• After reporting robust earnings in its first quarter ended December 31, 2024 (Q1 2025), Salada Foods' performance stalled in Q2 2025, with the company recording a 10.1% dip in earnings for the six months (6M) ended March 31, 2025. The decline was primarily driven by higher operating costs.

• Gross profit growth increased by only 3.3% to J$236.82Mn reflecting modest revenue growth that was partially eroded by higher direct costs. For the 6M period, revenues increased by 5.7% to J$767.90Mn, backed by a 6.6% improvement in domestic market sales and a 1.6% uptick in export revenues. This growth reflects the company’s ongoing strategic marketing initiatives and distribution expansion efforts. However, direct costs grew in tandem, with cost of sales rising by 6.8%.

• Continued investment in developing export markets to support brand expansion resulted in operating costs surging by 22.9%. and a 13.6% drop in operating profit to J$107.19Mn, compared to J$124.07Mn in the prior year period. The combined effect of rising costs and modest revenue growth compressed the operating margin, which fell from 17.1% to 13.9% in H1 2025.

• Despite a 47.0% uptick in net financing income, as interest income on invested funds exceeded financing expenses, Salada’s net profit margin declined to 11.6% from 13.6% in the prior corresponding period.

• At the close of the market on May 14, 2025, Salada’s shares closed at $3.25, implying a P/E ratio of 19.1x, which is above the Main Market Distribution & Manufacturing Average of 15.9x.

(Sources: Salada Foods Financial Release & NCBCM Research)

• The staff of the International Monetary Fund (IMF) have commended Jamaica following their official visit to the island from April 30 to May 7, during which they conducted the 2025 Article IV consultation.

• Over the last decade, Jamaica has successfully reduced its public debt, firmly anchored inflation and inflation expectations, and strengthened its external position. The country has built an enviable track record of investing in institutions and prioritising macroeconomic stability. Jamaica has also navigated recent global shocks and natural disasters in a manner that is agile, prudent, and supportive of growth, according to the concluding statement.
• Although GDP declined in FY2024/25 due to hurricane Beryl and tropical storm Raphael, which damaged agriculture and infrastructure and undermined tourism, economic activity is projected to normalise as these effects wane.

• Unemployment has fallen to all-time low levels (3.7% in January 2025); however, low productivity has been worsened by structural issues, including high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and trade barriers.

• Further, while inflation has converged to the Bank of Jamaica’s (BOJ’s) target band of 4-6%, the Fund noted that implementing reforms to enhance the foreign exchange market and allow greater exchange rate flexibility would strengthen the transmission mechanism of monetary policy.

• Nonetheless, the current account has shown a modest surplus for the last two fiscal years, supported by robust tourism revenues and high remittances. Consequently, the international reserves’ position has continued to improve.

• The IMF also acknowledged that the Government of Jamaica (GOJ) continues to implement sound macroeconomic policies, supported by effective fiscal policy frameworks. As a result, a primary surplus is expected for FY2025/26, leading public debt to fall towards 65% of GDP by the end of the fiscal year, the lowest level in 25 years and well below pre-pandemic levels. 

• Looking ahead, the outlook points to growth settling at its potential rate once the FY2025/26 recovery is complete and with inflation stabilising at the BOJ’s target range. Nevertheless, global developments require continued close monitoring. Global downside risks from tighter financial conditions, slower growth in key tourist markets, and trade policy disruptions remain significant. Additionally, extreme weather events such as floods, hurricanes, or earthquakes could negatively affect economic activity.

(Source: IMF)

• Newly elected Prime Minister Kamla Persad-Bissessar entered office on May 1, 2025, with a strong electoral mandate, a large parliamentary majority, and a potentially amenable opposition leader, supporting Trinidad and Tobago’s (T&T’s) policymaking environment and political stability outlook. However, T&T’s precarious fiscal position may hinder the incoming government’s ability to follow through on campaign promises, including significant increases in public sector wages and proposed tax cuts.

