• Chile's economic activity rose 3.2% in May when compared to a year earlier, driven by a strong performance of its key mining sector, but still landed below market forecasts, central bank (BCCh: Banco Central de Chile) data showed on Tuesday, July 1, 2025.
• The IMACEC index¹, which accounts for about 90% of the Andean country's gross domestic product, accelerated from the 2.5% year-on-year increase reported in April but missed the 3.7% expansion forecast by economists polled by Reuters.
• The mining sector of the world's largest copper producer posted the main activity jump as it grew 10.3% year-on-year, boosted by higher output of the red metal, the bank said. "The (annual) IMACEC result was explained by the growth of all its components, with the performances of services and mining being the highlights," it added in a statement.
• On a monthly basis, economic activity in the Andean country was down 0.2%, the bank said. "Economic activity remains solid, despite the modest month-to-month decline in May, which followed a decent run," Pantheon Macroeconomics' chief Latin America economist, Andres Abadia, said. "The outlook remains positive."
• After recording a 2.6% growth for 2024, Fitch Solutions forecasts growth to come in at 2.4% this year and 2.3% in 2026. This forecast is underpinned by the expected continued recovery of private consumption, with consumer confidence and retail sales looking strong and robust mining exports.
• Notably, Fitch’s mining production outlook remains solid for this year, and the state mining company Cadelco is partnering with the private sector on new lithium projects. However, elevated inflation poses some headwinds in 2025, as neither Fitch nor the BCCh expects inflation to fall to the 4.0% upper tolerance range by year-end, but inflation should moderate by year-end.

______________________

¹Spanish acronym for Monthly Index of Economic Activity

(Sources: Reuters and Fitch Connect)

• China is ready to have discussions about trade policies, including tariffs and subsidies, that Washington has identified as obstacles to reforming the World Trade Organisation, a senior delegate at China's mission to the World Trade Organisation (WTO) said.
• China had heard "every word" the U.S. had said at the WTO about its trade practices and is open to discussing tariffs, industrial policy and some benefits it gains from its developing country status, as part of broader conversations on reform ahead of a 2026 ministerial meeting in Cameroon, the delegate said.
• Washington, however, argues that there can be no meaningful WTO reform until China and other major economies relinquish privileges known as Special and Differential Treatment (SDT) granted to developing countries, which the U.S. says give them an unfair advantage.
• The delegate said China's developing country status was non-negotiable, but it might forgo SDT in upcoming negotiations, as it did recently on fisheries and domestic regulations. However, former WTO spokesperson Keith M. Rockwell, a senior research fellow at the Hinrich Foundation, was sceptical that China would fully relinquish SDT in areas like agriculture.
• The U.S. opposes countries picking and choosing SDT benefits and wants China to completely renounce them. The delegate said China was open to discussing subsidies to ensure a fairer playing field, provided it was met with goodwill in return. But it would not accept any attempts to try to change its economic system, they added.

(Source: Reuters)

• U.S. manufacturing remained sluggish in June, with new orders subdued and prices paid for inputs creeping higher, suggesting that the Trump administration's tariffs on imported goods continued to hamper businesses' ability to plan ahead.
• The Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI nudged up to 49.0 last month from a six-month low of 48.5 in May. Despite this increase, it was the fourth straight month that the PMI was below the 50 mark, which indicates contraction in the sector that accounts for 10.2% of the economy.
• The survey joined with weak data on the housing market, consumer spending and swelling unemployment rolls that have suggested the economy's underlying momentum slowed further in the second quarter, even as gross domestic product probably rebounded as the drag from a record trade deficit faded due to falling imports.
• President Donald Trump's sweeping tariffs, which have led businesses and households to front-run imports and goods purchases to avoid higher prices from duties, have muddled the economic picture. Economists warned it could take time for the tariff-related distortions to wash out of the economic data.
• The PMI last month was likely lifted by longer delivery times, which under normal circumstances would be related to strong demand. However, the extensive tariffs have caused bottlenecks in the supply chain, resulting in factories waiting longer for raw material deliveries.
• Though production at factories picked up last month, it was probably the result of manufacturers working through backlog orders. The ISM survey's forward-looking new orders sub-index dropped to 46.4 from 47.6 in May. This measure has now contracted for five consecutive months. With manufacturers facing weak demand and higher prices for inputs, employment declined further last month. The survey's measure of manufacturing employment fell to 45.0 from 46.8 in May.

