• U.S. consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February while 12-month inflation expectations surged, offering further signs that Americans were growing anxious about the potential negative economic impact of the policies of President Donald Trump's administration. At the same time, consumers' average inflation expectations rose to 6%, the highest since May 2023.
• The Conference Board survey on Tuesday noted that "comments on the current administration and its policies dominated the responses." It followed on the heels of surveys last week showing steep declines in business and consumer sentiment in February. Tariffs on imports, which Trump has already imposed or is planning to impose, have been singled out as the major issue in almost every household and business survey.
• Economists said unprecedented layoffs of federal government workers were also taking a toll on consumers' psyche, which posed a risk to spending, the main engine of the economy.
• The Conference Board's consumer confidence index dropped 7 points, the biggest decline since August 2021, to 98.3 this month. Economists polled by Reuters had forecast the index falling to only 102.5. The third straight monthly decrease pushed the index to the lowest level since June 2024. It is now at the bottom of the range that has prevailed since 2022.
• The Federal Reserve is likely to resume cutting interest rates in June and could reduce short-term borrowing costs again in September, traders bet on Tuesday as they took on board the implications of a widely watched survey that showed consumer confidence dove this month, and inflation expectations surged.

(Source: Reuters)

• The European Central Bank has room to cut its interest rates further if inflation eases to its 2% goal this year as it expects, ECB policymaker Joachim Nagel said on Tuesday, adding the outlook for prices was "encouraging".
• The ECB is widely expected to cut rates for a fifth straight time next week after seeing inflation fall from double digits after Russia's 2022 invasion of Ukraine to just over 2% in recent months. Nagel said incoming data, especially the latest developments on price growth, suggested the ECB was likely to achieve its target this year.
• "This would allow us on the Governing Council to lower the key interest rates further," he said in a speech as he presented the Bundesbank's annual accounts. "Overall...the outlook for prices is fairly encouraging," he added while cautioning about "persistently elevated core inflation and the undiminished strength of services inflation".

(Source: Reuters)

• According to PIOJ, the Jamaican economy is estimated to have contracted by 1.8% for the quarter ended December 2024 (Q4 2024), relative to the corresponding quarter of 2023, reflecting declines in both the Services and the Goods-Producing industries. The estimated out-turn for the review quarter largely reflected the impact of the lingering effects of Hurricane Beryl from the previous quarter, coupled with Tropical Storm Rafael and other hydrological events during the review quarter. Overall, the Goods-Producing Industry is estimated to have contracted by 4.7%, while the Services industry is estimated to have declined by 0.7%.
• During the quarter, all Goods-Producing industries are estimated to have declined, with agriculture being the most significantly impacted, contracting by 12.0%. The outturn was the result of damage to crops, as well as delays in reaping and replanting caused by the series of hydrological events. The industry’s performance was due to lower output in all sub-components of the industry, with the exception of Animal Farming.
• Mining & Quarrying, Manufacturing, and Construction also experienced declines of 3.2%,0.7% and 2.1% respectively. The decline in the Mining & Quarrying industry was due to a fall in the production of alumina and crude bauxite. A contraction in the Other Manufacturing sub-industry, which outweighed the estimated growth in the Food, Beverages, and Tobacco Industry, weighed on the performance of the Manufacturing Industry. This was primarily due to a reduction in the Refinery Service Factor, as the refinery was closed for 39 days during the review quarter, compared to 32 days in the same quarter of 2023. Estimated downturns in both the Building Construction and Other Construction sectors was behind the contraction in Construction.
• The performance of the Services Industry reflects the lower real value added in five of the eight sectors. Producers of Government Services were estimated to have remained unchanged. Among the declining sectors were Electricity & Water Supply, which fell due to lower electricity consumption, Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM) due to reduced sales in key sub-categories, and the Hotels & Restaurants industry, which reflects the decrease in stopover arrivals.
• Furthermore, visitor arrivals to the island continue to be negatively impacted by the impact of a fall in airlifts due to supply-side issues with Boeing; two travel advisories issued during 2024; and to a lesser extent, industrial disputes, which halted operations at some hotels.
• Despite two consecutive quarters of economic decline, the PIOJ is maintaining that Jamaica is not in a recession, as a recession cannot be determined solely by GDP. However, significant challenges persist, particularly due to hydrological shocks, which have impacted the Tourism, Electricity & Water Supply, and Agriculture, Forestry & Fishing Industries. Based on the latest available data, the PIOJ is forecasting that the economy will return to positive growth in the January-March 2025 quarter.