• Immediately following her swearing-in as Prime Minister, Persad-Bissessar announced several top policy priorities, including her intent to abolish the Trinidad & Tobago Revenue Authority (TTRA), an opposition-led initiative to improve tax collection efficiency and collect taxes in arrears, estimated at 7.0% of GDP in Q1 2018. Instead, PM Persad-Bissessar announced her intention to strengthen the Board of Inland Revenue (BIR) by hiring additional commissioners.

• With the IMF emphasising the importance of strengthening T&T’s tax collection and compliance capacity, the ability of the BIR to close the tax gap and identify new revenue streams will be crucial for fiscal stability, especially given the reported budgetary shortfalls.

• However, budget constraints and a deteriorating fiscal position present a downside risk to both Trinidad and Tobago’s fiscal outlook and public support for the government.

• On May 8, 2025, PM Persad-Bissessar reported that Trinidad and Tobago was in a significant budgetary hole, with a deficit of TTD 4.42Bn for May, and a projected deficit of TT$11Bn, an estimated 6.7% of GDP for the 2024/2025 fiscal year.

• Additionally, the PM announced significant shifts in energy policy, indicating that the government would no longer pursue the Dragon gas project. Instead, T&T would look to import natural gas from other sources, including Guyana and Grenada. 

• Finally, parliament will convene in May with proposed ‘stand-your-ground’ laws taking priority. As part of their anti-crime measures, the United National Congress (UNC) has pledged to expand access to firearms for law-abiding citizens, among other reforms. However, the effectiveness of these policies in reducing violence will remain to be seen, with previous efforts to crack down on crime yielding minimal results. 

(Source: Fitch Connect)

• Panama has announced this week that Colombian, Ecuadorian, and Venezuelan migrants residing in Colombia returning from North America will be able to be included on repatriation flights to these two countries, paid for by the United States. 

• “Within the migration memorandum of understanding that Panama signed with the United States (on July 1, 2024), we have also achieved that those individuals, such as Colombians, Ecuadorians, and Venezuelans residing in Colombia, can approach immigration, and we will finance their transfer to those countries through that memorandum,” said Roger Mojica, director of the National Migration Service. 

• He explained that “if there is anyone interested in that regard, we will include them as part of the memorandum of understanding program, and their transfer will be financed as if it were the flights we are operating, because the flow through Darién has decreased. We still have the funds, and we can take advantage of those opportunities we established with the United States.” So far, only Colombian, Ecuadorian, and Venezuelan migrants residing in Colombia can apply for the return flights, according to official information.

• For context, on July 1, 2024, the same day Panamanian President José Raúl Mulino took office, the United States and Panama signed a memorandum of understanding to reduce the migratory flow through the Darién Gap, the jungle bordering Colombia used daily by migrants who dream of reaching the United States in search of better living conditions. Since then, the U.S. has funded nearly $2.7Mn in flights and tickets for the return of migrants to their countries of origin through that agreement, according to information from the U.S. government released last February. 

• More than 40 charter flights have been carried out to more than 14 countries, including Colombia, Ecuador, India, and Vietnam, with 1,729 migrants. In addition to commercial flights to repatriate people from countries such as Russia, Afghanistan, Pakistan, Ghana, and Turkey, according to official data shared by U.S. authorities. 

(Source: Newsroom Panama)

• Recent inflation data point to continued progress toward meeting the U.S. Federal Reserve's 2% inflation goal, but the outlook is now uncertain due to the possibility that new import taxes will drive prices higher, Fed Vice Chair Philip Jefferson said.

• Consumer prices in April rose less than analysts expected, but "there is much uncertainty...around the future path of inflation," Jefferson said in comments prepared for delivery at a New York Fed event.

• Jefferson said he supported holding the policy rate of interest steady at the last Fed meeting, and felt the current "moderately restrictive" level, in the range of 4.25% to 4.5%, was "well positioned to respond to developments that may arise." He regarded the labour market as still "solid," and felt that the slight contraction in U.S. economic output over the first three months of the year was distorted by import data that overstated the degree to which the economy was slowing.

• Still, Jefferson said, sentiment among businesses and households has declined, and he was "watching very carefully for signs of weakening economic activity in hard data." He does expect economic growth to slow over the year, but to remain positive.