(Source: Reuters)

• Tourism Minister Hon. Edmund Bartlett says Jamaica’s tourism industry is on track for continued growth in 2025, driven by a drop in crime and a more favourable U.S. travel advisory.
• “Jamaica’s tourism industry remains on a strong trajectory. The outlook for 2025 is highly optimistic, bolstered by significant reductions in crime and the recent favourable shift in the United States (US) government’s travel advisory. These factors are creating a more welcoming environment for our visitors and partners,” Mr. Bartlett highlighted.
• Despite a 1% dip in stopover arrivals from January to June 25 compared to the same period last year, Mr. Bartlett noted encouraging signs of recovery. The first week of June recorded a 1.5% increase over 2024, with 210,011 stopover visitors.
• The Minister outlined a multi-pronged strategy to boost the sector, including improving visitor experiences, promoting sustainability, and diversifying source markets. “Diversification remains at the core of our strategy. While our traditional markets, such as the United States, are vital, we recognise the importance of broadening our reach into emerging regions to ensure resilience against global economic fluctuations,” he added.
• Although the U.S. market dipped by 4.1% in 2024 due to economic uncertainty and election-year dynamics, gains were made elsewhere. Europe saw a 9.1% increase, while Canada rose by 6.2%. The Caribbean and Latin America outpaced expectations, growing by 25.1% and 13.2%, respectively. He further noted that they are actively expanding into high-growth regions like Latin America, Asia-Pacific, and the Middle East, which presents a large growth potential.
• He also spotlighted India and China as major emerging travel markets. India, with a booming middle class and projected to become the world’s third-largest economy, and China, with its large outbound travel market, both offer significant opportunities.

(Sources: Caribbean National Weekly)

• The Executive Board of the International Monetary Fund (IMF) noted that for more than a decade, Jamaica has been implementing sound macroeconomic policies supported by strong policy frameworks.
• Its 2025 Article IV Consultation highlights Jamaica’s continued macroeconomic resilience despite recent climate-related shocks, such as Hurricanes Beryl and Raphael. The economy experienced a temporary slowdown in FY2024/25, particularly in agriculture and tourism, but is expected to rebound to its growth potential by FY2025/26.
• Key indicators remain strong: unemployment reached a record low of 3.7%, inflation stayed within the central bank’s 4–6% target, public debt continued its downward trend, and external reserves were bolstered by consecutive current account surpluses.
• The IMF highlighted that the government of Jamaica has advanced important reforms in fiscal transparency, public sector wage management, financial regulation, and institutional oversight, including the operationalisation of the Fiscal Commission.
• The outlook suggests that, following the expected recovery in FY2025/26, Jamaica’s growth will return to its potential rate, with inflation stabilising within the Bank of Jamaica’s target range. However, downside risks remain elevated due to tightening global financial conditions, weaker growth in key tourism source markets, potential trade disruptions, and the ongoing threat of extreme weather events.
• The IMF noted that Jamaican authorities are maintaining sound macroeconomic management underpinned by strong policy frameworks. A prudent fiscal stance is guiding public debt toward the target set in the Fiscal Responsibility Law (60% debt-to-GDP ratio by 2027/2028), while monetary policy has effectively anchored inflation near the midpoint of the target range, with inflation expectations trending toward the upper bound.
• It further highlighted that the BOJ’s decision to lower policy rates in 2024 was appropriate, given the transitory nature of climate-related shocks and the anticipated return of inflation to target. Looking ahead, the current fiscal and monetary policy mix positions Jamaica well to manage external risks and sustain macroeconomic stability.

