• Local Coffee farmers will be prioritised under the new Food Security, Agribusiness Development, Climate Smart Technologies and Export Expansion (FACE) initiative, says Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green.  
• The Minister disclosed that in the next financial year, they will launch the Crop Restoration and Establishment Programme (CREP), which is focused on rebuilding Jamaica’s coffee industry.  
• “It is tailored to suit 5,000 coffee farmers and 102,000 farm families. We’re going to be focusing on sustainable growth by ensuring that we embark on our biggest ever replanting programme that Jamaica has seen for Blue Mountain Coffee,” Mr. Green said.
• The Minister underscored that, like other agricultural crops, coffee farmers are affected by harsher climatic conditions, ageing farming populations, and increased costs for agricultural inputs. Over the next three to five years, he said, the objective is to increase output to 450,000 boxes of coffee and boost farmer productivity.
• This anticipated boost in local coffee production should bode well for companies such as Salada Foods, whose revenues and earnings would have been severely impacted due to the limited availability of Jamaican green coffee beans necessary for production of its coffee products. 

(Sources: JIS & NCBCM Research) 

• The World Bank, in its Global Economic Prospects report for Latin America and the Caribbean, noted that in 2023, the region experienced a significant economic slowdown, growing just 2.2%, down from 3.9% in 2022. This deceleration came within the context of heightened inflation, tight monetary conditions, weak global trade, and adverse weather events.
• “The economic outlook for the region suggests a gradual recovery, with growth projected to increase to 2.3% in 2024 and 2.5% in 2025. While the lingering effects of previous monetary tightening will continue to influence near-term growth, their impact is expected to diminish. As inflation slows, central banks are expected to reduce interest rates, alleviating obstacles to investment growth, the World Bank reported.
• The World Bank noted that excluding Guyana, which is experiencing a resource boom, Caribbean economies are expected to grow by 4.1% in 2024 and 3.9% in 2025, partly due to the ongoing expansion of the tourism sector.
• The Bahamas is estimated to have registered growth of 4.3% in 2023, then fall to 1.8% in 2024 and 1.6% in 2025. Barbados, which registered growth of 4.6% last year, will record 4.0% and 3.0% growth over the next two years.
• Similarly, Belize's estimated 4.5% growth last year is predicted to fall to 3.5% and 3.3% in the next two years. St Lucia's 3.2% economic growth in 2023 will decline to 2.9% and 2.3% over the next two years.
• Regarding the region's downside risks, the World Bank anticipates that escalating geopolitical tensions, especially in the Middle East, could disrupt energy markets and cause oil prices to surge.

(Source: World Bank Group)

• Mexico's headline inflation accelerated for the second month in a row in December while the closely watched core rate maintained its downward trend, official data showed on Tuesday.
• Annual headline inflation in Latin America's second-largest economy hit 4.66% in December, statistics agency INEGI said, overshooting the 4.55% expected by economists polled by Reuters and up from 4.32% in the previous month.
• The breakdown of the data showed that last month’s rise in the headline rate was due to stronger non-core inflation. Specifically, a spike in agricultural prices, with fruit and vegetable inflation hitting a two-year high.
• That said, core inflation, which strips out some volatile energy and food prices, posted its 11th consecutive monthly decline. The annual rate hit its lowest since September 2021 at 5.09%.
• Mexico's central bank has maintained a "slightly hawkish" posture in its monetary policy. It intends to sustain its key interest rate at a record peak of 11.25% while it waits for inflation to go back to the target of 3%, plus or minus one percentage point.
• "This was a poor end to the year," Pantheon Macroeconomics' Chief Latin America Economist Andres Abadia expressed, but added the general inflation picture continues to improve at the margin, and he expected headline and core inflation to decline consistently over the coming months.

