• Jamaica generated export earnings of just over US$1.9Bn, between January and December 2022. This marks a 28.4% increase compared to the US$1.48Bn recorded for the corresponding period in 2021, according to the Statistical Institute of Jamaica (STATIN).
• The value of last year’s exports surpassed the US$1.65Bn earned in 2019, prior to the COVID-19 pandemic’s onset, by 15%. STATIN attributed the 2022 performance primarily to a 102.6% rise in the export of ‘Mineral Fuels’. Domestic exports amounted to US$1.36Bn, which was 6.7% above the US$1.28Bn recorded in 2021. However, this figure was 9.8% lower than the US$1.5Bn earned in 2019, mainly due to reduced alumina exports.
• The top five destinations for Jamaica’s exports were the United States of America (USA), Puerto Rico, the Russian Federation, the United Kingdom, and Canada. Exports to these countries increased by 46.3% to just over US$1.4Bn, largely driven by higher fuel exports to the USA. Meanwhile, Jamaica’s expenditure on imports in 2022 rose by 29.5% to US$7.73Bn, compared to 2021. The increased spending was mainly due to higher imports of ‘Raw Materials/Intermediate Goods’, ‘Fuels and Lubricants’, and ‘Consumer Goods’. These rose by 24.4%, 53.7% and 21.8%, respectively, and contributed to the overall expenditure figure surpassing the 2019 pre-pandemic level total of US$6.4Bn.
• The increased spending on ‘Raw Materials/Intermediate Goods’, ‘Fuels and Lubricants’, and ‘Consumer Goods’ can be partly attributed to elevated oil and gas prices in 2022 as Russia’s invasion of Ukraine put upward pressure on energy prices. Additionally, increased shipping costs in 2022 contributed to higher prices for other goods throughout the year.
• Jamaica's primary trading partners in 2022 were the United States, China, Brazil, Trinidad and Tobago, and Japan. Import expenditure from these countries rose by 33.7% to US$4.97Bn, primarily due to increased fuel inflows from the United States and Trinidad and Tobago.
• Export plays a critical role in supporting economic growth. Revenue from exports generates foreign exchange, that is used to build foreign reserves.  A healthy foreign reserve stock is crucial to Jamaica as it allows the country to assure international investors of the nation's ability to fend off external shocks to the system.

(Sources: STATIN and JIS News)

• Fitch maintains its core view that rapid GDP growth and increased government spending will help promote greater social stability in Guyana, despite elevated inflation in the near term.
• The agency forecasts real GDP growth of 29.0% in 2023, following an estimated 62.3% in 2022, primarily driven by the expanding oil sector.. The government plans to use surging oil revenues to significantly increase spending on capital investments and social initiatives, which Fitch believes will mitigate the threat of large-scale protests in the near term.
• In 2022, Guyana withdrew US$607.6Mn from the National Resource Fund (NRF) with a planned budget to increase withdrawals to US$1.0Bn in 2023 to support the development of the non-oil economy, including structural increases in spending on health, education and housing.
• In light of these factors, Fitch holds Guyana's Short-Term Political Risk Index (STPRI) score at 57.4 out of 100. However, the 'social stability' component remains the lowest-scoring element in the STPRI, at 46.3, indicating ongoing risks stemming from a relatively weak labor market and ethnic tensions between the Indo- and Afro-Guyanese population.

(Source: Fitch Solutions)

• Fitch forecasts that Barbados’ fiscal deficit will narrow to 1.4% of GDP in FY2023/24 (April 2023 – March 2024) and 1.0% in 2024/25, from an estimated 2.1% of GDP in FY2021/22.
• The agency anticipates that the Barbadian government will continue to prioritise fiscal consolidation under the framework of the Barbados Economic Recovery and Transformation (BERT) 2.0 plan, which was approved in October 2022, and a US$110Mn, three-year Extended Fund Facility (EFF) agreed with the IMF in December 2022.
• A primary goal of both the BERT 2.0 and IMF deal is to gradually increase Barbados' primary budget surpluses over the coming years to reduce the country's debt burden. As a result, public spending increases will be limited in the coming years, while above-trend GDP growth will promote robust revenue growth.
• In accordance with these developments, the government posted a primary surplus equal to 2.7% of GDP in FY2022/23, surpassing its initial target of 2.0% of GDP and compared to a 0.9% deficit in FY2021/22. Based on these factors, Fitch expects that this primary surplus will increase to 3.2% and 4.0% of GDP in 2023/24 and 2024/25, respectively.  

