 
• This means that based on current projections of what the interest rate path may be, inflation will stay above the Fed's 2% target "for a long time”. 
• Gopinath also spoke of an "incredibly narrow" path that would allow for the tightness in goods and labour markets to unwind without rates rising much more. However, she said, "overall, the risks are towards the possibility that this will require much steeper increases in rates." 
• The Fed has raised rates twice so far this year and 50-basis point hikes are priced in for both its meeting next week and the following one in July.
• U.S. Treasury Secretary Janet Yellen said separately on Wednesday that the current annual inflation rate of 8% is "unacceptable" for the United States and 2% is an "appropriate target."

(Source: Reuters)

• Canada's central bank has signaled plans to race ahead with a series of oversized hikes to curb inflation, upping the risk of plunging the economy into a recession, say, economists, though worth it if it keeps rapid price rises from becoming entrenched. 
• The Bank of Canada last week raised its policy interest rate to 1.5% from 1.0%, its second consecutive 50-basis-point hike, and said it was ready to act "more forcefully" if needed to fend off "galloping inflation," already at a 31-year high. 
• That could mean more moves before pausing, larger than 50-bp increases, or an end rate somewhere above neutral - the 2%-3% range where interest rates neither stimulate nor weigh on growth, Deputy Governor Paul Beaudry said. 
• The housing market, a key driver of Canada's economy, has cooled sharply from February's peak, as rate hikes cut into buying power. The country's export volumes are also down 4.9% so far this year, a decline to date masked by hot commodity prices. Still, inflation is running at 6.8% and set to rise further, Canada's jobless rate is at a record low and businesses report more demand than they have the capacity to meet, bolstering the case for a forceful response. 
• Money markets are betting the Bank of Canada will raise its policy rate to 3.25% by the end of this year, the highest level since 2008 and three full percentage points above January's 0.25%. That rapid pace could shock Canada's economy, which has the highest level of household debt in the G7.

(Source: Reuters)

• Jamaica's real gross domestic product (GDP) per capita has averaged $4,746 over the past decade, below the average for the 1990s ($4885.36), and has declined further with the pandemic. Falling per capita income coincided with a larger share of the population at work suggesting declining average labour productivity. 
• Jamaica’s low growth and declining productivity are attributed to a long list of constraints, such as pervasive crime and violence which discourage investments. 
• The country is also vulnerable to climate shocks, such as natural disasters, which affect mainly vulnerable groups as well as key sectors like tourism and agriculture. Further, the costs of energy and internet connectivity are extremely high even by regional standards and there are gaps in human capital with high migration of skilled labour and a weakening in learning and education outcomes. 
• Despite a steep reduction of public debt in recent years, from 145% to an estimated 96% of GDP between 2013 and 2021, it remains among the highest in the region. As such, faster growth is needed to reduce the debt burden and create space for pro-poor interventions. Achieving the target of a debt stock of at least 60% of GDP by 2028 as outlined in the Fiscal Responsibility Law will require addressing constraints to growth while improving the efficiency and effectiveness of public spending.

(Source: World Bank)

• A proposal for the implementation of an Unemployment Insurance Scheme will soon be submitted to Cabinet for approval. This scheme aims to protect employed persons against the risk of job loss and facilitates access to partial income during spells of unemployment. 
• The feasibility study on unemployment insurance was undertaken by the International Labour Organisation and the Planning Institute of Jamaica (PIOJ), with input from several government ministries and stakeholders. 
• Unemployment Insurance would complete Jamaica’s social protection floor, as it is the only missing element as articulated in the Jamaica Social Protection Strategy of 2014. An unemployment scheme can serve as an important macroeconomic stabilisation tool during periods of economic downturn by strengthening Jamaica’s ability to respond to economic shocks, while reducing the risk of poverty among workers and their families in periods of crisis.

(Source: JIS News)

• Fitch forecasts that Peru’s current account deficit will narrow to 2.5% of GDP in 2022, from, 2.8% in 2021, due to import demand slowing more rapidly than export demand. After the COVID-19 pandemic yielded Peru’s first current account surplus since 2007 in 2020, due to a sharp fall in imports, a strong economic recovery returned the current account to a deficit in 2021. This comes as pent-up demand and pandemic-era stimulus measures drove domestic demand for foreign goods. 
• In Q1 2022, goods imports grew 19.1% y-o-y in nominal USD terms, as lower borrowing costs and the tailwinds from a strong economic recovery in 2021 supported domestic demand. However, it is expected that real GDP growth in Peru will slow to 2.6% in 2022, from 13.3% in 2021, with private consumption, in particular, easing in the coming months.  
• Goods export growth will slow to 11.1% in 2022, from 47.1% in 2021, pushing the overall trade surplus to USD16.8Bn (6.7% of GDP), from USD14.6Bn (6.6%) in 2021. In Q1 2022, exports grew 23.1% in nominal USD terms, largely driven by strong copper demand. While this data shows promising growth in the first months of 2022, multiple factors will weigh on export growth in the coming months. 
• Peruvian goods exports will be particularly impacted by slowing growth in China, the key export market for Peruvian copper, which makes up 40.0% of total exports from Peru. That said, Chinese real GDP growth will slow to 4.5% in 2022 due to health-related lockdowns, limiting demand for Peruvian copper. Additionally, copper prices will dip in H2 2022, which will further undercut the value of Peru’s exports. 
• Against this background, in the coming quarters, it is expected that the slowdown of the Peruvian economy will limit import demand, resulting in a wider goods trade surplus, narrowing the current account deficit.

