• Prime Minister, Dr. the Most Hon. Andrew Holness, officially opened the Princess Grand Jamaica and Princess Senses The Mangrove Resorts in Green Island, Hanover. The resorts’ development, representing a US$400.0Mn investment, promises to transform Jamaica’s tourism sector by creating sustainable economic growth and employment opportunities.
• The Prime Minitster acknowledged the substantial risks involved in such a large-scale project, emphasising the critical role of economic stability in attracting investments. The Prime Minister also shared an optimistic outlook for the tourism sector by announcing that at least three new hotels are in the pipeline for development, with several others already under construction and plans for 500-900 additional rooms by existing resorts.
• He added that, going forward, the sector will strategically pivot to focus on speed and efficiency, as well as improving infrastructure to support more investment opportunities. Prime Minister Holness further stated that most importantly, the sector will ensure that the people of Jamaica benefit from the stability, adding that, “those three things form the pivot.”
• Tourism Minister, Hon. Edmund Bartlett, similarly celebrated the development and commended the management of the Princess brand for their confidence in Jamaica. He acknowledged the transformative impact of the multimillion US dollar investment, which will create between 1,500 and 2,000 jobs for Jamaicans. Mr. Bartlett also highlighted the resorts’ unique ecological integration of a mangrove forest, incorporated as part of its attraction.
• The development features a triple-generation plant and solar facilities, designed to significantly reduce energy consumption. The plant is powered by natural gas and has a reverse osmosis facility for water treatment. Princess’ Managing Director, Enrico Pezzoli, stated that, currently, they employ over 1,400 staff, with plans to expand to 1,700 in the coming weeks.

(Source: JIS)

• Caribbean Cement Company Limited (CCC) has reached another major milestone in its kiln expansion project with the safe installation of a 160-tonne capacity surge bin and solid fuel equipment. This significant development ensures a stable and increased supply of fuel to the kiln, during the cement-making process.
• Managing Director of the Rockfort-based entity, Mr. Jorge Martinez, noted that the successful installation marks a significant step forward in enhancing CCC’s production capabilities. This investment is a main milestone of the expansion project to be completed in the first half of 2025. The project is aimed at increasing the efficiency and stability of the company’s operations.
• Martinez noted that the company remains focused on the continuous improvement of its infrastructure and processes to ensure long-term sustainability and value for its stakeholders, employees, and customers.
• Targeted for completion in early 2025, the expansion and increased capacity project is expected to strengthen the self-sufficiency of the cement-manufacturing industry, reduce dependency on imports, and reinforce the company’s commitment to supporting the growth of Jamaica’s construction sector and the wider Caribbean.

 (Sources: JSE & Carib Cement Limited)

• Barbados plans to upgrade the resilience of its water systems impacted by climate change by using funds freed up by a debt-for-climate swap. The country’s recently completed debt-for-climate swap is the world’s first to focus mainly on climate resilience measures. It joins a slowly growing list of similar financial structures linked more broadly to climate and nature goals, which are backed by multilateral institutions.
• The swap entails replacing part of Barbados’ national debt with cheaper debt, backed by multilateral institutions including the Inter-American Development Bank (IDB) and the European Investment Bank (EIB). Under the agreement, the provision of a sovereign sustainability-linked loan with a 3.25% coupon, lead arranged by CIBC Caribbean, enabled Barbados to buy back nearly US$300Mn (BBD600Mn) of its existing domestic bonds.
• The loan was backed by guarantees, comprising US$150Mn each from the IDB and the EIB, the latter under the EU Global Gateway Initiative. Upfront funding for the resilience project, totalling US$110Mn, is being provided by the IDB and the Green Climate Fund (GCF). This includes a US$40Mn grant from the GCF, a fund set up under the United Nations climate change process.
• Planned improvements include upgrading a sewage treatment plant into a modern water reclamation facility, which will produce water suitable for agricultural irrigation and recharging groundwater, as well as measures to reduce water losses and improve sewers, according to the institutions involved.
• By cutting marine and groundwater pollution, the upgrades will help safeguard marine ecosystems such as reefs, and groundwater quality, as well as protect public health. The boost to water supply will also help farmers to improve productivity in one of the world’s most water-stressed countries, which relies on groundwater from aquifers for much of its supply and has to import much of its food.
• Under the terms of the loan, Barbados has undertaken to hit targets related to the volume and quality of reclaimed water generated by the upgraded plant. If it fails to meet these requirements, the government will be subject to a financial penalty, which will be paid into the Barbados Environmental Sustainability Fund, a trust for environmental investments.