(Sources: IMF & NCBCM Research)

• Trinidad and Tobago's (TT) energy sector showed mixed performance in the first quarter of 2025, with natural gas output declining year-on-year (YoY) even as crude oil production and select petrochemicals recorded gains, according to the Central Bank (CBTT).
• Data from the Ministry of Energy and Energy Industries pointed to a YoY reduction in the production of natural gas (-5.9%) in Q1. Crude oil production improved (6.1%), while the performance of the petrochemical industry was mixed. Expansions in ammonia (4.7%) and urea (12.5%) were countered by a decline in methanol output (-15.3%).
• Oil prices spiked due to concerns about supply disruptions stemming from military conflict in the Middle East. Brent crude prices reached a high of US$76 per barrel but subsequently fell below US$70 per barrel following the announcement of a ceasefire. These prices remained far below the US$85 per barrel price assumption and will likely impede the TT54.012Bn revenue that was set in T&T’s 2024/2025 budget. Financial markets nonetheless remain on edge in a very fluid situation. Higher energy prices and a possible escalation of hostilities pose risks for growth and inflation across the world, although energy exporters could benefit from the terms of trade shock.
• The CBTT also reported that while momentum in the non-energy sector appears to be slowing, overall economic activity remains positive. Indicators monitored by the Central Bank suggest that positive performances in the manufacturing, distribution and finance sectors were somewhat offset by sluggishness in the construction and utilities sectors.
• Inflation has also remained contained during the review period. Headline inflation, as measured by the Central Statistical Office's Consumer Price Index, rose to 1.4% YoY in May 2025 from 0.7% in January 2025. Core inflation (which excludes food prices) rose by 0.7%, while food prices increased by 4.1% in May. Food prices have been driven by higher prices for meat and for imported items such as butter, margarine and edible oils.
• Taking all these factors into account, the Monetary Policy Committee (MPC) agreed to maintain the repo rate at 3.5%,' it stated. The Central Bank stated that its MPC considered the 'uncertain outlook' for global growth and inflation amidst trade policy developments and geopolitical tensions in the Middle East.

(Sources: CBTT, Trinidad Express Newspapers)

• Brazilian private economists still expect the central bank to start cutting interest rates next January, even after policymakers reinforced guidance that borrowing costs will remain steady for a "very prolonged" period to anchor inflation to the target, according to a survey released on Monday, June 30, 2025.
• The central bank's weekly survey shows economists project the benchmark Selic rate to be held at 15% through December, before falling to 14.75% in January.
• Policymakers earlier this month raised the Selic rate by 25 basis points (bps) to its current level, bringing the total amount of tightening to 450bps since September, and signalled a pause at the next meeting in late July. Following the hike, the median forecast in the survey shifted to a 25-basis-point cut in January, with the Selic rate projected to end 2026 at 12.50%. That outlook remained unchanged on Monday.
• The latest survey also showed that the expected inflation rate for 2025 was cut for a fifth straight week to 5.20%, but projections for subsequent years remain unchanged above the 3% official target, which has a 1.5-point tolerance range on either side.
• In recent speeches, central bank Governor Gabriel Galipolo and Guillen reiterated policymakers' commitment to bringing inflation to the 3% target over the "relevant horizon" - the 18-month period influenced by current policy decisions. Policymakers have flagged a rate pause despite projecting inflation to be 3.6% over that horizon. That forecast was based on market expectations that the Selic rate would be held steady at 14.75% until January 2026 - a more dovish path than has materialised. Galipolo and Guillen added that inflation is still expected to converge to the central bank's target under alternative, undisclosed rate paths.

(Source: Reuters)

• Britain's economy grew at its fastest pace in a year in the first three months of 2025 as homebuyers rushed to beat a deadline on property purchases and manufacturers sped up output ahead of U.S. President Donald Trump's higher import tariffs.
• In a bounce that is not expected to be maintained in the rest of 2025, output grew by 0.7%, confirming a preliminary estimate and the fastest quarterly pace since the first three months of 2024, the Office for National Statistics said.
• The jump in economic output in early 2025 contrasted with the growth of just 0.1% in the fourth quarter of 2024. Data suggests that gross domestic product fell by 0.3% in April from March, but the drop was exacerbated by one-off factors.
• Thomas Pugh, chief economist at audit firm RSM UK, said weak consumer spending and hiring figures in recent weeks were likely to be a one-off reaction to a tax increase on employers and Trump's tariffs, many of which have been suspended. "Now that uncertainty has started to recede, consumer confidence is rebounding, and business surveys point to the worst of the labour market pain being behind us," Pugh said.
• Still, the Bank of England (BOE) expects economic growth of about 0.25% in the second quarter of this year. Expectations for the central bank to cut interest rates twice more over the remainder of 2025 is likely to support household spending. However, a renewed rise in energy prices in the event of further conflict in the Middle East could add to the strains on the already slow-growing economy.