(Source: PIOJ)

• Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'. The ratings reflect stronger governance than the peer median, significant progress with debt reduction, a sound fiscal framework, and a strong political commitment to deliver large primary surpluses. Debt-to-GDP has fallen to a forecast 70.8% in fiscal 2024/2025 from a high of 135.3% of GDP in fiscal 2012/2013.
• However, the ratings remain constrained by deep structural weaknesses, including subdued growth potential owing to a high crime rate, low productivity and weak demographics, and vulnerability to external shocks including weather-related.
• Despite the economic downturn last year caused by Hurricane Beryl and extensive rain in the fall, the overall surplus in the fiscal year ending in March 2025 will be slightly better at 0.3% of GDP than fiscal year 2023/24 at 0.0% of GDP. This is in part due to one-off revenues from insurance payments as well as concession proceeds from airports.
• These large primary surpluses are expected to reduce general government debt GDP to 66.3% of GDP in fiscal year 2025/26 from 70.8% this fiscal year. Debt is expected to fall to 63.5% in fiscal 2026/2027, putting it on track to meet the government's debt target, although the 60% target is still higher than the current 'BB' median of 55.6%.
• Most notably, Jamaica has remained committed to an economic policy framework built on two key pillars: the Bank of Jamaica's (BoJ) inflation-targeting monetary policy and fiscal policy anchored on debt reduction targets. Inflation fell to 5%, the midpoint of the BOJ's target range, at year-end 2024.
• The Rating Outlook is Positive. The Positive Outlook reflects Fitch's expectation of continued improvement in debt metrics and further strengthening of the policy framework over the next few years, including climate risk mitigants.

(Source: Fitch Ratings)

• Peru's gross domestic product (GDP) will likely expand by 4% this year and rank as the second-fastest growing economy in Latin America, as inflation is seen holding for another year at around 2%.
• The Andean economy is bouncing back from recession, with the government of President Dina Boluarte and the central bank forecasting positive prospects for 2025, including fewer inflationary pressures and more investment.
• Peru's economy for decades was one of Latin America's top performers, but in recent years growth has cooled as social unrest hit the country's key mining sector amid growing political instability. At a press conference, Economy Minister, Jose Salardi, pointed to the expectation of relatively high prices for copper and gold - Peru's top mineral exports - and a push to cut regulations that should facilitate investment.
• In Latin America, Peru's expected economic growth this year would be surpassed only by Argentina's likely expansion, according to Salardi. The Economy Ministry also forecasts inflation of 2% this year, after the annual rate of rising consumer prices closed in 2024 at 1.97%. Salardi added that he aims to lower the government's budget deficit, in line with established fiscal rules.
• Peru's debt-to-GDP ratio stands at around 33%. The minister added that the ratio is expected to go down, but did not go into further detail.

(Source: Reuters)

• The Government of Barbados and the CAF (Development Bank of Latin America and the Caribbean) have signed a US$75Mn financing agreement aimed at advancing cultural heritage preservation, tourism, and modernising related infrastructure.
• The agreement was formalised between Prime Minister Hon. Mia Mottley and CAF’s Executive President Sergio Díaz-Granados on the sidelines of the 48th CARICOM Heads of Government Meeting in Barbados.
• The funding will support key initiatives under the Reclaiming Our Atlantic Destiny (ROAD) Program, which seeks to strengthen Barbados’ connection to its rich history. Prime Minister Mottley described the initiative as “a moral imperative and an economic necessity.”
• She added, “CAF has been responsible for a number of loans that have made a difference in the life of Bajans, largely because many of these loans have been to build capacity in the country—from roads, right back through to the port at one point. This time we are taking a different slant. The country has not had investment in heritage facilities for some time.”
• CAF’s Executive President Sergio Díaz-Granados commended Prime Minister Mottley’s leadership and pledged ongoing support for Barbados’ sustainable development. “Our goal is to work with you to identify new projects and programmes that we can support.
• Since 2015, CAF has approved USD 335 million in development financing for Barbados, including recent allocations for water infrastructure modernisation, climate resilience, and recovery efforts following Hurricane Beryl

(Source: Nation News)

• Russia's overheating economy is on the cusp of serious cooling, as huge fiscal stimulus, soaring interest rates, stubbornly high inflation, and Western sanctions take their toll, but after three years of war, Washington may just have thrown Moscow a lifeline.
• U.S. President Donald Trump is pushing for a quick deal to end the war in Ukraine, alarming Washington's European allies by leaving them and Ukraine out of initial talks with Russia and blaming Ukraine for Russia's 2022 invasion, political gifts for Moscow that could also bring strong economic benefits.
• Washington's push comes as Moscow faces two undesirable options, according to Oleg Vyugin, former deputy chairman of Russia's central bank. Russia can either stop inflating military spending as it presses to gain territory in Ukraine, or maintain it and pay the price with years of slow growth, high inflation and falling living standards, all of which carry political risks.
• Though government spending usually stimulates growth, non-regenerative spending on missiles at the expense of civilian sectors has caused overheating to the extent that interest rates at 21% are slowing corporate investment and inflation cannot be tamed. "For economic reasons, Russia is interested in negotiating a diplomatic end to the conflict," Vyugin said. "This will avoid further increasing the redistribution of limited resources for unproductive purposes. It's the only way to avoid stagflation."
• While Russia is unlikely to swiftly reduce defence spending, which accounts for about a third of all budget expenditure, the prospect of a deal should ease other economic pressures, could bring sanctions relief and eventually the return of Western firms.