• The steady flow of tariff announcements from the Trump administration, driving import levies to record heights only to see the most aggressive actions postponed, has left the Fed struggling to determine the ultimate impact on prices, growth and employment. For now, policymakers say they are on standby as trade and other policy changes are finalised and their effect on the economy can be studied.

(Source: Reuters)

• Japan's wholesale inflation hit 4.0% in April as companies continued to pass on rising raw material and labour costs, underscoring price pressure that will likely keep the central bank on course to raise interest rates further.

• There was little impact seen from U.S. President Donald's sweeping tariffs announced on April 2, in part due to a 90-day pause set by Washington, with many firms yet to finalise their pricing strategy, a Bank of Japan (BOJ) official said in a briefing on the data released on Wednesday.

• The year-on-year increase in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, matched a median market forecast and slowed from a revised 4.3% annual increase in March.

• The index, at 126.3, hit a fresh record high for the 8th straight month, in a sign that lingering inflationary pressures are feeding into higher consumer prices with some lag. The yen-based import price index fell 7.2% in April from a year earlier after a revised 2.4% drop in March, a sign the currency's rebound was taking pressure off import costs.

• Food and beverage prices rose 3.6% in April from a year earlier, faster than a 3.4% gain in March. Agricultural goods prices also spiked 42.2% in April after a 39.1% rise in the previous month.

• The BOJ ended a decade-long, massive stimulus last year and raised short-term interest rates to 0.5% in January. While it has signalled readiness to raise rates further, the economic fallout from Trump's tariffs has complicated its decision on the next rate-hike timing. Core consumer inflation, which is the key indicator the BOJ uses to set monetary policy, hit 3.2% in March on persistent rises in food costs, staying above the central bank's 2% target for three years.

(Source: Reuters)

• TransJamaican Highway Limited (TJH) reported a 31.1% increase in its net profits for the quarter ending March 31, 2025 (Q1 2025) to US$9.07Mn.
• The growth in earnings was fueled by a 13.8% year-on-year increase in revenues and a 9.5% reduction in operating expenses, which was partially offset by a 29.9% decline in other income to US$0.9Bn. Strong revenue performance from the company's main operations, i.e. toll collections, led to the overall improvement in its topline performance, while the decline in other income was due to lower interest income, as the Group reduced investment activity to reserve funds for planned initiatives scheduled for the first half of 2025.
• Despite an increase in administrative expenses (7.1%), operating profit benefited from a reduction in operating expenses (-9.5%). Higher salary adjustments and increased travel expenses, linked to renewed contracts for operational team transportation, accounted for the rise in admin expenses. In contrast, lower amortisation of the Intangible Asset and a decline in repairs and maintenance activities carried out in the first quarter contributed to the reduction in operating expenses. That said, this was partially offset by higher marketing expenses and bank charges as TJH increased its marketing spend to support the expanded T-Tag and other campaigns, as well as higher bank charges.
• Against this background, operating profit amounted to US$15.42, a 21.9% increase over the period, resulting in a 456 basis point (bps) improvement in operating margins to 68.5%.
• Additionally, financing costs for the company fell (-4.9%), aligning with the gradual decline in interest expenses, as principal repayments on secured notes continue to be paid on a quarterly basis. Consequently, on the back of higher revenues and lower operating and financing expenses for the quarter ended March 31, 2025, TJH’s net profit margin rose to 40.3% from m34.9% in the previous corresponding quarter.
• At market close on Tuesday, TJH’s JMD stock price was J$3.67, down 20.7% since the start of the year. At its current price, the company trades at a P/E of 9.1x, below the average of 15.5x for the Main Market Energy, Industrials and Materials Sector.

