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US Service Sector Expands in February; Price Growth Accelerates Published: 06 March 2025

  • U.S. services sector growth unexpectedly picked up in February, and prices for inputs increased, which, combined with a recent surge in the cost of raw materials at factories, suggested that inflation could heat up in the months ahead.
  • Rising price pressures could be worsened by a trade war triggered by President Donald Trump's new 25% tariffs on imports from Mexico and Canada, which took effect on Tuesday, March 4, along with a doubling of duties on Chinese goods to 20%.
  • The Institute for Supply Management (ISM) said on Wednesday, March 5, that its non-manufacturing purchasing managers index (PMI) climbed to 53.5 last month from 52.8 in January. Economists polled by Reuters had forecast the services PMI dipping to 52.6.
  • A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy. The ISM associates a PMI reading above 49 over time with expansion in the overall economy.
  • The PMI pointed to resilience in domestic demand but was at odds with so-called hard data, including consumer spending and homebuilding, that have suggested a sharp slowdown in gross domestic product this quarter.
  • With the goods trade deficit deteriorating sharply in January, largely blamed on the front-loading of imports ahead of tariffs, the Atlanta Fed is currently forecasting GDP contracting at a 2.8% annualized rate this quarter. The economy grew at a 2.3% pace in the fourth quarter.
  • The ISM survey's new orders measure rose to 52.2 last month from 51.3 in January. That helped to lift its gauge of prices paid for services inputs to 62.6 from 60.4 in January. The ISM reported on Monday that its measure of prices paid by factories jumped to nearly a three-year high in February.

(Sources: Reuters)

1GS Earnings Not So Great for 2024 Published: 04 March 2025

  • 1Great Studios (1GS) generated J$35.68Mn in earnings for the financial year ended December 2024 (FY2024), 54.88% lower than in FY2023 amid lower revenues. Revenues came in at J$342.20Mn, 25.75% lower than in 2023 reflecting a 39.0% decline in its SEO business line that offset a combined 19.0% growth in all other business lines.
  • The impact of the underperformance in the company’s revenues on operating profits was exacerbated by a slower pace of reduction in cost of sales and higher operating expenses. Cost of sales fell just 12.9%. Operating expenses increased by 10.27% to J$87.43Mn driven by material increases in salaries, wages and related costs, advertising and promotion expenses. As a result, 1GS’ operating profit of J$47.41Mn was more than half its FY2023 figure.
  • Non-operating costs softened the blow. Interest expense and taxation charges were markedly lower at 86.62% and 91.30% respectively, reflecting the benefits of tax exemptions from listing on the Junior Market, along with proceeds from its IPO, which helped reduce debt and interest expenses. Nonetheless, this was inadequate to offset the lower revenue and sticky operating costs. As a result, earnings fell to J$35.68Mn.
  • Notwithstanding the not-so-great FY2024 profits, management remains optimistic about the company’s ability to leverage its expertise and services to drive shareholder value. Given new trends within the industry, 1GS continues to diversify its product and service offerings and other revenue streams including Web & App development, which followed as the second-largest segment. Meanwhile, strategically significant yet smaller segments, Digital, Branding & Creative, and Video Production, continued to play a vital role in the company’s diversified service portfolio.
  • 1GS’s stock price has decreased by 32.35% since the start of the 2025 calendar year and has lost 54.0% of its market value since being listed in September 2023. The stock closed Monday’s trading session at $0.46.

(Source: 1GS & NCBCM Research)

Jamaica’s BPO Sector Expands from Humble Beginnings to Over Three Million Square Feet Published: 04 March 2025