(Source: Fitch Solutions)

• U.S. job growth accelerated in April accompanied by solid wage gains, indicating persistent labour market strength that could compel the Federal Reserve to keep interest rates higher for longer as it fights to bring inflation under control.
• The Labour Department's closely watched employment report on Friday also showed the unemployment rate falling back to a 53-year low of 3.4%. Though data for February and March were observed to be sharply lower, the labour market is slowing only marginally. It suggested there was no impact yet on the economy from tighter credit conditions, which together with the Fed's punitive rate hikes have raised the risk of a recession.
• "Interest rates are going to have to remain elevated," said Sean Snaith, director of the University of Central Florida's Institute for Economic Forecasting. "This kind of strength in the labour market makes it more difficult for the Fed to continue its reduction in inflation."
• Nonfarm payrolls rose by 253,000 jobs last month, but the economy created 149,000 fewer jobs in February and March than previously reported. Job growth has averaged 290,000 jobs per month over the prior six months. Economists polled by Reuters had forecast payrolls would rise by 180,000. The larger-than-expected increase in payrolls could be hinting at some spring revival in the economy after activity slowed in February and March.

 (Source: Reuters)

• Turmoil in mid-sized institutions caused banks to tighten lending standards both to households and businesses, potentially posing a threat to U.S. economic growth, according to a Federal Reserve report released on Monday. The Fed’s quarterly Senior Loan Officer Opinion survey said requirements got tougher for commercial and industrial loans as well as for many household-debt instruments such as mortgages, home equity lines of credit and credit cards.
• The loan officers further said they expect troubles to persist over the next year, owing largely to diminished expectations for economic growth as well as fears over deposit outflows and reduced risk tolerance.
• “Banks reported expecting to tighten standards across all loan categories,” the report said. “Banks most frequently cited an expected deterioration in the credit quality of their loan portfolios and in customers’ collateral values, a reduction in risk tolerance, and concerns about bank funding costs, bank liquidity position, and deposit outflows as reasons for expecting to tighten lending standards over the rest of 2023.”
• In particular, the report showed “tighter standards and weaker demand” for commercial and industrial loans, an important bellwether for economic growth. Those conditions were seen across all business sizes.
• Also, the report showed the same conditions across commercial real estate categories. “There has been an ongoing tightening of lending conditions, and that is part of part of the process by which monetary policy works,” Treasury Secretary Janet Yellen told CNBC’s Sarah Eisen in response to a question about the report in a Monday “Closing Bell” interview. “The Fed is aware that tightening of credit conditions is something that will tend to slow the economy somewhat, and I believe they are taking this into account in deciding on appropriate policy.”

(Source: CNBC)

• The Ministry of Health and Wellness has been provided with a capital budget of approximately $6.43Bn for the fiscal year 2023/24. This represents a 31% increase over last year’s allocation, according to Portfolio Minister, Dr. the Hon. Christopher Tufton. He made the disclosure during his 2023/24 Sectoral Debate presentation in the House of Representatives, on Wednesday (May 3).
• Tufton, in providing a breakdown of programmed engagements in progress, said work on the Western Children and Adolescent Hospital in St. James has advanced to the fifth floor, with more than $450 million spent, so far, through a grant provided by the People’s Republic of China. “We are slated for completion in 2025. When completed, the facility will boast the only adolescent hospital in the English-Speaking Caribbean and the second paediatric facility on the island,” he informed.
• Regarding the Spanish Town Hospital, ground-breaking is scheduled for July 2023 at a contract price of some $6.4 billion to be spent over two years. He noted that consequent on these investments, the Spanish Town Hospital’s services will be expanded to include Cardiology, Haematology/Oncology, Ophthalmology, and Otolaryngology (ENT).
• Tufton also advised that the Cornwall Regional Hospital’s renovation is in the final stages of completion. “The final phase will commence in a month or two. There is a $14-billion expenditure associated with that and we expect that will begin to reoccupy the main building by the end of this year, right through the year 2024,” the Minister said.
• The Minister informed that since 2018, more than 100 health facilities islandwide have benefited from significant investments totalling approximately $4.4 billion, which have served to right-size and renew primary healthcare institutions.