(Sources: TJH Financial Release & NCBCM Research)

• While the Jamaican economy is estimated to have contracted by 0.5% in 2024, according to Fitch Solutions, expectations are for the country to grow by 1.0% in 2025, with sluggish external demand offset by steady domestic demand amid the continued economic recovery from Hurricane Beryl.
• Favourable domestic economic conditions influence the growth outlook, including a record-low unemployment rate of 3.5% in the fourth quarter of 2024 (Q4 2024) and 3.7% in Q1 2025, well anchored inflation rates within the BOJ’s target range, and an expected 6.7% minimum wage increase and rise in the income tax threshold from J$1.7Mn to J$1.8Mn in April 2025 that will help to boost disposable income.
• While domestic demand will help growth recover in 2025, Jamaica remains vulnerable to external shocks and challenging global economic conditions. These external factors include flagging U.S. demand, a challenging trade policy environment following Trump’s tariff announcement, and a potentially damaging hurricane season in 2025.
• Concerning the U.S., Fitch anticipates that it will fall into a modest recession over the second half of 2025 (H2 2025), which will have meaningful implications for Jamaica. The U.S. accounted for 47.2% of Jamaica’s total exports in 2023 and 40.9% of total imports. A slowing US economy will, therefore, impact remittances to Jamaica, which made up 18.5% of GDP in 2023 and an estimated 16.9% in 2024.  
• Additionally, slowing economic activity in the U.S. will impact investment levels in Jamaica, as evidenced by sharp declines in foreign direct investment inflows in 2024.

(Sources: Fitch Connect)

• A lower interest burden and a reversal of one-time expenditures will see Costa Rica’s budget deficit narrow from 3.8% of GDP in 2024 to 3.3% in 2025 and further drop to 3.1% in 2026.
• Fitch Solutions expects this to bring the primary surplus to 1.5% of GDP compared to 1.1% in 2024, and just above the government’s target of 1.3%.
• In 2024, expenditure growth (6.3%) outpaced revenue growth (3.2%), largely due to a one-off COVID-19-related expense tied to vaccine procurement agreements. This should cause spending to ease in 2025, with expenditures expected to fall to 18.4% of GDP (relative to 18.9% in 2024).
• The public employment reform law, which standardises salary structures and eliminates discretionary bonuses, will also help reduce the public wage bill, historically one of the largest components of spending.
• Revenue growth will, however, remain relatively flat at 14.9% of GDP in 2025 relative to the 15.1% of GDP in 2024, as political gridlock between the executive and legislators continues to block structural tax reforms.
• Nevertheless, an increased primary surplus will help reduce the debt-to-GDP ratio from 59.8% in 2024 to 59.5% in 2025, supported by adherence to the fiscal rule. Looking ahead, the debt-to-GDP ratio is also expected to continue on a downward path.

(Source: Fitch Connect)

• Panama’s real GDP growth is expected to come in at 2.6% in 2025, slightly below 2024’s estimated outturn of 2.8%. Growth will be supported by a return to more normal water levels in the Panama Canal (which accounts for roughly 7.5% of GDP) after several years of reduced throughput due to drought.
• An upward revision to the projections would have been on the cards given solid incoming data; however, those prints largely predate the aggressive shifts in U.S. trade policy seen since March 2025 and the deterioration in foreign relations between the U.S. government and the Mulino administration over President Donald Trump’s insistence that the Panama Canal be either returned to U.S. hands or that appropriate compensation should be paid.
• Panama is not particularly exposed to the direct effect of tariffs, given that goods exports account for a small share of GDP. Nonetheless, its status as a major logistics hub does leave it more vulnerable to the knock-on consequences of tariffs on goods trade, but the impact will be masked in 2025 by a surge in global trade over H1 2025 as firms race to front-run tariffs.
• As a result, the primary impact on growth in the near term will be a drop in business confidence, exacerbated by persistent concerns that the Trump administration may impose financial sanctions of some sort, which Panama is highly exposed to as a dollarised economy, in response to Mulino’s reluctance to hand back control of the Canal.
• Further, two domestic headwinds will add to the existing pain. First, the government’s aggressive fiscal consolidation plans, which will likely take the form of spending cuts, will likely see public investment set to bear the brunt. Second, a national strike that began in mid-to-late April in response to the government’s social security reforms will weigh heavily on economic activity in Q2 2025, with the Chamber of Commerce estimating that the stoppages are coming at a daily cost to the economy of around US$100Mn (approx. 0.1% of GDP).

(Source: Fitch Connect)