• The Barbados pension system is facing a growing crisis, Central Bank Governor Dr Kevin Greenidge warned, with more than 28% of defined benefit plans underfunded and an average funding rate of just 84.1%. Addressing the Eckler Annual Pension Investment Conference, Greenidge pressed for urgent reform and innovation to ensure the system’s sustainability as Barbadians are living longer. According to the Pan American Health Authority, the life expectancy at birth in Barbados in 2024 is projected to be 76.3 years, 1.7 years higher than the 2000 life expectancy of 74.6 years.
• Greenidge emphasised the challenges facing the pension industry, particularly the impact of an ageing population and declining birth rates. “If our pension system is to remain a reliable source of financial security for retirees, it must adapt to changing demographics and economic conditions,” he said.
• The governor highlighted opportunities for pension funds to play a transformative role in national development. He encouraged stakeholders to consider strategic investments in key areas such as climate resilience, affordable housing, and green technology, which align with national priorities and promise stable long-term returns.
• He also pointed to government-led initiatives such as the Barbados Optional Savings Scheme Plus (BOSS Plus) as secure options for pension funds to grow assets, while bolstering economic growth. BOSS Plus offers a 4.5% return, presenting an opportunity for pension plans to strengthen their portfolios while contributing to economic growth.
• “Pensions are far more than financial instruments. They are a promise of security and dignity for all retirees. To fulfil that promise, we must strengthen governance, improve financial literacy, and embrace innovation. This is a shared responsibility, one that demands resilience, collaboration, and forward-thinking”, the governor added.

(Source: Barbados Today; PAHO)

• Japan's exports expanded faster than expected in October, led by a pick-up in chip equipment demand in China, though fears persist over potential U.S. protectionist trade policies that could hamper future shipments.
• Japanese businesses are weighing the impact of new and potentially hefty tariffs promised by U.S. President-elect Donald Trump that could disrupt international trade.
• Total exports in October rose 3.1% from a year earlier, data from the Ministry of Finance showed on Wednesday, rebounding from a 1.7% drop in September and outpacing a median forecast in a Reuters poll of a 2.2% increase.
• Exports to China led the recovery with a 1.5% gain due to strong demand for chipmaking equipment, while those to the United States, Japan's largest export destination, were down 6.2% on weak auto-shipments, the data showed.
• Kazuma Kishikawa, economist at Daiwa Institute of Research, warned that global demand remains weak. "In particular, U.S.-bound shipments are likely to take months to recover as it would take time for interest rate cuts to start to lift the economy," he said.

Source: (Reuters)

• British inflation jumped by more than expected last month to rise back above the Bank of England's 2.0% target. Underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts.
• Consumer prices rose by an annual 2.3% in October, pushed up almost entirely by an increase in regulated domestic energy tariffs, after a 1.7% rise in September which was the first time the inflation rate had fallen below the BoE's target since 2021.
• The British Pound Sterling strengthened by almost a third of a cent against the U.S. dollar after the data was published before losing most of those gains. Interest rate futures priced at a slightly slower pace of rate cuts and bond prices fell. The BoE's most recent forecast and a Reuters poll of economists both pointed to a weaker CPI reading of 2.2%.
• James Smith, research director at the Resolution Foundation think tank, said a rise had been expected as last year's energy price falls dropped out of the annual calculation and the price cap increased in October.

(Source: Reuters)

• After several consecutive quarters of decline, MailPac reported a 66.1% increase in Q3 net profit to $114.00Mn compared to $68.62Mn in the prior year. Despite the robust third-quarter recovery, Mailpac recorded a 10.1% ($20.52Mn) year-over-year (YoY) decline in earnings to $182.67Mn for the nine months ended September 30, 2024.
• At the end of Q3 2024, revenue totalled $732.03Mn, an 82.9% increase from the prior year. The strategic integration of MyCart Express, acquired in March 2024, as well as the continued performance of its core brands, were the primary drivers of the brisk topline growth.
• Further, operating expenses for the quarter surged to $224.15Mn (91.9%), reflecting higher operating costs with the amalgamation of MyCart Express, along with growth in operating expenses from its existing business.  Higher airline freight charges, system upgrades and restructuring initiatives, aimed at harmonizing the brands, were among the contributors to the increase in expenses.
• The acquisition of MyCart Express has positioned MailPac as the largest courier platform in the Caribbean, now delivering over 1.5Mn packages annually. Consequently, the company has been focusing on technological improvements to drive cost efficiencies and innovation. As these strategies continue to unfold, MailPac anticipates significant synergistic benefits, operational efficiencies, and enhanced revenue.
• MailPac’s stock price has increased by 10.5% since the start of the calendar year, closing Wednesday’s trading session at $2.42. At this price, the stock trades at a P/E of 26.89x, above the Junior Market Distribution Sector Average of 19.95x.

