• Real GDP is projected to trend upwards at an average rate in the range 2.0% to 4.0% over the June 2022 to March 2024 quarters, but remain below potential output over the forecast horizon. The projected growth in the economy largely reflects the normalization of economic activity, partly offset by weaker external demand. 
• From the perspective of aggregate supply, growth is anticipated in Hotels & Restaurants, Other Services, Agriculture, Forestry & Fishing, Transport, Storage & Communication, Manufacture, Electricity & Water and Construction. 
• The projected growth in Hotels & Restaurants and Other Services reflects the continued improvement from the travel industry as the number of flights coming into the Island continues to increase, given the low COVID-19 positivity rate. 
• Improvement in Agriculture, Forestry & Fishing is anticipated, given the forecasted demand from tourism, increased investments in traditional crop production, and various initiatives by the Government to assist the industry. This growth may, however, be constrained by the negative effect of higher input cost on production and productivity. 
• In addition, the growth of Manufacture is largely predicated on increased food and beverage production, reflecting the anticipated further improvement in education, entertainment, and tourism, relative to the previous year. For Electricity & Water, growth is premised on the increased electricity and water consumption given the normalization in business activities, particularly in the tourism industry as well as recreational and sporting activities. With regard to Construction, growth, though moderating relative to prior periods, is premised on a projected increase in spending on residential and commercial construction.

(Source: BOJ Quarterly Monetary Policy Report)

• The European Union (EU) is providing funding for the Digital Response Connecting Citizens (DIRECCT) program aimed at strengthening the resilience of the health, education, and small business sectors in the Caribbean to cope with current and future crises. 
• Executive Director of the Trinidad-based Caribbean Public Health Agency (CARPHA), Dr. Joy St. John, said the Caribbean region will benefit from this program through strengthened health information systems and increased capacity for early detection, response, monitoring, and reporting of public health threats and emerging diseases. 
• Likewise, Executive Director of the Barbados-based Caribbean Export Development Agency, Deodat Maharaj, affirmed the agency’s commitment to working with relevant stakeholders to ultimately help Caribbean businesses and entrepreneurs take advantage of digital technologies to build their resilience and sustainability. 
• Digital transformation and innovation are key priorities in the EU’s engagement with the Caribbean. The EU plans to step up its digital engagement with Latin America and the Caribbean through a Digital Alliance. The aim is to combine both regions’ interests, strengths, and capacities, to jointly address the digital divide and achieve inclusive digital transformation.

(Source: Caribbean National Weekly)

• The government of Guyana continues to invest heavily in the agriculture sector, in areas like large-scale vegetable and livestock production, coconut, and drainage systems, all of which contribute to the country’s rapidly growing food production system. 
• Minister of Agriculture, Zulfikar Mustapha, M.P. said recently, that the vast land space in Upper Takutu-Upper Essequibo (Region Nine) is enough for the region to produce agricultural products to feed Caribbean countries. 
• Mustapha stated that “This region for us is a very important region that can be the food capital of CARICOM. With the potential and the vast land space of almost 57, 000 square kilometers of savannah and with the rich potential of this area, it has the potential to feed the Caribbean.” 
• Against this backdrop, local farmers and producers are now charged to lead the agri-food production agenda in the Caribbean to allow CARICOM countries to attain food security, and reduce the food import bill by 25% by 2025.

(Source: Caribbean News Global)

• Years of under-investment in the mining of metals essential to energy transition, supply shocks, and high energy prices will continue to drive commodity prices higher, Eurasian Resources Group (ERG) Chief Executive Benedikt Sobotka said on Wednesday. 
• Combined with COVID-related logistical issues and demand for transparency on sustainability these factors have brought together "all the ingredients for a perfect storm in commodity markets," he told the Reuters Global Markets Forum in Davos. 
• Sobotka said that a commodity super-cycle has now begun and will carry on for the next 30 years, predicting a 20% rise in copper prices by the end of 2022. 
• Sobotka believes a fossil fuel resurgence is temporary, and the transition to a lower-carbon economy "cannot be stopped," which will require a projected $50 trillion in the next three decades. "Anything between $200-$300 billion in investment per year will be required for the mining industry to satisfy demand for the energy transition," he said, with much of this invested into the mining of copper, nickel, cobalt and other metals. 
• In an environment of high prices and supply chain pressures, Sobotka expects companies and countries to stockpile strategic raw materials, including oil, copper, cobalt and other metals. "If you get small supply disruptions, you are going to see big swings in prices," Sobotka said, adding that he expected to see an impact in the second half of 2022.

(Source: Reuters)

• World Bank President David Malpass on Wednesday suggested that Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession. 
• Malpass told an event hosted by the U.S. Chamber of Commerce that Germany's economy, the world's fourth largest, has already slowed substantially due to higher energy prices, and said reduced production of fertilizer could worsen conditions elsewhere. 
• "As we look at the global GDP ... it's hard right now to see how we avoid a recession," Malpass said. He gave no specific forecast. 
• He said the economies of Ukraine and Russia were both expected to see a significant contraction, while Europe, China, and the United States were seeing slower growth. 
• Developing countries are also being hit even harder given shortfalls of fertilizer and food stocks and energy supplies. 
• "The idea of energy prices doubling is enough to trigger a recession by itself," he said. 
• The World Bank last month had already cut its global growth forecast for 2022 by nearly a full percentage point, to 3.2% from 4.1%, due to the impacts from Russia's invasion of Ukraine.