(Source: Impact Investor)

• Lawmakers in Brazil's lower house of Congress approved on Tuesday, December 17, 2024, a bill that includes regulations needed to implement a constitutional tax reform, following a Senate vote to approve the bill.
• The proposal will now head to President Luiz Inacio Lula da Silva for his signature. The bill sets rules needed to consolidate five existing taxes into a single consumption levy, also known as a value-added tax (VAT), with separate federal and regional rates.
• It also provides details on a new tax on products considered harmful to human health or the environment, such as cigarettes and alcoholic beverages. Lawmakers in the lower house added sweetened beverages back to the list after the senators removed it. Lawmaker Reginaldo Lopes, bill rapporteur in the lower house, said the changes approved by the house will set the overall consumption tax rate at 26.5%.
• The eagerly anticipated tax reform was approved by lawmakers last year and is a central pillar of Lula's plans to boost productivity and economic growth in Latin America's largest economy. Previous governments have attempted and failed to implement a tax reform of their own. Lula's government has also sent to lawmakers a separate bill, which still requires Senate approval, regulating how the VAT would be managed at the state level.

(Source: Reuters)

• Chinese leaders agreed last week to raise the budget deficit to 4% of gross domestic product (GDP) next year, its highest on record, while maintaining an economic growth target of around 5%, two sources with knowledge of the matter said.
• The new deficit plan compares with an initial target of 3% of GDP for 2024 and is in line with a "more proactive" fiscal policy outlined by leading officials after December's Politburo meeting and last week's Central Economic Work Conference(CEWC), where the targets were agreed but not officially announced.
• The additional one percentage point of GDP in spending amounts to about 1.3 trillion yuan ($179.4 billion). More stimulus will be funded through issuing off-budget special bonds, said the two sources, who requested anonymity as they were not authorised to speak to the media.
• These targets are usually not announced officially until an annual parliament meeting in March. They could still change before the legislative session. The State Council Information Office, which handles media queries on behalf of the government.
• The stronger fiscal impulse planned for next year forms part of China's preparations to counter the impact of an expected increase in U.S. tariffs on Chinese imports as Donald Trump returns to the White House in January.

(Source: Reuters)

• Canada's annual inflation rate unexpectedly dropped by a tick to 1.9% in November, driven by a broad-based slowdown in prices, while the consumer price index was unchanged on a monthly basis. Analysts polled by Reuters had forecast that inflation would hold steady at the 2% rate recorded in October and the consumer price index would rise 0.1% month over month.
• The Canadian central bank's preferred measures of core inflation, CPI-median and CPI-trim, were unchanged, though the previous month's data were revised up by a notch. CPI-median remained at 2.6%, and CPI-trim - which excludes the most extreme price changes - stayed at 2.7%.
• Economists noted that continued strength in core measures could be an issue for the Bank of Canada, which has said that with inflation coming down consistently, it was important for the bank to ease rates to prop up the economy.
• "While the Bank of Canada will welcome the renewed dip below 2% for headline inflation, they would prefer that the sticky core trends stayed away this holiday season," said Douglas Porter, chief economist at BMO Capital Markets. The bank has forecast core inflation to average at 2.3% for the fourth quarter but it is currently trending around 2.7% roughly. Tuesday's data was the first of two inflation reports the BoC will get to assess before its next rate decision on Jan. 29.
• The central bank has cut interest rates by 50 basis points at each of its last two policy announcements to bring the cumulative reduction in borrowing costs to 175 basis points since June. This has helped restrict the rise in consumer prices to the mid-point of its desired target range of 1-3% for several months. BoC Governor Tiff Macklem indicated last week that further rate cuts would be more gradual.

(Source: Reuters)

• The Inter-American Development Bank (IDB) has announced the launch of a regional security alliance against crime that brings together 18 governments across Latin America and the Caribbean as well as several international finance institutions.
• "Security needs to be part of the solution for our economic progress," IDB President Ilan Goldfajn told reporters ahead of the project's launch in Barbados, saying countries worried about the cost of crime had requested the initiative.
• The IDB is set to provide US$1Bn in financing for projects aligned with the initiative next year, Goldfajn added and plans to mobilize public and private donors to raise more funds. The projects include the regional sharing of criminal records among alliance members and meetings to discuss money laundering tied to illegal mining in the Amazon.
• The alliance also includes the Organization of American States, the Caribbean Community, INTERPOL, the World Bank and regional development banks and has a strong social focus on reducing communities' vulnerabilities, as well as strengthening police, state justice institutions and hitting financial crime.

