• Given the challenges with the levels of productivity in Trinidad and Tobago (T&T), a four-day workweek may not be the best option for the country at this moment, according to the views of some of the country’s business leaders.
• Following the growing trend globally, Germany, Europe’s largest economy has just started a trial where employees from select companies will work for four days with the same salary. Similarly, in the Caribbean, The Dominican Republic and Barbados have also shifted to testing this model.
• The Employers’ Consultative Association (ECA), T&T’s largest employer-umbrella organisation in a statement to Sunday Business said it is not sure that the domestic economy is ready for the four-day workweek concept.
• “While in principle we are not opposed to the idea of a four-day work week, we are not certain that presently our economy is ready to embrace a shift of this magnitude and its potential challenges. The four-day work week has been mainly trialled within developed economies – which are often underpinned by high productivity rankings. Within the context of T&T, our mechanisms for measuring workplace productivity are lacking and so we do not have a full scope on where we stand as a nation.”
• The ECA also said that to its knowledge, no company in T&T has started such trials or has shown any interest in doing so.
• The ECA also noted that the success of a four-day workweek would depend on the robustness of existing labour policies that drive productivity, innovation, and competitiveness as well as the more implicit elements of a society such as norms and cultural values.

(Source: CariCris)

• Chile's central bank considered reducing the benchmark interest rate by either 100 or 125 basis points at its January meeting, with one rate setter thinking it was appropriate to analyse the option of 150 bps, the meeting minutes showed on Thursday.
• The Andean nation last month reduced its key rate by 100 basis points (bps) to 7.25%, with the monetary authority seeing inflation pressures easing. The cut, in line with estimates, was not a unanimous decision.
• However, the board members agreed that a larger cut "could be a big surprise that might generate unnecessary volatility," the statement added.
• One member said that a cut of 125 bps points or more was, in his view, "the best response to the macro scenario and reduced risks of inflation being lower than desired".
• The board members agreed that inflation was converging to the 3% target faster than had been expected some time ago.
• Despite the split vote, all members agreed that the proper implementation of monetary policy implied efficiently meeting the inflation target, at the lowest possible cost in terms of activity.

 (Source: Reuters)

• Britain's economy fell into a recession in the second half of 2023, a tough backdrop ahead of this year's expected election for Prime Minister Rishi Sunak, who has promised to boost growth.
• Gross domestic product (GDP) contracted by 0.3% in the three months to December, having shrunk by 0.1% between July and September, official data showed. The fourth-quarter contraction was deeper than all economists' estimates in a Reuters poll, which had pointed to a 0.1% decline.
• Thursday's data means Britain joins Japan among the Group of Seven advanced economies in a recession, although it is likely to be short-lived and shallow by historical standards. Canada has yet to report GDP data for the fourth quarter. Britain's economy stands just 1% higher than its level in late 2019 before the COVID-19 pandemic struck, with only Germany among G7 countries faring worse.
• Ruth Gregory, deputy chief UK economist at Capital Economics, said the GDP figures had more political significance than economic, with voters due to elect lawmakers in two constituencies on Thursday. "The news that the UK slipped into technical recession in 2023 will be a blow for the prime minister on a day when he faces the prospect of losing two by-elections," Gregory said.
• Of note, data on Wednesday showed inflation held at a lower-than-expected 4.0% in January, reviving talk among investors about a BoE rate cut as soon as June. However, strong wage growth reported on Tuesday underscored why the BoE remains cautious. Investors were pricing a roughly 68% chance of a first BoE rate cut at its June meeting.

(Source: Reuters)

• U.S. retail sales experienced the most significant drop in 10 months in January, with a 0.8% decline, primarily attributed to adverse weather conditions and challenges in adjusting data for seasonal fluctuations.
• The Commerce Department's report indicates a potential slowdown in consumer spending, as retail sales for November and December were revised lower. However, a tight labour market and elevated wage growth suggest that consumer spending is not collapsing.
• The severe weather conditions, including frigid temperatures and snowstorms, contributed to the decline in retail sales. Building material and garden equipment store sales, motor vehicles and parts dealers, and gasoline station receipts were particularly affected.
• Freezing temperatures also impacted factory production, with a 0.5% decline reported in manufacturing output. Despite these weak reports, expectations for the U.S. central bank to refrain from cutting interest rates before May remain unchanged.
• While import prices saw their biggest gain in nearly two years, online sales dropped in January, and core retail sales (excluding specific categories) decreased by 0.4%. Despite these mixed signals, economists believe that consumer spending will continue to rise at a solid pace, supported by a resilient labour market and growing household purchasing power.