(Source: NCBCM Financial Research & FESCO Financial Statements)

• In recent years, Jamaica has focused on increasing the number and scope of Special Economic Zones (SEZs) to enhance economic growth, attract foreign investments and boost exports. This development has been part of the country’s broader Global Logistics Hub Initiative, which aims to position Jamaica as a critical player in international trade.
• Since the replacement of the Free Zones Act with the Special Economic Zones Act in 2016, there has been a steady rise in the number of approved SEZs across Jamaica, resulting in the current total of 198 locations. This strategic development has strengthened Jamaica’s logistics cluster and puts the country in a better position to become the fourth global logistics node¹.
• The Jamaica Special Economic Zone Authority (JSEZA) plays a pivotal role in SEZ development, regulation and management, and has a mandate to establish the island as a hub for world-class facilities and services.
• Recognising the importance of workforce development in achieving this goal, JSEZA’s CEO Kelli-Dawn Hamilton pointed out that the entity has partnered with key institutions, like HEART/NSTA Trust and the Caribbean Maritime University (CMU), to build a talent pipeline aligned with emerging opportunities.
• Additionally, JSEZA has amplified its advocacy efforts, championing policies that ensure competitiveness and economic viability for SEZ clients. “We see the SEZs as a testing ground for the broader economy. If a solution works within the SEZ, we are confident it can benefit the wider economy,” Mrs. Hamilton stated.

______________________________

¹A centralized geographical location that brings together the key business operators in logistics, e.g. manufacturers, shipping lines, air cargo companies, third- and fourth-party logistics providers (e.g. express cargo service providers), and logistics support services.

(Source: JIS)

• The value of goods exports from Latin America and the Caribbean (LAC) have increased by 3.2% year-on-year in the first half of 2024, after recording a 1.6% decline last year according to the Inter-American Development Bank (IDB).
• In its latest report, the IDB noted that this improvement was the result of an increase in export volumes and the stabilisation of prices relative to 2023. The recovery in goods exports was fueled mainly by extra-regional demand, while trade with partners within the region continued to decline.
• Despite the improvement in goods exports, the most recent indicators do not yet confirm a sustained recovery in the region's overall exports according to the report. Notably, service exports slowed slightly in the first quarter of 2024, growing at 9.5% compared to the average of 12.2% last year. Nevertheless, this growth remains well above the global average of 7.1%.
• For the Caribbean, exports are estimated to have recovered significantly in the first half of 2024 (20.0%), after declining in the average for 2023 (-13.7%). This growth, however, was driven almost entirely by Guyana, as preliminary data for the Bahamas, Barbados, Belize, Jamaica, and Trinidad and Tobago point to a decline in export performance.
• Looking ahead, the external environment still holds significant uncertainty and downside risks, mainly due to geopolitical tensions, industrial policies, rising protectionist measures, and the impact of climate change.

(Source: IDB & Trinidad Express Newspaper)

• The Government of Bahamas has beaten its debt buyback target by agreeing to repurchase almost $216Mn in Bahamian foreign currency bonds that were listed and traded on major international stock exchanges.
• The total to be acquired, using financing from a $300Mn loan provided by Standard Chartered Bank, slightly exceeds the original $210Mn goal and was disclosed in a statement issued on the Government’s behalf before global markets closed on Friday, November 15, 2024.
• The release revealed that the Government received $445.817Mn worth of offers from investors to sell their holdings of Bahamian sovereign bonds spread across six different issues with principal maturity dates ranging from 2028 to 2038.
• The $215.69Mn to be repurchased means that the Davis administration accepted just under half, or 48.3%, of investor offers. The combined value of the offers accepted by the Government following the transaction’s closing represents just 8.8% of the combined $2.43Bn in principal covered by the outstanding bond issues.
• The rationale for the debt buyback has yet to be fully disclosed. However, the Government is likely to be exchanging higher-cost bonds for a Standard Chartered loan carrying a lower interest rate, later maturity date and more favourable terms. Furthermore, the interest savings generated from this buyback should finance a conservation trust fund set up by the Government to help safeguard the marine environment. The transaction thus has some characteristics of a debt-for-nature swap.
• The Bahamas is also understood to be working on a similar transaction, possibly worth up to $500Mn, with the Inter-American Development Bank (IDB) - a deal that the latter’s president recently confirmed is being worked on in an interview with international media.
• Securing the $500Mn IDB loan would allow the Bahamas to refinance an additional 22.6% of outstanding debt at a more favourable rate. This would mean lower debt servicing costs, unlocking more funds for investments in domestic projects and reducing the sovereign’s fiscal deficit.