(Source: JIS)

• Mexican economic activity remained robust in Q123, with real GDP growth picking up from 0.5% q-o-q (3.6% y-o-y) in Q422 to 1.1% q-o-q (3.9% y-o-y). This was well above both Fitch’s and consensus estimates, which sat below 1.0%.
• No expenditure breakdown is available as of yet, but preliminary output data from the National Institute of Statistics and Geography (INEGI) suggest that growth was broad-based.
• Helped by the continued resilience of the US economy, the export-oriented secondary sector grew by 0.7% on a q-o-q basis (2.6% y-o-y), while a 1.5% (4.3% y-o-y) expansion of the tertiary sector pointed to strength in domestic demand.
• In response to the Q123 results, Fitch has revised up its average annual forecast for real GDP growth in 2023 even further from 1.8% to 2.2%. Fitch remains considerably more bullish than consensus, which has pencilled in a 1.4% expansion this year.
• Mexican real GDP growth is being underpinned by three key factors, namely, significant FDI inflows, linked to the near-shoring phenomenon (close proximity to the USA); persistent strength in US economic activity that has helped to support Mexican export growth and remittances and; the government’s move in January to raise the minimum wage by 20% and the public pension by 25% that has boosted domestic demand.
• Notably, the apparent resilience in domestic demand also poses some upside risks to the interest rate forecast. Currently, Fitch sees the Bank of Mexico’s (Banxico) policy rate rising by a final 25bps to 11.50% in June, before being cut to 11.00% by year-end.

(Source: Fitch Solutions)

• The Chilean peso is set for a period of stability as economic and political worries continue to fade, validating the central bank's decision to unwind an intervention programme implemented last year to calm market turmoil, a Reuters poll showed.
• The foreign exchange and dollar liquidity intervention programme was implemented in mid-July 2022 to help the proper functioning of the foreign exchange market and facilitate the adjustment of the economy and financial markets to external and internal conditions.
• In July last year, the peso plunged to a record low of 1,050 per U.S. dollar in reaction to a sharp drop in the price of copper, Chile's top export, that added to concerns over a proposed reform of its market-friendly constitution.
• However, the peso recovered in the second half of 2022 and has settled close to 800 since the start of this year due to better demand for metals after China reopened its economy.
• The currency is forecast to remain near 800 in coming months, trading at 811 per dollar in one year, where it was on Tuesday, May 2, according to the median estimate of 14 foreign exchange experts surveyed on April 28 to May 3.

(Source: Reuters)

• European savers are pulling more of their money from banks, looking for a better deal as lenders resist paying to hold on to deposits some feel they can currently live without.
• This trend emerged as some of the region's biggest lenders outlined a profitable start to the year, in results that also offered a glimpse of a phenomenon dubbed a "bank walk" - a slow but notable outflow of customer cash.
• Lenders wasted little time in charging more for loans when interest rates rapidly rose from an almost 15-year slumber around zero last year, but most have dragged their feet on boosting deposit rates paid to millions of their customers. That has boosted profits at many major banks beyond many analysts' expectations but left savers disgruntled, raising fresh questions over the longer-term stability of the sector.
• "Traditional banks need to decide whether to maximise their return by keeping rates on deposits as low as possible or to prioritise their liquidity and stability by increasing rates and retaining customers' funds," Nicola Marinelli, assistant professor of finance at Regent's University London, said.
• Money market funds are proving popular among savers seeking bigger returns on their cash as high levels of inflation persist. In recent years, returns on these funds have only narrowly beaten bank deposit rates but the Crane sterling-denominated Money Market Fund index reported a 7-day annualised yield of 4.12% as of April 25, compared with some bank interest rates still stuck below 1%. The euro-denominated equivalent was 2.81%.

(Source: Reuters)

• Britain's services sector kicked off the second quarter with its fastest growth in a year, boosted by new orders, but it passed the cost of rising wage bills on to consumers, adding pressure on the Bank of England to keep raising interest rates.
• The final S&P Global/CIPS UK Services Purchasing Managers' Index (PMI) rose to 55.9 from 52.9 in March, above the 50 threshold for growth and higher than a provisional reading of 54.9.
• The reading added to a series of improved measures of the economy which had appeared to be heading for a recession in early 2023. Official mortgage and consumer lending data also surprised to the upside on Thursday. "A strong rate of service sector growth meant that the UK economy started the second quarter of 2023 in a positive fashion," Tim Moore, economics director at S&P Global Market Intelligence said.
• However, prices charged by businesses picked up pace after rising by the smallest amount in 22 months in March, and are still increasing noticeably faster than before the COVID-19 pandemic as firms rebuild profit margins. A BoE survey of companies on Thursday showed expectations for selling prices refused to budge lower in April, although their predictions for wage growth and inflation in the coming year cooled.
• The BoE, which is expected to lift its Bank Rate to 4.5% next week, is closely monitoring wage-setting and businesses' profit margins as it attempts to return double-digit inflation to its 2% target.

(Source: Reuters)