(Source: Reuters)

• China's central bank faces a major hurdle in quelling the threat of deflation. Deteriorating asset quality from the property crisis and local government debt woes are pressuring central bankers to release liquidity into the banking system by cutting reserve requirements to fend off any risks of a funding crunch.
• The People's Bank of China (PBOC) is under pressure to cut interest rates as falling prices raise real borrowing costs for private businesses and households, curbing investment, hiring, and consumer spending. The PBOC's predicament highlights the need for the government to accelerate structural reforms that boost consumption, addressing a long-standing deficit in policies promised for 2023.
• However, both moves share a common problem: demand for credit in China mainly comes from the manufacturing and infrastructure sectors, whose overcapacity issues are exacerbating deflationary forces in the economy.
• Weak private sector demand for credit, reflected in falling money supply ratios, emphasizes the necessity for policies that enhance private business confidence. Despite the PBOC's efforts to ease monetary policy, weak private sector demand, rising real borrowing costs, and structural imbalances pose challenges.
• Additional monetary easing may carry the risk of increasing deflationary pressures, and analysts emphasize the importance of a comprehensive approach involving fiscal policy, and structural reforms to stimulate demand and economic growth.

(Source: Reuters)

• The International Labour Organization (ILO) forecasts a slight increase in the global unemployment rate, reaching 5.2% in 2024. This is attributed primarily to rising joblessness in advanced economies.
• The ILO's 2024 World Employment and Social Outlook report identifies deceleration in global growth as a key factor contributing to a modest fall in labour market performance. The report notes that after a brief post-pandemic recovery, aggregate labour productivity growth has slowed.
• The report raises concern about high-income countries, highlighting an anticipated negative turn in employment growth in 2024. It suggests that only modest improvements are expected in 2025, contrasting with more robust job gains in low-income and lower-middle-income countries over the next two years.

 (Source: Reuters)

• National Baking Company’s chairman, Butch Hendrickson, unveiled plans for a new $6.7Bn bread plant during the company’s announcement ceremony at the Hilton Hotel and Spa in Rose Hall, St. James, on January 8.
• Chairman Butch Hendrickson noted that the forthcoming 120,000-square-foot plant, to be built in Catherine Hall, will be a modern facility designed to increase efficiency and boost exports. He also mentioned that it will enhance operations, addressing the growing demand in the west for National’s products.
• “This investment will enable us to produce over 3,600 loaves of bread per hour, meeting our commitment to deliver fresh products faster,” he pointed out.
• The plant’s completion is scheduled for 2025 and will include new distribution centres across the island, with the first nearing completion in Mandeville. This strategic expansion will not only allow it to expand its footprint but also enhance its customer reach. The addition of the new bread plant and distribution centres positions the company to potentially capture a larger market share, particularly in western Jamaica.
• National Baking Company is the leading baked goods manufacturer in Jamaica. It was established in 1952 and is currently operating as a privately owned company.

(Source: JIS & NCBCM Research)

• The Government of St. Kitts and Nevis has successfully implemented its new salary increase for government employees and a Contributory Pension Plan, effective January 01, 2024. Civil servants and pensioners will benefit from an 8% salary increase commencing on January 12, 2024.
• The Contributory Pension Plan, also commencing on January 12, 2024, with a 3% pension contribution, is specifically designed for all Government Auxiliary Employees (GAE) and those employed by the government since May 18, 2012. This plan aims to provide a secure and sustainable pension system, contributing to the financial stability of government employees post-retirement.
• To ensure a smooth transition and comprehensive understanding of these new benefits, particularly the Contributory Pension Plan, a series of information sessions will commence on January 15, 2024.
• Prime Minister, the Honourable Dr. Terrance Drew, expressed his satisfaction with the implementation of these changes, reiterating the Government of St. Kitts and Nevis’s dedication to improving employee working conditions and benefits. He emphasized that the new salary structure and pension plan represent a long-term commitment to support government employees throughout their careers and into retirement.