(Source: Reuters)

• The European Central Bank expects to cut interest rates further if inflation settles at its 2% target. ECB President Christine Lagarde and the bank's most influential policy hawk, Isabel Schnabel, cemented market bets on further gradual reductions in borrowing costs in the euro zone as the economy stutters and fears about high inflation fade.
• "If the incoming data continues to confirm our baseline, the direction of travel is clear and we expect to lower interest rates further," Lagarde said in a speech in Vilnius. Inflation in the euro zone was 2.3% last month and the ECB expects it to settle at its 2% target next year after hitting double digits in the wake of Russia's full-scale invasion of Ukraine in 2022.
• The euro zone's central bank lowered its key rate last week for the fourth time this year and opened the door to more reductions by removing a reference to keeping rates "sufficiently restrictive".
• Schnabel was more explicit, saying the ECB should keep cutting interest rates gradually until they reach neutral. "Price stability is within reach," Schnabel told an event in Paris. "Considering the risks and uncertainties we are still facing, lowering policy rates gradually towards a neutral level is the most appropriate course of action."
• While a neutral interest rate is a vaguely defined concept, Schnabel sees it between 2% and 3%, and Lagarde has said that ECB research puts it at 1.75%-2.5%. This indicates that several more cuts in the 3% deposit rate may come before the neutral debate heats up.

(Source: Reuters)

• Britain's economy shrank for a second month in a row in October in the run-up to the government's first budget, the first back-to-back falls in output since the onset of the COVID-19 pandemic, and a setback for new finance minister Rachel Reeves.
• Gross domestic product (GDP) contracted by 0.1% month-on-month in October, as it did in September, the Office for National Statistics said. It was the first consecutive drop in monthly GDP - which is volatile and prone to revision - since March and April 2020, when Britain enforced its first coronavirus lockdown.
• Economists polled by Reuters had forecasted a monthly expansion of 0.1%. The ONS said there was "mixed" anecdotal evidence from companies that turnover had been affected by companies waiting for the budget statement, which imposed large tax rises on businesses. Others brought forward activity.
• The services sector flatlined, while output in the manufacturing and construction industries declined in October's data, which measured the economy in the weeks before Reeves' budget statement on Oct. 30.
• Reeves and Prime Minister Keir Starmer warned that the budget would include painful tax increases. The data adds to a run of worse-than-expected figures for Britain’s economy, with business surveys and retail sales readings also falling flat.
• “While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth,” Reeves said in a statement.

(Sources: Reuters & GDN Online)

• Kingston Properties Limited (KPREIT) closed on the acquisition of a 20,000 sqft fully tenanted office building in Bristol, United Kingdom on December 12, 2024. This marks the Group’s first acquisition in the UK and is part of its strategy of pursuing greater geographic diversification.
• The property is located in the Aztec West Business Park just north of Bristol – the fifth largest city in the UK, which attracts players in the aerospace, defense, engineering, financial services, media and environment services industries. KPREIT is bullish on the UK and expects the economy to see growth in 2025 with increased government spending and continuing interest rate cuts.
• According to the Organisation for Economic Cooperation and Development (OECD), UK’s GDP growth is projected to strengthen to 1.7% in 2025, boosted by the large increase in public expenditure set out in the autumn budget, before slowing to 1.3% in 2026, as the effect of fiscal expansion tapers off.
• The sub-urban small office sub sector continues to show resilience and is expected to continue to see growth with the campaign for a return to the office in the UK. The tenants in the building range in services from insurance, shipping, and service office providers to one of the largest suppliers of affordable housing and care in the UK.
• The rapid growth of the service or flexible office industry since the pandemic signals the direction of the office for the future and bodes well for the continuing demand for office space.
• This acquisition was funded using both debt and the proceeds from the sale of units at Tropic Centre in the Cayman Islands and now brings the geographic dispersion of assets to: Cayman Islands (45%), Jamaica (42%), UK (7%) and US (6%).
• KPREIT’s stock price has increased 22.9% since the start of the calendar year. The stock closed Thursday’s trading session at $9.59 and currently trades at a P/E of 10.2x, which is below the Main Market Real Estate Sector Average of 10.3x.

(Sources: JSE & NCBCM Research)