(Sources: The Tribune & NCBCM Research)

• Canada's annual inflation rate accelerated more than expected to 2.0% in October as gas prices fell less than the previous month, data showed on Tuesday, likely diluting chances of another large rate cut in December.
• Prices for goods rose 0.1% on a year-over-year basis in October, following a 1.0% decline in September. In contrast, prices for services decelerated in October, rising 3.6%, the smallest yearly increase since January 2022. Over the past three years, prices for goods rose 10.2%, while prices for services increased 14.2%.
• Karl Schamotta, Chief Market Strategist at Corpay, believes the Bank of Canada will likely opt for a smaller quarter-point increase in December. He expects signs of economic resilience to support policy expectations into 2025. However, underlying price pressures are continuing to ease. If the upcoming GDP release on November 29 and the jobs report on December 6 show softer results than today's report, policymakers may take more aggressive action to reduce the gap between current rates and the neutral rate^[1]. This gap is estimated to be between 2.75% and 3.25%.

Source: (Reuters & Statistics Canada)

• Britons started new businesses last year at the slowest rate since 2010, a potential warning sign for longer-term economic growth and productivity, according to official data published on Monday.
• The number of new businesses started in the United Kingdom fell to 316,000 in 2023 from 337,000 in 2022, according to the Office for National Statistics.
• This reduced the 'business birth rate' - the number of new businesses started as a percentage of the total number trading, from 11.5% to 11.0%, the lowest since 2010. Fewer businesses closed too, with 309,000 shutting their doors in 2023, down from 349,000 in 2022, lowering the 'business death rate' to 10.8% from 11.9%, the lowest since 2020.
• Many economists view falling rates of business creation and destruction as bad for productivity growth and long-term improvements in living standards, as older businesses often find it harder to adopt better business models or new technology.

(Source: Reuters)

• Consumer prices fell to a 3-year low in October, according to data from STATIN. The point-to-point inflation rate for October 2023 and October 2024 was 4.9%, the lowest since June 2021, when the reopening of economies caused a spike in global demand and supply chain challenges that led to a surge in prices for imported goods.
• October’s low inflation outturn primarily reflects lower prices in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division (+3.5%), which was partially offset by higher costs for the ‘Food and Non-Alcoholic Beverages’ (+5.3%) and ‘Transport’ (+9.1%) divisions.
• Growth in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division was due mainly to increases in the prices of ‘Imputed Rentals for Housing’ (+6.2%) and ‘Water Supply and Miscellaneous Services Relating to the Dwelling’ (+7.8%) spurred by higher rental prices and water and sewage rates.
• The ‘Food and Non-Alcoholic Beverages’ division continued to be impacted by higher prices in the ‘Fruits and Nuts’ (+17.5%) and ‘Vegetables, tubers, plantains, cooking bananas and pulses’ (+5.7%), due to the lingering effects of Hurricane Beryl and the recent heavy rains on the supply of some produce.
• Higher prices in the Transport division were driven by a 15.4% increase in the ‘Passenger Transport Services’ class, resulting from a 19% rise in taxi fares in October 2023, and the fare restructuring by the Jamaica Urban Transit Company effected May 2024.
• At 4.9%, Jamaica’s inflation is comfortably within the BOJ’s target range of 4.0%-6.0%. With the path for inflation over the next eight quarters likely to be lower, it could set the stage for another rate cut at the next meeting of the Monetary Policy Committee on November 21. Currently, the policy rate stands at 6.50% after 2 consecutive 25 basis points cuts, which is significantly higher than the 0.5% rate in June 2021.
• Still, the US Federal Reserve’s (US Fed’s) interest rate pathway may be a constraint on the magnitude of future BOJ rate cuts, as Jamaica’s central bank walks the interest rate differential tightrope to help moderate inflation. Projections for the US Fed's 2025 rate cut trajectory have moderated due to the potential impacts of a Trump presidency. Proposed policies such as corporate tax cuts, deregulation, broad tariffs, and mass deportations could stimulate US inflation. This, in turn, could drive up Jamaica's imported inflation, complicating the Bank of Jamaica's (BOJ) short-term policy rate projections.

(Source: STATIN)