• A Tourism Economic Impact Study will be conducted to identify the economic, fiscal, social and environmental impact of developing an additional 15,000 to 20,000 hotel rooms to augment Jamaica’s existing stock. This exercise will be spearheaded by the Ministry of Tourism, Portfolio Minister, Hon. Edmund Bartlett, announced as he closed the 2023/24 Sectoral Debate in the House of Representatives on Tuesday (June 20).
• He said the study’s objectives are to identify and evaluate the potential impact of the proposed developments on the gross domestic product (GDP); foreign exchange earnings; investment; government revenue and expenditure; income and employment (direct and indirect); and key related sectors such as agriculture, construction, manufacturing and entertainment
• The study is also intended to identify and evaluate the potential impact of the proposed developments on infrastructure needs; the environment; and individuals (particularly concerning housing, transport, and recreation); as well as provide recommendations to mitigate potential negative impacts while capitalizing on positive effects, as well as a credible, rigorous evidence base to inform public awareness of the value of the tourism industry to Jamaica.
• Tourism has been one of the main drivers of growth over the years in the Jamaican economy, contributing about 29.1% in 2019 (pre-pandemic) to GDP. It has also been one of the key drivers of economic recovery in the post-pandemic environment. However, there is still room to improve on the current tourism product and diversify offerings to unlock more benefits for the economy.

(Source: JIS News)

• The Agri-Linkages Exchange (ALEX) portal has generated earnings of $325 million for farmers during the first five months of 2023. Minister of Tourism, Hon. Edmund Bartlett, made the disclosure as he closed the 2023/24 Sectoral Debate in the House of Representatives on Tuesday (June 20).
• ALEX, which is a joint initiative of the Ministry, through the Tourism Enhancement Fund (TEF) and the Rural Agricultural Development Authority (RADA), is the first online platform of its kind in the country. It brings hoteliers into direct contact with the farmers and, in turn, reduces leakages and helps Jamaica retain more of the economic benefits of tourism.
• Bartlett noted that this significant accomplishment showcases the platform’s effectiveness in connecting farmers with potential buyers and creating prosperous opportunities.
• He noted that in the preceding year of 2022, the ALEX portal facilitated the sale of agricultural produce valued at $330 million, which not only highlights the platform’s success but also underscores the positive impact it has had on the livelihoods of 1,733 farmers and 671 registered buyers.

(Source: JIS News)

• Fitch Solutions projects Barbados’ fiscal balance will come in at a surplus of 1.1% of GDP in FY2023/24 (April 2023 through March 2024). Their forecast marks a significant improvement in the country’s public finances given its FY2022/23 balance estimate of -1.4%. 
• Despite no new tax measures, the surplus will be mostly driven by strong revenue growth underpinned by a continued recovery in economic activity. 
• The rebound in economic activity which is believed will continue throughout 2023 as tourist arrivals increase further will drive an increase in revenue intake. Revenues will grow by 11.0% in the current FY (up from 28.2% of GDP in FY2022/23 to 28.3% in FY2023/24).
• The government will also continue to take steps to improve the efficiency and administration of tax collection in the months ahead by, for instance, increasing audits and encouraging electronic tax filings.
• Nonetheless, government spending will grow at a slower rate as efforts – such as reducing capital expenditure – are made to keep the primary balance in surplus.
• In the medium term, Fitch believes that the government debt-to-GDP ratio will fall from 137.9% in 2021 to 77.9% by 2027 given contingency plans to eliminate risks of non-compliance with government targets as the government maintains a fiscally conservative posture.

(Source: Fitch Solutions)