  • Jamaica’s Business Process Outsourcing (BPO) sector has recorded phenomenal growth over the past four decades, transforming from a modest operation in the Montego Bay Free Zone to a sprawling industry encompassing over three million square feet of space islandwide.
  • According to Vice President, BPO and Logistics, Port Authority of Jamaica (PAJ), Gloria Henry, this expansion has been fuelled by increasing private sector investment and strategic stakeholder vision to position Jamaica as a key player in the global logistics hub.
  • The shift from public to private sector dominance has been a key driver of this growth. Up to 15 years ago, the public sector, through the PAJ, was the primary provider of BPO space. The private sector now accounts for 67% of the space occupied, a testament to the industry’s increasing attractiveness and potential.
  • The PAJ has been pivotal in catalysing the BPO industry, facilitating its transition from traditional box processing to higher-value services.
  • Meanwhile, Jamaica is being strategically positioned to capitalise on the $1.5Tn third-party logistics (3PL) space. The Cayman Special Economic Zone (SEZ1) is expected to play a significant role in this endeavour, leveraging the synergies between BPO and 3PL. Given its proximity to Jamaica and its attractive tax incentives, the SEZ serves as a strategic hub for linking Jamaica’s BPO sector to the 3PL industry. By providing high-value support services, the SEZ acts as a regional enabler that can strengthen and expand Jamaica’s BPO operations.
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    1The Cayman Special Economic Zone (SEZ) is a designated area within the Cayman Islands that offers attractive incentives for international businesses to set up a physical presence, allowing them to operate essentially tax-free and with streamlined processes, primarily focused on attracting companies in sectors like technology, media, and financial services.

(Source: JIS)

 

Mexico Has Proposed Matching US Tariffs on China Published: 04 March 2025

  • U.S. Treasury Secretary Scott Bessent said on Friday that Mexico has proposed matching U.S. tariffs on China in a move that he described as "very interesting" and one that Canada should match.
  • Top Mexican officials have met with members of Trump's cabinet this week for trade talks ahead of a March 4 deadline, when U.S. President Donald Trump's proposed tariffs on Mexican and Canadian imports are set to get into effect alongside an additional 10% duty on Chinese imports. The Mexican and Canadian governments did not immediately respond to requests for comment. The Chinese embassy in Washington said unilateral tariff hikes by the U.S. severely violate World Trade Organization rules and harm the interests of China, the U.S. and the world.
  • Embassy spokesperson, Liu Pengyu highlighted that pressuring, coercion and threat are not the right way to deal with China. Instead, mutual respect is the basic prerequisite. Bloomberg, citing a person familiar, has reported that the proposed tariffs by Mexico on China would focus on cars and auto parts. The move is likely a response by Mexico City to avoid a looming 25% tariff by the United States on Mexican goods.
  • Mexican President Claudia Sheinbaum's administration has said for months that it is carefully considering Washington and Ottawa's policies towards China, saying even before Trump's reelection that it sought to be "more aligned" in addressing potential unfair Chinese trade practices.
  • Mexican Deputy Economy Minister Vidal Llerenas noted that Mexico could adopt further trade measures beyond tariffs it has slapped on cheap goods mostly from China, including counterfeit products, which had entered under previous low-cost exemptions known as "de minimis."

(Source: Reuters)

Chamber Of Commerce Seeks End to Port Delays to Boost Economy. Published: 04 March 2025

  • Barbados Chamber of Commerce and Industry (BCCI) head James Clarke has called for urgent reforms to address persistent delays at the Bridgetown Port, warning that inefficiencies are stifling business operations and undermining the country’s economic growth.
  • Clarke called for urgent action to streamline port logistics, reduce bureaucratic red tape, and modernise trade and investment policies to position Barbados as a more competitive global player. The BCCI president said port bottlenecks remain one of the most pressing concerns for the local business community, highlighting frustrations over costly delays and inefficiencies that have plagued importers and exporters alike.
  • These issues, he stressed, must be addressed as part of a broader strategy to improve the ease of doing business in the country. “Delays at the port continue to affect our business community, impacting supply chains and creating unnecessary hurdles for trade,” Clarke added.
  • Addressing an audience of business leaders and policymakers, Clarke outlined the chamber’s agenda for 2025, identifying regulatory reform, digital transformation, and business advocacy as key priorities. He said the chamber would continue working closely with the government and social partners to implement policies aimed at reducing bureaucracy, modernising business practices, and making Barbados a more attractive destination for investment.