(Source: Reuters)

• Canada's retail sales grew by a robust 2.5% on a monthly basis in December, beating analysts' expectations, as a sales tax holiday bumped up spending on food and beverages. People also bought cars and vehicle parts, data showed last Friday.
• Retail sales are considered an early indicator of GDP growth and contribute almost 40.0% to total consumer spending, which was primarily responsible for keeping Canada's economy growing in the third quarter. Economists said the government's sales tax break, which kicked off in mid-December and ended February 15, also boosted revenues.
• Analysts polled by Reuters had forecast retail sales would rise by 1.6% on a month-on-month basis and by 1.8% excluding automotive and parts sales. Retail sales jumped by 2.5% even after sales of automotive parts and at dealerships were excluded, Statistics Canada said.
• "Even if the momentum of retail sales fades into the new year, these figures add to the argument for the Bank of Canada to pause at next month's meeting," Shelly Kaushik, senior economist at BMO Capital Markets, wrote in a note.
• Currency swap markets now see a more than 68.0% chance of no rate cut on March 12, although economists have said expectations for the trajectory of interest rates could change if U.S. President Donald Trump slaps a 25% tariff on Canadian imports in March.

(Source: Reuters)

• At its meetings on February 18 and 19 2025, the Bank of Jamaica’s (BOJ) Monetary Policy Committee (MPC) unanimously agreed to hold the policy rate at 6.00%. The decision was influenced by upside inflation risks from the external environment and potential adverse weather conditions. This rate action comes after the Central Bank cut rates by a total of 100 basis points between August 2024 and December 2024.
• The maintenance of the policy rate was supported by the MPC’s belief that the current policy rate of 6.0% continued to be appropriate to support inflation remaining within the target range and maintaining relative stability in the foreign exchange market.
• Inflation remains firm within the Bank’s 4.0%-6.0% target range, with January 2025 inflation at 4.7%, down from 7.4% in January 2024. Core inflation, which excludes the most volatile inflation components – food and fuel – and is thus a better indicator of long-term inflation trends, amounted to 4.0% in January 2025, remaining consistently below 6.0% since July 2023. Furthermore, the MPC anticipates that headline inflation will remain inside the target over the next 8 quarters, likely supported by lower business inflation expectations, a key driver of headline inflation.
• While the inflation outlook appears balanced, risks are skewed to the upside given the uncertainty related to the potential economic policy changes in the United States which could affect inflation expectations and inflows through the current account of Jamaica’s balance of payments. Worse-than-anticipated weather conditions could also put upward pressure on inflation. That said, the MPC communicated that it would be prepared to adjust the stance of monetary policy if the above-noted risks crystallise and result in an upward deviation from the inflation target.

(Sources: BOJ & NCBCM Research)

• After seeing steady gains for the financial year ended September 30, 2024 (FY2024), Salada Foods has witnessed a +63.2% earnings increase for its first quarter ended December 31, 2024 (Q1 2025) relative to Q1 2024, buoyed by the impact of improved distribution efforts which added to revenue growth.
• Salada’s Q1 revenues increased by 32.8% to J$398.19Mn due to heightened demand across both domestic and export markets. This was supported by the Company’s strategic marketing initiatives and distribution expansion efforts.
• In FY2024, Salad successfully secured distribution of its flagship brand, Jamaica Mountain Peak, in Trinidad & Tobago with local distributors Alstons Marketing Company (AMCO) Limited. The Mountain Peak Golden Turmeric Latte quickly became a household favourite, contributing approximately 24% of the value of the portfolio in Trinidad & Tobago. This along with exports to Barbados, St. Lucia, Antigua and Barbuda, and other company engagements continued to provide support for revenue growth.
• Direct costs grew in tandem with revenues with cost of sales rising by 30.6%, slightly below revenue growth, which supported a 37.6% gross profit increase to J$126.22Mn.
• Meanwhile, operating costs rose 15.7%, which supported a 68.3% increase in operating profits to J$65.74Mn compared to 5.5% to $37.87Mn for Q1 2024. This improvement reflects disciplined cost management and improved operational efficiencies due to ongoing plant modernization efforts.
• The company also saw a 4.9% uptick in net financing income for Q1 as interest income on funds invested exceeded financing expenses. With the increase in revenues, controlled costs and the uptick in net financing income, Salada’s Q1 total comprehensive income increased by (+63.2%) to J$50.40Mn. 
• At the close of the stock market on February 20, 2025, Salada’s share price stood at $3.26, implying a P/E ratio of 16.40x, which is above the Main Market Distribution & Manufacturing Average of 14.05x.

(Sources: JSE & NCBCM Research)