• Caribbean telecommunications operators will participate in a critical meeting in Miami on Friday in their ongoing quest to have Big Tech companies contribute financially to regional telecoms network infrastructure.
• Bmobile said this is the second meeting where these operators will address the impact that companies like Meta, Google, and Netflix continue to have on the Caribbean telecommunications industry.
• The mobile network said that regional operators face a significant financial burden associated with over-the-top-driven (OTT) costs. Meta (Facebook, Instagram, and WhatsApp), Alphabet (Google), TikTok, Netflix, Amazon, and Microsoft are responsible for 67% of the total internet traffic in the Caribbean. Despite this, the operators have complained that the Big Tech/OTT providers make no contribution or investment to local delivery networks.
• ‘That market failure is taking place against a backdrop of stalled revenues for telecommunications, with limited prospects for future growth. By contrast, OTT providers' revenues grew by over 150% between 2017 and 2021. The rationale behind OTTs/ Big Tech paying their fair share is to address this market failure, ensure a level playing field, and promote the sustainability of telecommunications infrastructure which benefit the region's citizens," Bmobile further stated.
• Notably, in 2022, European Commissioners and policymakers announced the intention to have OTTs make 'fair contributions to telecom networks." South Korea has already proposed legislation to ensure global content providers such as Netflix and Alphabet's Google, pay South Korean network fees.
• However, not all companies believe this to be a good idea with Peters, co-chief executive officer of Netflix, speaking at Mobile World Congress, held in Las Vegas, noted that ‘Broadband customers already pay for the networks through their subscription fees,".
• The way forward does appear gloomy for regional telecom operators, however, hope still lingers that an agreement can be reached.

(Source: CariCris)

• Further Federal Reserve rate increases are "a pretty good guess" of where the central bank is heading if the economy continues in its current direction, Fed Chair Jerome Powell said in remarks on Wednesday to lawmakers on Capitol Hill.
• In response to a question late in a three-hour hearing before the House Financial Services Committee, Powell said he would not characterize the Fed's decision last week not to increase rates as a "pause," and noted the fact that a majority of policymakers see two more quarter-point rate increases as likely by the end of the year.
• Though Fed officials held off on raising interest rates at their meeting last week, Powell called that an exercise in prudence, allowing time to gather more information before deciding on further rate increases that Fed policymakers feel will be necessary by the end of the year.
• Despite the consensus on lowering inflation, the Fed is at a point where opinions about the need for and timing of additional interest rate increases may start to diverge. As it was for past presidential incumbents, how that debate gets resolved could make the difference between a benign election-year economy and a corrosive one.
• For Biden, the success or failure of Fed policy could mean a "soft landing" of continued economic growth, lower inflation and only modestly higher unemployment, or it could force him to campaign against a backdrop of increasing joblessness, stubbornly higher prices, and punishing interest rates for anyone trying to buy a home or car or finance a business.
• The Fed at its meeting last week held its benchmark interest rate steady at between 5% and 5.25%, but officials projected rates will have to increase another half percentage point by year's end because inflation has been falling so slowly and remains more than double the Fed's 2% target.

(Source: Reuters)

• U.K. borrowers are facing a cliff edge that could damage the economy as rising mortgage costs hit deal renewals and the number of products available shrinks, experts warned Monday.
• New figures from financial information company, Moneyfacts, showed the average two-year fixed rate mortgage on a residential property in Britain rose from 5.98% Friday to 6.01%, its highest level since Dec 1.
• Martin Stewart, director of the mortgage advisory London Money, said the last nine months had been “seismic” for the mortgage and housing sector, “on a par with the financial crisis,” although with different causes.
• Asked about support for struggling households, Prime Minister Rishi Sunak on Monday told ITV’s Good Morning Britain programme that the government’s priority was halving inflation and it needed to “stick to the plan.”’
• Markets are pricing in peak interest rates of almost 6%, up from the current 4.5%. A strong labour market report on June 13 sent rate expectations higher, with the Bank of England set to announce its latest interest rate decision on Thursday after enacting its 12th consecutive hike in May.

(Source: CNBC)