(Source: Barbados Today)

Canadian Factory PMI Tumbles as Tariff Uncertainty Hits Sentiment Published: 04 March 2025

  • Canadian manufacturing activity contracted for the first time in six months in February as an uncertain trade outlook led to firms turning the most pessimistic since the start of the COVID-19 pandemic.
  • The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) fell to 47.8 from 51.6 in January, its first move below the 50.0 no-change mark since August. A reading below 50 indicates a contraction in the sector.
  • Output fell noticeably, driven lower by a steeper decline in new orders as product markets, both in Canada and abroad, were paralysed by concerns over the applicability and size of tariffs in the coming months. The output index fell to 47.5 from 52.3 in January, and the new orders index was at 45.4, its lowest level since July.
  • U.S. President Donald Trump has proposed 25% tariffs on Mexican and Canadian goods that are due to go into effect on March 4. Canada sends about 75% of its exports to the United States.
  • "Understandably, manufacturers grew increasingly downbeat about the future ... This meant firms also adopted an increasingly cautious approach to purchasing and employment," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. The measure of future output fell to 48.5 from 57.1 in January, marking the second-lowest level in survey data going back to July 2012. April 2020 was the only month when sentiment was weaker.
  • A stronger U.S. dollar and suppliers adjusting prices in anticipation of tariffs contributed to increased input prices, S&P Global said. The input price index was at 58.9, its highest level since April 2023. The Bank of Canada has worried that tariffs could raise inflation even as they reduce prospects for economic growth.

(Source: Reuters)

US Congress Nowhere Close to Deal to Avert Shutdown Ahead of March 14 Deadline Published: 04 March 2025

  • With less than two weeks before a March 14 deadline, Republicans and Democrats in the U.S. Congress appear to be nowhere close to a deal to avert a government shutdown that would throw Washington into deeper turmoil. The talks have been complicated by President Donald Trump, who has ignored spending laws passed by Congress, suspended foreign aid and fired tens of thousands of federal workers.
  • Both sides say his actions are the biggest sticking point as they seek to reach a deal that would provide government funding beyond March 14, when it is due to expire. Democrats say they are trying to secure guarantees that would prevent Trump and his budget-slashing point person, billionaire Elon Musk, from firing more workers or cancelling more government programs. Republicans say Democrats are trying to undo Trump's actions, which they call a nonstarter.
  • The spending deal only covers a portion of the budget, funding agencies like the Department of Defense and the Environmental Protection Agency. It would not address the country's rising borrowing costs or rapidly growing benefit programs like Social Security and Medicare.
  • Republicans are separately pushing to extend the tax cuts that Trump signed into law in 2017. One version, which narrowly passed the House last week, would cut taxes by $4.5Tn and reduce spending by $2Tn over a decade. Independent analysts say that would further add to the nation's $36Tn debt load.
  • Failure to reach a spending deal by March 14 would force the government to furlough hundreds of thousands of workers and shutter "nonessential" operations, such as financial regulation and trash pickup at national parks.
  • The last government shutdown was also the longest, ending in January 2019 after 35 days, as Trump, during his first term in office, and lawmakers clashed over his effort to build a wall along the U.S.-Mexico border. With no clear resolution in sight, lawmakers have already begun pointing fingers.

(Sources: Reuters)

Jamaican Minister Pushes for Banks to Lower Loan Rates Published: 27 February 2025