(Source: Fitch Solutions)

•  Grenada is welcoming the resumption of Air Canada’s direct service from Toronto. Earlier this year, Air Canada announced the suspension of flights to several Caribbean islands including Grenada citing “current pandemic context,” a reference to the ongoing coronavirus (COVID-19) pandemic, as the reason. 
• Tourism, Civil Aviation, Climate Resilience and the Environment Minister, Clarice Modeste-Curwen, said “The return of Air Canada is welcome news at a time when accessibility and travel convenience are key to attracting international visitors.” Notably, Canadian arrival numbers have remained strong in Grenada, despite the absence of direct service. The country is pacing ahead of 2019 numbers, and group business is up 37%. 
• Canada is recognized as one of the most important tourism generating markets in the world, with 41% of Canadians choosing beach destinations. To that end, Grenada continues to be a firm favourite amongst Canadian travelers with a typical stay of up to ten days on the island. The market has continued to grow over the years and delivers a great return on investment in the tourism industry. 
• This direct connection will ultimately lead to a further increase in the number of Canadians visiting Grenada. In addition, the country recently rescinded its entry protocols, “making it easier for travelers to reach the destination” and contribute to the resumption of the country’s tourism sector. Modeste-Curwen said both vaccinated and unvaccinated travelers arriving in Grenada do not need to take any COVID-19 tests prior to arrival or upon arrival, do not need to fill out a health declaration form prior to arrival or upon arrival, and do not need to quarantine on arrival.

(Source: Caribbean Nation Weekly)

• The World Bank on Tuesday slashed its global growth forecast by nearly a third to 2.9% for 2022, warning that Russia's invasion of Ukraine has compounded the damage from the COVID-19 pandemic, and many countries are now facing recession. 
• The war in Ukraine had magnified the slowdown in the global economy, which was now entering what could become "a protracted period of feeble growth and elevated inflation," the World Bank said in its Global Economic Prospects report, warning that the outlook could still grow worse. 
• In a news conference, World Bank President David Malpass said global growth could fall to 2.1% in 2022 and 1.5% in 2023, driving per capita growth close to zero, if downside risks materialized. Malpass said global growth was being hammered by the war, fresh COVID lockdowns in China, supply-chain disruptions, and the rising risk of stagflation -- a period of weak growth and high inflation last seen in the 1970s. 
• The bank forecast a slump in global growth to 2.9% in 2022 from 5.7% in 2021, a drop of 1.2 percentage points from its January forecast, and said growth was likely to hover near that level in 2023 and 2024. It said global inflation should moderate next year but would likely remain above targets in many economies. Growth in advanced economies was projected to decelerate sharply to 2.6% in 2022 and 2.2% in 2023 after hitting 5.1% in 2021. U.S. growth was seen dropping to 2.5% in 2022, down from 5.7% in 2021, with the Eurozone seeing a growth of 2.5% after 5.4%. 
• Negative spillovers from the war in Ukraine would more than offset any near-term boost reaped by commodity exporters from higher energy prices, with 2022 growth forecasts revised down in nearly 70% of emerging markets and developing economies.

(Source: Reuters)

• The U.S. trade deficit narrowed by the most in nearly 9-1/2 years in April as exports jumped to a record high, putting trade on course to contribute to economic growth this quarter. The sharp decline reported by the Commerce Department on Tuesday reversed March's surge and suggested that trade could be shifting back to a more normal pattern. The deficit widened, hitting successive all-time highs, as the United States' economy led the recovery from the COVID-19 pandemic global downturn. 
• "The deficit has widened on trend over the past two years because the U.S. economy has generally grown faster than most of its major trading partners over that period," said Jay Bryson, chief economist at Wells Fargo in Charlotte, North Carolina. "We look for trade to make a modest positive contribution to overall GDP growth in the second quarter.” 
• The trade deficit dropped 19.1%, the largest decline since December 2012, to $87.1 billion. This is below the expectations of economists polled by Reuters, which had forecast the trade gap shrinking to $89.5 billion. 
• In April, exports of goods and services increased 3.5% to an all-time high of $252.6 billion. The broad increase was led by shipments of industrial supplies and materials, which hit a record high amid rises in exports of natural gas, precious metals, and petroleum products. Exports of services also increased from $2.4Bn to $76.5Bn, lifted by gains in both travel and transport. 
• Imports of goods and services fell 3.4% to $339.7 billion. Imports had been rising rapidly as businesses replenished inventories to meet strong domestic demand. However, with the Federal Reserve raising interest rates to combat inflation, demand is slowing. Inventories of some goods are also close to normal levels, reducing the need for imports. The drop in imports could also be the result of shutdowns in China as it battled new COVID-19 infections. Imports from China fell by $10.1 billion, helping to narrow the goods trade gap with Beijing to $34.9 billion from $43.4 billion in March.

(Source: Reuters)