• Scotia Group reported a net profit of $4.37Bn for its six months ending April 30, 2022 which represents a year-over-year decline of 2.5%. This was influenced by lower revenues as operating expenses remained flat. 
• Although net interest income increased 16% due to a rise in interest earned on the investment portfolio and improved retail loan volumes, revenues declined 1.6%. The decline was attributed a fall in gains on financial assets (-83.9%), other revenue (-69.4%) and net gains on foreign currency activities (-26.1%). 
• To improve its financial performance Scotia has implemented new initiatives such as  lowering the minimum opening balance requirement for mutual funds and unit trusts to $250,000. This move will allow more of its customers to add investment products to their overall financial portfolio. Additionally, its insurance arm—Scotia Insurance—launched Scotia Elevate, a new Universal Life product, which requires no medical underwriting.  These new initiatives should support its top-line performance in the coming months. 
• Scotia’s stock price has appreciated by 2.6% year-to-date to $36.95. At its present price it trades at a P/E of 13.9x, which is above the Main Market Financial Sector Average of 12.1x .

(Source: Company Financials & NCBCM Research)

• The World Bank projected a slowdown in growth in the Caribbean, as it delivered a grim warning that many of the world’s countries face recession. The financial institution’s Global Economic Prospect report said the world economy was now headed toward “a protracted period of feeble growth and elevated inflation”. 
• The World Bank is projecting 2.9% global growth this year, down from 5.7% in 2021, and credits the expected lack lustre performance to Russia’s invasion of Ukraine and the effects on key commodities, coupled with the fallout from the COVID-19 pandemic. 
• According to the Bank, the unstable conditions have severely hit Latin America and the Caribbean (LAC) economies and expected economic growth in the region will slow to 2.5% this year and further to 1.9% in 2023. Growth in the Caribbean is however projected at 6.9% in 2022 and 6.5% in 2023, helped by recovering tourism. 
• Notably, the region’s growth forecast includes spillovers from weaker global growth, increased food insecurity and social unrest, continued higher-than-forecast inflation and financial stress. In addition, the war in Ukraine is having substantial effects on the region via higher commodity prices and weaker global growth. 
• Further, in a context of slow growth and rising US interest rates, financial stress could take hold in some economies of the region, especially if policymakers are unable to credibly commit to reforms to sustainably boost growth. To reduce the risks, the World Bank said policymakers should work to coordinate aid for Ukraine, boost the production of food and energy, and avoid export and import restrictions that could lead to further spikes in oil and food prices.

(Source: Barbados Today)

• Peru's central bank raised the country's benchmark interest rate by 50 basis points to 5.5% on June 9, the eleventh consecutive hike, as authorities in the copper-producing Andean nation battle stubbornly high inflation. Peru's central bank has raised the key interest rate 525 basis points since mid-2021. Prices rose more slowly in May than in the two prior months, but annual inflation still reached 8.09%, its highest level in 24 years. 
• The Andean nation’s central bank’s decision follows rate hikes this week in Brazil, Chile, and Mexico, as authorities respond to inflation that is not falling as quickly as expected.

(Source: Reuters)

• Next month, the International Monetary Fund expects to further cut its forecast for global economic growth in 2022, following moves by the World Bank and Organization for Economic Co-operation and Development (OECD) to cut their own forecasts this week. That would mark the IMF's third downgrade this year. In April, the IMF had already slashed its forecast for global economic growth by nearly a full percentage point to 3.6% in 2022 and 2023. 
• Fund spokesperson Gerry Rice told a regular IMF briefing that the overall outlook still called for growth across the globe, albeit at a slower level, but that some countries may be facing a recession. 
• The World Bank on Tuesday slashed its global growth forecast by nearly a third to 2.9% for 2022, citing compounding damage from Russia's invasion of Ukraine and the COVID-19 pandemic, while warning about the rising risk of stagflation. A day later, the OECD cut its forecast by 1.5 percentage points to 3%, although it said the global economy should avoid a bout of 1970s-style stagflation. 
• Rice said the expected downgrade was due to the continuing war in Ukraine, volatile commodity prices, very high food and energy prices, and a more severe than expected slowdown in the Chinese economy, as well as rising interest rates in a number of advanced economies.

(Source: Reuters)

• 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)