(Source: Reuters)

• TransJamaica Limited recorded a net profit of US$23.86Mn for the twelve months ended December 31, 2023. This represents a 434.2% YoY turnaround in profitability, primarily bolstered by strong quarterly performances and significant cost savings throughout the year.
• For the Twelve months ending December 31, 2023, revenue was US$75.20Mn, reflecting an increase of 15.7% compared to US$65.06Mn for the same period in 2022. The significant increase was due to greater traffic levels over the previous year and movements in the toll tariff, which is reviewed annually.
• Operating expenses for the twelve months improved to US$22.44Mn or 43.8% from US$39.91Mn in 2022. This was primarily due to cost savings that continue to accrue to TJH from the acquisition of the subsidiary, Jamaican Infrastructure Operator (JIO), which allowed for the modification of the fees, thus reducing its cost to operate. This was, however, partially offset by bank and security charges incurred, higher maintenance costs, including spares and equipment purchased to improve the services, cost for renovation works that are currently being done at the Portmore Toll Plaza, and higher Insurance costs associated with the renewal of its coverage for the motorway.
• The Group’s administrative expenses primarily comprised of staff costs, plant and equipment depreciation, and other routine office expenses, came in at US$8.36Mn for the full year (FY). This represents a rise of US$6.61Mn relative to US$1.75Mn for FY 2022, influenced by subsidiary’s staff and related costs and increased consultancy fees.
• The acquisition of JIO has resulted in a one-time settlement loss of US$13.88Mn; however, TransJamaica stands to gain from future cost savings as this transaction has significantly reduced its Operating Expenses by more than 40% for the twelve months and increased its profitability which is expected to continue in subsequent years. Furthermore, increased traffic flows have bolstered and will continue strengthening the company’s topline.
• In addition, TJH has the first right of refusal to maintain and operate the May Pen to Williamsfield leg of Highway 2000 and is currently in negotiations with the government regarding the concession. If the company is successful in securing the concession, we anticipate that it will provide an additional boost to TJH’s revenues and profitability, as the road is a major thoroughfare along the south coast and will significantly reduce travel time to Kingston from Mandeville for motorists.
• TJH’s stock price has increased by 17.7% since the start of the calendar year. The stock closed Tuesday’s trading session at $3.19 and currently trades at a P/E of 10.29x below the Main Market Energy, Industrial, and Materials Sector Average of 12.42x.

(Sources: JSE and NCBCM Research)

• Mailpac Group Limited (“Mailpac Group”), one of Jamaica’s leading businesses in e-commerce logistics and solutions, announced that it has agreed to acquire MyCart Express (“MyCart”), the fastest-growing and second-largest courier company in Jamaica.
• This strategic transaction not only positions the combined entity as the largest courier platform in the Caribbean, delivering over 1.5Mn packages annually, but also merges the complementary management, service offerings, and geographic footprint of both entities to deliver superior growth to stakeholders.
• Following the transaction, the Board of Directors plans to hold an extraordinary general meeting to propose rebranding Mailpac Group as MyPac Group. MyPac will operate multiple e-commerce brands, including Mailpac (premium courier), MyCart (value courier), ‘Pack Yuh Barrel’ (digital barrel packing and shipping), and Mailpac Local (local online purchasing).
• The Group will be led by a management committee consisting of Khary Robinson and Garth Pearce of Norbrook Equity Partners Limited ("Norbrook"), Mark Gonzales and Samantha Ray of Mailpac, and Kamar Palmer and Aldane Smith of MyCart. The management of each brand will stay unchanged.
• In addition to doubling the size and capacity of Mailpac Group, the transaction will see the owner-operators of MyCart becoming shareholders of the publicly listed company, significantly adding to the innovation and execution capacity of the Group. Mailpac and MyCart will also strategically focus on their core market segments with appropriate services and pricing.
• Khary Robinson, also the Executive Chairman of Mailpac Group, highlighted that this transaction marks a pivotal moment in the logistics sector, with MyPac poised to deliver exceptional courier services across Jamaica and the Caribbean. He further noted that the combined expertise, resources, and innovative approaches of Mailpac and MyCart create a formidable force that will shape the future of logistics in the region.