• The IMF team and the Jamaican authorities reached a staff-level agreement on the completion of the first reviews of Jamaica’s Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF). The IMF’s Executive Board is expected to consider these reviews in August.
• Over the past few years, Jamaica has been buffeted by a difficult global environment. However, entrenched macroeconomic stability and sound policy frameworks are helping the country to navigate this complex global environment. The economy has been recovering strongly—GDP growth for FY2022/23 is estimated at 4.3 per cent. It was supported by a strong rebound in tourism—which has returned to pre-pandemic levels—and the reopening of one of the largest alumina plants, which offset the impact of the terms-of-trade shock from the war in Ukraine. Furthermore, inflation is inching closer to the central bank’s target band.
• Tourism is buoyant and still strong—although moderating—remittances more than offset the large import bill from high fuel, food, and freight prices resulting in a low current account deficit, and international reserves are growing and are at healthy levels. The public debt has continued to fall, and the financial system remains well-capitalized and liquid.
• The outlook points towards continued growth, and inflation is expected to return to the mid-point of the central bank’s target range by year-end. Nonetheless, global risks remain high and include tighter-than-expected global financial conditions, higher-than-expected global energy and food prices, and the ever-present risks from climate events.
• The fiscal balance recorded an overall surplus in FY2022/23. International reserves continued to increase over the last fiscal year, strengthening external buffers, in line with objectives in the authorities’ programme. The government continues to treat the PLL as precautionary. The country remains committed to maintaining primary surpluses and achieving a 60 per cent debt-to-GDP ratio by FY2027/28, as prescribed by the Fiscal Responsibility Law.
• Significant progress is being made by the government with its ambitious agenda to green the economy and make it more resilient to climate change. In the context of the policy agenda under the Resilience and Sustainability Facility, they are completing reform measures that will introduce important climate-related elements in the fiscal framework and foster energy efficiency. The completion of these reforms will make available (Special Drawing Right)SDR191.45 million (about US$255 million) under the arrangement.

(Source: IMF)

• A US$14-million investment over the next five years to drive a minimum 50 per cent increase in the production of ginger, turmeric and pimento has been announced by Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green.
• Addressing the Rural Agricultural Development Authority (RADA) St. Elizabeth Open Day Agrifest at the Social Development Commission (SDC) complex in Santa Cruz, on June 9, Mr. Green said farmers who are not currently engaged in cultivating the valuable crops have an opportunity to participate in the strategic investment.
• He noted that this is just one of a series of initiatives and investments aimed at enhancing food security as well as paving the way for a prosperous interaction between farmers and buyers.
• This project is poised to enhance Jamaica’s agricultural output and contribute to the growth of the sector and potentially boost the export of the crops.

(Source: JIS News)

• While food inflation is expected to be tempered by the slowdown in international food costs, adverse weather could lead to periodic spikes in domestic agricultural produce prices, the Central Bank has said.
• The Central Bank in its May 2023 Monetary Policy Report, said food inflation slowed over February, March, and April as bread and cereals, vegetable and fruit prices eased. It noted similarly, core inflation decelerated to 4.8%.
• The monetary policy committee outlined that domestic price pressures are anticipated to continue to ease in the short run, however, core inflation may be affected by the path of wage settlements, a gradual recovery of consumer demand, and possible implementation of higher utility rates.
• Energy output in the fourth quarter of 2022 rose on a year-on-year basis, while the Central Bank said available data suggests some sluggishness in non-energy output during that period. Overall energy production was fairly steady in the first quarter of 2023.
• Notably, labour market conditions improved as the unemployment rate fell and labour force participation rose in the fourth quarter of 2022 and the Central Bank highlighted that the financial system liquidity remained ample, supporting expansion in private sector credit.
• Overall, the current local climate in the twin islands will continue to support its momentum throughout 2023, with the sovereign projected to grow by 2.2% for the year, only slightly below its 2022 growth of 2.7%.

(Sources: Trinidad Express Newspapers & Fitch Solutions)

• Fitch forecast that real GDP growth will drop to 2.3% in 2023 in Bermuda, which is down from the previous forecast of 2.8% growth for the year, and down from an estimated 3.0% in 2022.
• Although the tourism sector will be the main growth driver in 2023 after restrictions on arrivals were largely removed in 2022, slowing rates of GDP growth will reflect the impact of base effects, inflation eroding real household incomes and headwinds facing the global financial services sector.
• Recently released data from the Government of Bermuda Department of Statistics showed that real GDP growth came in at 2.4% y-o-y in Q422. This was up from a 2.9% contraction in the previous quarter.
• Growth was mainly driven by a 4.5% y-o-y increase in private consumption, as the labour market benefited from improvements in the tourism sector and the absence of any domestic restrictions to contain the Covid-19 pandemic.
• Net exports and services rose by 5.1% in Q422, owing to recovering receipts from the tourism sector after post-arrival testing requirements for vaccinated travellers were dropped from April 2022 onwards.
• Nonetheless, Fitch sees real GDP growth slowing further to 2.0% in 2024, as further improvements to the tourism sector are offset by longer-term structural impediments to growth, though expecting inflation to slow to 2.8% in 2024 (4.5% projected for 2023) as global commodity price pressures ease.

(Source: Fitch Solutions)