(Source: St. Kitts and Nevis Observer)

• The International Monetary Fund (IMF) published its full report following the fourth review under the Extended Fund Facility (EFF) arrangement for Suriname. The document comes just under a month after the IMF Board approval that allowed for the disbursement of around $53Mn (accumulated $263Mn) and greenlit the program extension until March 2025. The review from the IMF was positive, highlighting the authorities’ commitment to fiscal discipline while undertaking an ambitious reform agenda.
• Program performance is reported to be strong following the fourth review, with all quantitative performance criteria (QPCs) and continuous performance criteria met. Authorities, however, missed the September floor on social assistance spending. Progress on meeting the structural benchmarks under the EFF continues, albeit with various delays.
• On the fiscal front, the IMF anticipates authorities to achieve a 1.6% of GDP primary surplus this year, despite weaker mining revenue. For 2024, it revised the primary balance target to 2.7% of GDP from 3.5% to support the recovery and also “attract and retain qualified civil servants”. The IMF anticipates a return to a 3.5% primary surplus in 2025, the final year of the program and an election year.
• Still, the report noted, “further fiscal consolidation beyond the program period may be needed to build buffers for the recapitalization of the CBvS (Central Bank) and commercial banks”. The IMF estimates the recapitalization needs at 10% of GDP, with 5% of GDP to the CBvS through annual injections and a one-time 5% of GDP recap for the commercial banks. This is now expected to take place sometime in 2024.
• Policy implementation challenges are the foremost risk, particularly if social discontent were to worsen. Other key downside risks to the near-term outlook include rising risks to the financial sector and weak capacity that could impact the implementation of the government’s reform program.
• The revised Debt Sustainability Analysis (DSA) shows a lower estimated debt balance for end-2023 at 87% of GDP compared to 107% following the third review. Half of this difference reflects the delay of the recap assumptions to 2024. Despite the lower figure, the downward debt trajectory is slightly more modest than earlier forecasts, with debt expected to reach 60% of GDP by 2032, assuming real GDP at 3% and primary surpluses of 3.5% of GDP over the period.

 (Sources: International Monetary Fund & Oppenheimer & Co. Inc.)

• US Bond Manager, Pacific Investment Management Company LLC (PIMCO), emphasizes that it is premature to declare victory over inflation despite market expectations of a soft landing for the U.S. economy. The bond manager suggests that recession risks persist, warranting a vigilant approach.
• PIMCO predicts that bonds will outperform stocks in 2024, especially in the event of a recession. Despite a recent bond-market rally driven by expectations of Fed rate cuts, the company adopts a neutral stance on duration, highlighting that it currently doesn’t view duration extension as a compelling tactical trade.
• Looking ahead, PIMCO expresses concerns about long-term bonds facing potential challenges due to worries about widening U.S. fiscal deficits and increased government bond issuance. The company anticipates that anxiety regarding elevated supply, seen in late summer, could lead to further weakness in the long-end curve. PIMCO favours government bond maturities of five to 10 years and is "underweight" in the 30-year area.

(Source: Reuters)

• Canada's trade surplus decreased to CAD 1.57Bn in November from the previous month, falling below analysts' expectations of CAD 2Bn. October's surplus was revised upward to CAD 3.2Bn.
• Exports experienced a 0.6% decline, marking the first decrease in five months. The drop was attributed to lower exports of precious metals like gold, silver, and platinum group metals, as well as aircraft and transportation equipment. Bergman said the decline in precious metals was likely due to a decrease in bank demand in Europe due to unrest in the Middle East.
• Imports, on the other hand, were up 1.9%, driven by energy products and industrial machinery, with increased imports of nuclear fuel and other energy products. Under the energy segment, imports of nuclear fuel and other energy products increased the most, mainly on higher imports of uranium from Kazakhstan. Imports of refined petroleum energy products also increased due to higher imports of motor gasoline and aviation fuel from the United States, coinciding with outages reported in Canadian refineries in autumn.
• Despite flat economic growth in October, the Bank of Canada noted easing labour market pressures. The central bank expects a slowdown in 2024 but considers it a sign that its monetary policy is effective. The next rate announcement is on Jan. 24, with expectations to maintain the key policy rate at 5%.
• Factors influencing the trade balance include a potential return to deficit due to normalizing auto imports after U.S. strike impacts. Further, global high interest rates may limit demand for Canadian exports.

(Source: Reuters)