 (Source: JSE)

• An overturned vessel has caused a huge oil spill along Trinidad and Tobago’s coastline, in what the Caribbean country’s prime minister described as a “national emergency” on Sunday.
• The spill occurred on February 7 off the southern shores of Tobago Island, and about 15 kilometres of the coastline “is now blackened,” according to the country’s Office of Disaster Preparedness and Management (ODPM).
• In a news conference Sunday, Prime Minister Keith Rowley said that “the situation is not under control, and origins of the vessel have not yet been identified.” He went on to note that “This is a national emergency and therefore, it will have to be funded as an extraordinary expense. However, the government is not certain of the “full scope and scale” of what is going to be required.
• The spill occurred during Carnival season, one of the country’s biggest tourist attractions. “The best part of Tobago’s economy is its tourism, so it is important that we be cognizant that we don’t expose the tourism product to this kind of thing, and because this has happened, we have to contain it,” the prime minister said.
• Authorities installed booms - floating barriers - to prevent the spill from spreading to other areas, said Farley Augustine, the chief secretary of the Tobago House of Assembly. Officials have also dispatched divers to try to plug the leak but have not been successful.

 (Source: CNN)

• If the Israel-Hamas war were to expand into a regional conflict and have a meaningful impact on global oil prices, it would place pressure on inflation rates in Latin America and likely delay or reverse rate-cutting cycles.
• However, compared to other regions of the world, Fitch believes that Latin America is relatively insulated from the impacts of the ongoing disruptions to trade in the Red Sea. 
• This is so, as virtually none of the region’s trade travels through the Suez Canal or the Red Sea, as its major partners – the US, Europe, and Mainland China – are directly accessible across the Atlantic and Pacific oceans.
• Notwithstanding, Latin America is vulnerable to a spike in oil prices due to a potential regionalisation of the Israel-Hamas war. Furthermore, if a spike in oil prices were to happen, Latin America, like every other region in the world, would see a notable inflationary impact.
• Finally, Fitch does not expect much of a political impact in Latin America from the conflicts in the Middle East, despite divisions over the Israel-Hamas war.

(Source: Fitch Solutions)

• After a brief decline in December and January, mortgage rates are on the rise again. The average contract interest rate for 30-year fixed-rate mortgages increased to 6.87% from 6.80% the previous week, marking the highest rate since early December 2023.
• The increase in mortgage rates is affecting mortgage demand, with total mortgage application volume falling by 2.3% compared to the previous week, and both applications for home purchases and refinancing showing declines.
• Applications to refinance a home loan dropped by 2.0% for the week but were still 12.0% higher than the same week one year ago. Despite rates being half a percentage point higher than a year ago, recent rate drops from a 20-year high have prompted some borrowers to seek savings through refinancing.
• Purchase applications for mortgages to buy homes decreased by 3.0% for the week and were 12.0% lower than the same week a year ago. Affordability challenges, elevated mortgage rates, and low existing housing inventory are cited as factors contributing to the subdued purchase activity in the housing market. Harsher winter weather is also noted as a factor limiting house hunters' activities.
• Additionally, a recent government report on inflation causing rates to surge even higher is highlighted, with the average rate on the 30-year fixed reaching 7.08%, leading to immediate reactions in the bond market and prompting mortgage lenders to raise rates.

(Source: CNBC)

• The Congressional Budget Office (CBO) director, Phillip Swagel, cautioned House lawmakers about the growing national debt and the potential existential threat it poses to the U.S. economy.
• The CBO's semi-annual report indicated that the U.S. yearly budget deficit is expected to increase by an estimated US$1.0Trn over the next decade, reaching US$2.6Trn in 2034. Net interest costs are predicted to surpass non-defense discretionary spending by 2024, climbing to 3.9% of GDP in 10 years.
• Swagel attributed the rising national debt to factors such as high interest rates, an ageing population, and increased federal healthcare costs. The projected debt is set to reach a record 116.0% of GDP by the end of 2034, potentially impacting social security benefits.
• Republicans on the committee welcomed findings indicating that the Fiscal Responsibility Act of 2023 helped marginally reduce the deficit. The bipartisan bill, negotiated by former GOP House Speaker Kevin McCarthy, linked raising the debt ceiling with federal spending caps.
• Democrats, like Dan Kildee from Michigan, emphasised the need for changes to the tax code to generate more revenue and criticised previous tax cuts. Swagel highlighted the CBO report's key finding that increased immigration could positively impact the U.S. economy, contributing to GDP growth and additional tax revenue over the next decade.

(Source: CNBC)