• Fitch forecasts real GDP growth of 2.4% in the Cayman Islands in 2023, from an estimated 4.0% in 2022.
• According to data from the Economic and Statistics Office, real GDP growth came in at 3.8% y-o-y in Q1 2022 (latest available data). While more up-to-date data is largely not available for the Cayman Islands, Fitch estimates that real GDP will have come in at 4.0% for the full-year 2022. 
• The economy of the Cayman Islands will continue to recover from the main impacts of the Covid-19 pandemic in 2023. The main growth driver will be the continued recovery of the tourism sector, which normally comprises around 35% of GDP, second behind only the financial services sector (55%) in terms of the market’s main industries.
• However, elevated inflation will weigh on real household incomes, denting consumer confidence and thus capping private consumption growth. Inflation came in at 5.9% y-o-y in Q4 2022. Although down from a recent peak of 12.1% y-o-y in Q2 2022, Fitch still forecasts inflation to average 4.0% in 2023. 
• Fitch then sees real GDP growth slowing further to 2.1% in 2024, owing to higher base effects and as the economy settles back towards its longer-term growth trajectory.
• Additionally, gains in the tourism sector will prove harder to come by, with capacity constraints in the sector emerging as arrivals trend closer towards pre-pandemic levels. 

(Source: Fitch Solutions)

• The Dominican Republic’s tourism industry has witnessed significant growth and enhancement in terms of diversification and quality of accommodations, due to the unwavering commitment of highly prestigious hotel brands.
• This development has allowed the country to position itself in a segment that caters to a more discerning and demanding clientele.
• While the country’s tourism authorities acknowledge the importance of maintaining their core offering of sun and beach tourism, they also recognize the need to promote further diversification.
• According to Minister of Tourism David Collado, it is crucial to ensure that public beaches match the quality and amenities found in private areas to continue attracting nature-loving visitors.
• By investing in the improvement and development of public beach areas, the Dominican Republic aims to offer a diverse and appealing range of tourist experiences which will help to bolster economic growth.
• Fitch forecasts that growth will ease in the Dominican Republic from 4.9% in 2022 to 3.5% in 2023, primarily due to a weakening US economy in H223. Nonetheless, the Dominican Republic is forecasted to remain one of the Caribbean’s fastest-growing economies over the next decade once rising commodity prices and inflation subside.

(Source: Dominican Today & Fitch Solutions)

• A meeting of the government's top economic council on Monday focused on whether recent rises in inflation and wage growth suggest Japan was approaching a sustained exit from deflation.
• With inflation accelerating globally and wage growth picking up in Japan, discussions also touched on the desirable timing to end the Bank of Japan's ultra-loose monetary policy, a government official told reporters.
• With inflation exceeding the BOJ's 2% target, markets are rife with speculation that the central bank will soon phase out its massive stimulus that combines huge asset purchases and a pledge to cap long-term interest rates around zero.
• However, data showing Japan's wholesale inflation slowed for a fourth straight month in April may ease pressure on the BOJ to seek an early exit from ultra-low interest rates. The top economic council occasionally holds a separate session on topics relevant at the time, to take their views into account in setting fiscal and monetary policy.

(Source: Reuters)

• U.S. House Republicans and President Joe Biden's Democratic administration on Friday paused talks on raising the federal government's $31.4 trillion debt ceiling, rattling financial markets as the deadline to avoid default ticked closer.
• Republicans are pushing for sharp spending cuts in exchange for the increase in the government's self-imposed borrowing limit, a move needed regularly to cover costs of spending and tax cuts previously approved by lawmakers.
• Talks at the Capitol broke up around midday, and there was no immediate word on when they would resume. The Treasury Department has warned the government could be unable to pay all its bills a soon as June 1. This would trigger a default that would shake the world economy.
• "We've got to get movement from the White House and we don't have any movement yet," House Speaker Kevin McCarthy, the top Republican in Congress, told reporters after his lead negotiator walked out of talks with Biden administration officials. "We can't be spending more money next year. We have to spend less than the year before."
• A White House official said: "There are real differences between the parties on budget issues and talks will be difficult. The President’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.