(Source: Reuters)

• U.S. consumer spending unexpectedly fell in May as the boost from the pre-emptive buying of goods like motor vehicles ahead of the Trump administration's tariffs faded, while monthly inflation maintained a moderate pace of increase.
• The Commerce Department's report on Friday likely will have no impact on near-term monetary policy as Federal Reserve Chair Jerome Powell told lawmakers this week that the U.S. central bank needed more time to gauge the impact of the import duties on prices before considering a resumption of interest rate cuts.
• Business surveys have suggested tariffs could start driving up prices this summer, a sentiment shared by Powell and most economists. President Donald Trump's sweeping tariffs, which have led businesses and households to front-run imports and goods purchases to avoid higher prices from duties, have muddled the economic picture, and the spending report offers no clarity.
• Consumer spending, which accounts for more than two-thirds of economic activity, dropped 0.1% last month after an unrevised 0.2% gain in April, the Commerce Department's Bureau of Economic Analysis said. That was the second decline in consumer spending this year. Economists polled by Reuters had forecast consumer spending would edge up 0.1%.
• Economists warned it could take time for the tariff-related distortions to wash out of the economic data. Despite the weakness, an imminent collapse in spending is unlikely as wages increased by a solid 0.4% last month.
• Most economists argue price increases have remained moderate because businesses are still selling inventory accumulated before the tariffs went into effect. They expect inflation will start picking up, beginning with consumer price data for June. Still, some of them believe softening demand could make it harder for businesses to pass on tariffs to consumers.

(Source: Reuters)

• Jamaica’s trade deficit for the period January to February 2025 increased by 5.6% to US$1.01Bn when compared to US$961Mn in 2024, according to data from the Statistical Institute of Jamaica (STATIN). The decline was driven by a reduction in exports and a modest increase in spending on imports. Between January and February 2025, Jamaica’s spending on imports totalled US$1.32Bn, up US$24Mn (1.9%), while the country earned approximately US$306.20Mn from exports, down US$29.70Mn (8.8%).
• “Raw Material/Intermediate Goods” and “Consumer Goods”, which rose by 6.2% and 9.9%, respectively, were the primary drivers of the increase in import spending. The 8.8% decline in exports reflected a 41.0% decrease in the value of exports of “Mineral Fuels”.
• The top five import markets during the period were the United States, China, Brazil, Nigeria, and Colombia. Import spending from these countries rose by 9.3% to $855.0Mn, largely due to higher spending on imports of Mineral Fuels.
• For the same period, Jamaica's largest export markets included the United States, Russia, Iceland, Canada, and France. Export revenue from these markets rose by 11.7% to US$233Mn, largely due to higher exports of Crude Materials.
• Given the U.S. administration’s minimum 10% tariff on all trading partners, this policy shift could lead to a decline in total domestic export revenues for Jamaica, as the higher prices that results from the tariff could slow demand. The U.S. is Jamaica's top trading partner, accounting for just over 40% of total goods exports. This drove the trade deficit higher, reversing the decline witnessed in 2024 (-3.0% YoY).
• In terms of the current Middle East Conflict, higher oil prices could dampen trade and growth prospects, which would also negatively impact Jamaica’s trade balance. However, the ceasefire between Israel and Iran and the de-escalation of the conflict, in turn, saw a collapse in oil prices, with Brent Crude trading back around US$69 per barrel (/bbl), and Fitch believes oil prices will remain in the range of US$70–80/bbl.
• That said, the outlook is mixed and is heavily dependent on the event of a re-escalation in tensions. Any sustained move above US$90/bbl would begin to weigh on global activity, while for a surge to US$120–150/bbl, global inflation could rise by 1.2–1.8 percentage points (pp) and global growth could be reduced by at least 0.2–0.3pp, likely tipping the global economy into a mild recession.

(Sources: STATIN, Fitch Connect & NCBCM Research)