(Source: Reuters)

• X-Fund reported a net profit of $181.61Mn for its first quarter ended March 31, 2022, up from the net loss of $203.20Mn recorded in the corresponding period in 2021. However, 138 Student Living (138SL) reported a 7.0% year over year decline in net profit for the first half of its financial year. 
• X-Fund’s positive net earnings were driven by an increase in hotel revenues, amidst the relaxation of local and international travel restrictions. There were higher occupancy levels and increased bookings for corporate and individual events during the first quarter. Notably, the improvement in hotel revenues for Q1 2022 was a 17% increase over pre-pandemic levels. 
• Similarly, 138SL’s average occupancy levels also increased by 5% to 56% supporting a 10.4% increase in revenues in Q1 and 9.3% in H1. However, a 58.0% increase in finance costs, due to renegotiations in its long-term liabilities, influenced the decline in net profit. 
• We expect that X-Fund will continue to see an earnings recovery in the coming months supported by greater tourist arrivals as business travel gains momentum, which will buttress its hotel revenues.  This outlook is supported by a survey by USA Travel Association which indicated that 77% of business travelers and 64% of employed Americans agreed that is important to return to business trips. On the other hand, 138SL’s occupancy levels may remain significantly below pre-pandemic levels as tertiary institutions continue to administer online classes, which may affect short-term profitability if costs are not contained. 
• X-Fund has witnessed a 2.2% depreciation in its stock price year-to-date, while 138SL has seen a 2.2% increase. X-Fund and 138SL currently trade at P/Es of 24.4x and 8.5x, which are above and below the Main Market Real Estate Sector Average of 12.6x, respectively.

(Source: Company Financials and NCBCM Research)

• Minister for Economic Affairs Michael Halkitis said there will be no new taxes in the upcoming budget as it would be “counterproductive” to economic recovery. 
• Halkitis warned that despite the latest International Monetary Fund’s Article IV Consultation report advocating for more taxes calls for such an increase in taxes would not be in the cards due to the ongoing economic recovery from the COVID-19 economic fallout. This view is also shared by the Prime Minister who stated that adding new taxes would be “an absolute last resort.” 
• Instead, the Bahamas is currently focused on trying to grow the economy into recovery, attracting investment, and doing a better job of tax administration through the new revenue enhancement unit. By attracting investment and growing the economy, the country should see an increase in employment, which in turn increases revenue collected by the government. 
• The fund also advocated for a gradual increase of the VAT rate to the regional average of 15%; and the construction of comprehensive real estate price indices on all islands that would provide a basis for a market-value-based property tax. The latter could be made progressive by increasing the rate on higher value residences. 
• However, Halkitis said any implementation of such a tax would be a “major departure” from what historically has been done in The Bahamas and would have to be done after long periods of consultations with the stakeholders, bearing in mind that the threshold is for companies with $750m in turnover.

(Source: The Tribune)

• On Monday, May 9, 2022, Guyana signed an air services agreement with the Kingdom of Saudi Arabia to promote and facilitate the expansion of international air services opportunities between the two countries. The agreement addressed matters pertaining to Grant of Rights; Designation and Revocation; User Charges; Recognition of Certificates and Licences; Tariffs; Commercial Opportunities; Fair Competition, and Environmental Protection, among other matters. 
• Guyana and Saudi Arabia established formal diplomatic relations on February 22, 2012, and presently, there is no direct flight between Guyana and Saudi Arabia; however, this Agreement puts in place the legal framework that opens market access for airlines to operate and enhance competitive air transport services, trade, and economic growth between the two countries. 
• Consequently, Minister Edghill explained that “through the signature of the Guyana-Saudi Arabia Air Services Agreement, we anticipate that it will serve as impetus for Saudia, the national airline of Saudi Arabia to explore air services to Guyana, Latin America and the Caribbean since the airline does not have a presence in this region of the world.” 
• The signing of this agreement is in keeping with the government’s commitment to connecting Guyana with the rest of the world and complements the more than 50 Air Services agreements Guyana has established with the other ICAO States (International Civil Aviation Organization is a specialized agency of the United Nations) for the development of the air link among States.

(Source: Kaieteur News)

• U.S. Treasury Secretary Janet Yellen said that she believes the Federal Reserve can bring down inflation without causing a recession because of a strong U.S. job market and household balance sheets, low debt costs, and a strong banking sector. 
• Yellen told a U.S. House of Representatives Financial Services Committee hearing on Thursday that "all of those things suggest that the Fed has a path to bring down inflation without causing a recession, and I know it will be their objective to try to accomplish that." 
• She said during the hearing on the Financial Stability Oversight Council's work that inflation was the "No.1 economic issue" facing the nation and the Biden administration. 
• "It's having a substantial adverse impact on many vulnerable households and we are laser-focused on addressing inflation," Yellen said, repeating the Biden administration's initiatives to hold down gasoline prices through large releases of crude oil from the Strategic Petroleum Reserve and efforts to unblock congested U.S. ports. 
• There are various factors fueling inflation, including spikes in energy prices due to Russia's invasion of Ukraine and continued pandemic-driven supply chain problems.

(Source: Reuters)

• A closely watched transportation report on Thursday said "the prospect of freight recession is now considerable" as the spending shift from goods to services accelerates, inflation erodes disposable income and interest rates climb. 
• Freight transportation is viewed as a barometer for the U.S. economy because when goods purchases fall, trucks and trains carry less cargo, and business activity slows. 
• "After a nearly two-year cycle of surging freight volumes, the freight cycle has downshifted with a thud," authors of the Cass Freight Index wrote in their April report. 
• U.S. freight volumes fell in April from March and the same period a year ago, according to the report produced by data company Cass Information Systems Inc. that is closely followed by analysts and investors. 
• The shipments component of the index fell 0.5% year over year in April, following a 0.6% year-on-year increase in March. 
• The April shipments component dropped 2.6% from March, and was 0.9% below the normal seasonal pattern. 
• "With more difficult comparisons in the next few months as global supply chain disruptions set to intensify, more softness is on the horizon," the report said.

(Source: Reuters)