(Source: Reuters)

• Furniture Manufacturer, JFP Limited recorded a net loss of $14.87Mn for the first quarter ended March 31, 2023, relative to a profit of $34.91Mn in the corresponding period of 2022.
• Revenue for the quarter was down by 31.3% yoy to $75.77Mn, due to delays beyond the control of JFP’s production department. Two key factors included changes to the design/build process and the logistics required to return to the work environment inside a local international airport. Cost of sales increased by 1.2% which, when combined with the falloff in the topline, resulted in a 45.2% decline in gross profit. As a result, the gross margin shrunk from 70.1% to 55.9%.
• Administrative expenses increased by 18.5% in Q1, driven by higher staff costs due to a larger staff complement.
• Despite having a challenging first quarter, the company is expected to rebound in the coming quarters. The company inked a commercial deal with Total Office, a Trinidadian office supply company, in March 2023 that will create a regional distribution chain for JFP and a manufacturing arm for Total Office. The partnership will give JFP a foothold in the regional office furniture distribution trade.
• JFP stock price has increased by 4.60% since the start of the calendar year. The stock closed Thursday’s trading session at $1.80 and currently trades at a P/B of 11.4x which is above the Junior Market Manufacturing Sector Average of 2.9x.

(Sources: JSE and NCBCM Research)

• The International Monetary Fund (IMF) on Tuesday, May 16, said it "strongly supports" Brazil's efforts to improve the country's fiscal position, while also commending the country's "ambitious agenda" to have a sustainable, inclusive, and green economy.
• "Enhancing Brazil's fiscal framework, broadening the tax base, and tackling spending rigidities would support sustainability and credibility," the leader of an annual mission to the country, Ana Corbacho, said in a statement after the Fund's visit.
• Brazil's finance ministry in late March unveiled new fiscal rules to balance limits on spending growth under the administration of President Luiz Inacio Lula da Silva, who has vowed to boost social programmes and public investment.
• The new rules limit spending growth to 70% of Brazil's revenue growth in the prior 12 months. The government's proposed fiscal framework also targets a zero primary deficit in 2024, from a deficit of 1.0% in 2023, followed by a primary surplus equal to 0.5% of GDP in 2025 and 1% of GDP in 2026. Additionally, Brazilian lawmaker Claudio Cajado on Monday presented a revised version of the government's bill to ensure the rules have penalties in case of non-compliance by the government.
• IMF "staff recommends a more ambitious fiscal effort that continues beyond 2026 to put debt on a firmly declining path while protecting social and investment spending," Corbacho added in the statement.

(Source: Reuters)

• Coverage, especially in rural areas, and affordability are some of the issues that need to be addressed to achieve an efficient digital economy within the region. This was revealed by Francisco Soto, Huawei’s chief expert in Wireless Solutions, Latin America, and the Caribbean, who said the digital economy brings with it several opportunities, but also new challenges and rules of the game in the global market.
• Soto pointed out that the positioning of the country on the global stage largely depends on its ability to adapt to new conditions. He noted that the digital economy brings a new set of benefits, which can make it possible to reduce the differences that exist between rich and poor nations.
• “Developing countries have the opportunity to transform their economy and to contribute to the development of the digital economy. Although these economies are characterised by high added value, faced with numerous obstacles, many developing countries cannot adequately respond to the demands of the digital economy,” Soto disclosed to the Express Business last week.
• Also, he said inadequate access to the latest technology, sophisticated telecommunications infrastructure, low computer literacy as well as numerous cultural and socio-economic factors are just some of the challenges that developing countries have to face.
• A report from Global System for Mobile Communications Association (GSMA) on Digital inclusion in Latin America and the Caribbean which was published on its website a few years ago showed that Latin America and the Caribbean have the highest regional level of income inequality in the world.
• Affordability is a big barrier to Internet adoption for people at the bottom of the economic pyramid. For the bottom 40 per cent of the population, the cost of mobile ownership is on average 17 per cent of income. This the report said compares to just two per cent of income for the top 20 per cent of the population. The report identified that effective collaboration between the government and mobile operators is necessary to overcome the barriers to digital inclusion.