  • Jamaica’s Minister of Industry, Investment, and Commerce, Aubyn Hill, is once again calling on banks to lower their interest rates on loans, arguing that high borrowing costs are stifling economic growth.
  • Despite the Bank of Jamaica (BOJ) reducing its policy rate four times between August and December 2024, commercial banks have yet to follow suit. Hill pointed out that banks benefit the most in a growing economy because of the increased number of transactions. However, for the economy to grow, it is crucial to have reasonable and relatively low interest rates.
  • The concern over high lending rates is particularly significant for micro, small, and medium-sized enterprises (MSMEs), which form the backbone of Jamaica’s economy. MSMEs account for 97% of Jamaican businesses, employ 80% of the workforce, and contribute 44% of the country’s GDP. Yet, access to affordable financing remains a persistent challenge.
  • Jamaica’s lending rates remain significantly higher than those in the United States, where mortgage and auto loan interest rates are considerably lower. For example, while mortgage rates in the U.S. currently range between 6-7%, Jamaican borrowers often face rates exceeding 8-10%—sometimes higher depending on the financial institution. Car loans in Jamaica can carry double-digit interest rates, compared to U.S. rates that are typically in the 5-8%. This discrepancy creates a barrier for Jamaicans abroad who may be considering investing in property or business ventures back home.
  • High interest rates can slow down the growth of local businesses, making it harder for entrepreneurs, especially in tech and manufacturing, to obtain the necessary capital to expand. This is one of the key reasons why initiatives like the DBJ’s Boosting Innovation, Growth, and Entrepreneurship Ecosystems (BIGEE) program, funded by the Inter-American Development Bank (IDB), are so important. The newly announced partnership between CEDA and DBJ will introduce a grant-funding program to support local tech entrepreneurs who secure corporate partnerships, with funding of up to US$75,000 per innovator.
  • As global investors and members of the diaspora evaluate their options, Jamaica’s high interest rates continue to be a major factor in investment decisions. Until lending institutions lower rates in line with BOJ’s policy shifts, the country may struggle to attract the level of business expansion and foreign capital needed to sustain long-term economic growth.

(Source: Caribbean National Weekly)

Panama Canal to Build New Water Resource to Protect Against Future Droughts Published: 27 February 2025

  • The Panama Canal Authority is pushing forward with a key project to expand its water resources for canal operations while also emphasising the vital trade role of its operations. The authority is taking the necessary steps to prepare for the future ignoring the threats from Donald Trump.
  • There have been reports of an uneasy standstill after Panama hosted the visit by U.S. Secretary of State Marco Rubio. Panama took some public moves including serving official notice to China that it was withdrawing from the Belt and Road initiatives while also emphasising the country’s sovereignty.
  • The Panama Canal Board of Directors at the end of last week approved the next critical phase of the canal with the authorisation to move forward on a new man-made lake to supply water for residents and the operations of the canal.
  • It is a key component of the water management plan developed in Panama in response to the 2023-2024 drought that severely restricted canal operations, which officials had said could come within four years without intervention. They are seeking to maintain the momentum that has returned to the Canal’s operations.
  • The board authorised moving forward with the necessary resources for the construction of the lake in the Indio River Watershed. The project is expected to start by 2027 and take up to six years.
  • The Water Projects Program was created to guarantee water supply for over 50% of the country’s population, nearby communities, and canal operations, as well as to foster other productive activities across the country. The resolution also includes funds allocated for compensation, resettlement, and support for families and property owners who may be affected by the project.

(Source: The Maritime Executive)

 

The Return Of La Niña in The Southern Cone Published: 27 February 2025

  • La Niña conditions have returned, bringing increased uncertainty in weather patterns across the Southern Cone (Argentina, Brazil, Chile, Paraguay and Uruguay).
  • El Niño and La Niña are the warm and cool phases of a natural climate pattern across the tropical Pacific known as El Niño-Southern Oscillation, or “ENSO” for short. The two different phases represent variations in ocean surface temperatures in the central and eastern tropical Pacific Ocean, affecting wind and rainfall patterns.  La Niña typically brings wetter conditions to Central America and northern South America, while central and southern South America usually experience drier conditions.
  • From 2020 to 2023, there were three consecutive La Niña events, referred to as the "triple dip." This was one of the longest-lasting occurrences in recent history, leading to severe droughts and wildfires across much of the Southern Cone.
  • As the upcoming La Niña period unfolds, extreme weather patterns are set to continue. Even though this La Niña is expected to be weak, major wildfires and record-breaking heat have already been recorded in the region.
  • Drought conditions present significant risks to key summer crops, particularly soybeans and corn, which dominate agricultural output in the region. For all countries in the region, lower global soybean prices, coupled with weaker demand from key trading partners like China, will weigh further on export revenues against a challenging global macro backdrop.
  • That said, ongoing geopolitical uncertainties continue to pose risks to trade, potentially diverting exports and also increasing volatility in commodity prices. Additionally, if the La Niña cycle extends beyond March, drier conditions could persist for a longer period, further stressing crops and increasing production losses.

(Source: Fitch Connect)