(Source: Trinidad Express Newspapers)

• The number of Americans filing new claims for unemployment benefits fell more than expected last week, with applications in Massachusetts decreasing sharply, suggesting the labour market remains tight.
• The steep decline in weekly jobless claims reported by the Labor Department on Thursday reversed the surge in the prior week, which had boosted them to the highest level since Oct. 30, 2021. That increase was largely blamed on an unusual jump in applications for unemployment insurance in Massachusetts.
• The state's Department of Unemployment Assistance said last week it was "experiencing an increase in fraudulent claim activities in which people attempted to gain access to active UI accounts or file new UI claims using stolen personal information so they can fraudulently obtain unemployment benefits."
• "The labour market is not deteriorating like we had thought as jobless claims were pumped up to recession levels by fraudulent applications for unemployment benefits," said Christopher Rupkey, chief economist at FWDBONDS in New York.
• Initial claims for state unemployment benefits declined 22,000 to a seasonally adjusted 242,000 for the week ended May 13. The drop was the largest since Nov. 20, 2021. Economists polled by Reuters had forecast 254,000 for the latest week.
• The labour market is being closely watched for signs of stress from the Federal Reserve's fastest monetary policy tightening campaign since the 1980s. The U.S. central bank is expected to keep interest rates unchanged next month for the first time since it started hiking them in March 2022.

(Source: Reuters)

• President Joe Biden sounds optimistic about the odds of reaching a deal with Republicans to raise or suspend the debt limit in time to avoid economic fallout from even a potential U.S. debt default. “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it,” Biden told reporters Sunday in Delaware. As to his state of mind, he said, “I remain optimistic because I’m a congenital optimist.”
• Biden also characterized the talks underway between White House liaisons and congressional aides as “a negotiation,” a notable choice of words after months of insisting he would not “negotiate” over the debt limit. The president and the top four congressional leaders plan to meet again about the debt ceiling Tuesday.
• Biden’s remarks followed the postponement of a White House meeting, originally set for Friday. The White House said the three-day delay should be viewed as a sign of progress in the talks. “The meetings have been productive over the past few days and leaders wanted to continue before they regrouped,” White House press secretary Karine Jean-Pierre said Friday.
• Not everyone involved in the talks has such a sunny outlook, however, as House Speaker Kevin McCarthy told NBC News on Monday that he thinks they are still far apart and that it doesn’t seem yet that they want a deal. “It seems like they want to look like they’re in a meeting,” said McCarthy. “They’re not talking about anything serious.”
• Democrats have spent months blasting House Republicans’ proposal, which demands sweeping cuts to federal spending in exchange for agreeing to pass a debt limit hike. Just last Thursday, Biden accused the House GOP of “holding our economy hostage.” Against this backdrop of months of bitter partisan attacks, Biden’s sudden shift in tone Sunday was striking.
• Investors are watching how the negotiations unfold. Stocks declined Monday morning as the market chewed over the comments from Biden and McCarthy.

(Source: CNBC)

• The almost $200-million expansion of Best Dressed Chicken’s Cumberland Hatchery in Portmore is being hailed by Minister of Agriculture and Fisheries, Hon. Pearnel Charles Jr., as a major boost for the agriculture sector. The expansion increases the hatchery’s capacity by 70 per cent, allowing the company to better meet the demands of the local market and, particularly, small poultry farmers, by ensuring a steady supply of baby chicks.
• Speaking at the reopening ceremony on Wednesday (May 10), Minister Charles Jr., said the Jamaica Broilers Group, which is the parent organization of Best Dressed Chicken, continues to be a “primary strategic partner” with a “long and rich history” of assisting small farmers across Jamaica. For his part, Group President and Chief Executive Officer of the Jamaica Broilers Group, Christopher Levy, said that the upgrade is an investment in the small farmers of the country, who represent 30 per cent of the production of poultry meat in Jamaica.
• Mr. Levy said that the small poultry farmers are the country’s first line of defence against imported poultry, and the recent investment in the Cumberland Hatchery is to bring the company “up to amazing standards”. Furthermore, he outlined that the move is hoped to instill greater confidence in the poultry sector and spur other investments.
• The increased capacity provided by the Cumberland hatchery will help shore up the local supply of baby chicks going to small farmers - a critical part of the sector, especially as Jamaica is looking to reduce poultry imports. This will also be good for JBG in terms of sales thereby boosting bottom-line growth.

(Source: JIS News)