• With 42% of the expenditure of a visitor being on food, Tourism Minister, Hon Edmund Bartlett, is inviting local investors to build the capacity of Jamaica for it to become “a real strong foodie destination”.
• The Minister made the call in an interview with JIS News at an event dubbed ‘Come Back to Craving’, held at the Devon House Mansion in Kingston on June 21, where a group of local and international journalists were treated to a unique gastronomy experience.
• He noted that Devon House was designated as the Gastronomy Centre of Jamaica and the Caribbean, and as a result, the Ministry of Tourism has been developing a Gastronomy Policy.
• Currently, gastronomy is a huge driver of the Jamaican tourism experience and the country has the potential to bring a new element of tourism demography into the destination.
• Minister Bartlett highlighted that the Jamaican story is strong and compelling, and as more people are brought to the destination, they will create consumption patterns that are new and varied, and Jamaica has the capabilities to present the food types that will respond to these different consumption patterns. This would allow the country to appeal to a new tourist demography and ultimately increase arrivals.  

(Source: JIS)

• An index evaluating Latin American countries' ability to weed out corruption showed most countries moving backwards, according to the ranking released on Tuesday, June 27.
• The 2023 Capacity to Combat Corruption (CCC) Index, published jointly by Americas Society/Council of the Americas (AS/COA)) and Control Risks, covers 15 countries, which together represent 96% of Latin America’s GDP, pointed to a decline in the region's average score for the first time since 2020.
• Looking at 14 variables, including the independence of judicial institutions and the strength of investigative journalism, the CCC Index "relies on extensive data and a proprietary survey conducted among leading anti-corruption experts" to score and rank countries on a 0-10 scale.
• Notably, two of the 15 countries, Guatemala (2.86) and Venezuela (1.46), saw significant declines in their scores in 2023, and one country, Panama (5.39), saw a material improvement. Guatemala and Mexico (5.39) are the only two countries whose overall scores have decreased every year since the Index was released in 2019.
• Latin America's largest economy, Brazil (4.83), ranked 8th, with its score improving by 1.5% from 2022. The region's second-largest economy, Mexico, ranked 12th, showing "pronounced downgrades" in the civil society and media categories as Mexican journalists face "the world's highest rate of violence against reporters outside Ukraine," the report said.
• Uruguay (6.99) ranked first again, but registered a consecutive year of decline, a sign "that no country is immune from either stagnation or regression in the fight against corruption," the index said.

(Source: Reuters & AS/COA)

• The National Energy Corporation of Trinidad and Tobago Ltd has launched a pilot project with the Bermudez Biscuit Company Ltd aimed at improving energy efficiency in this country's local manufacturing sector.
• “If successful on a national level, the Super Energy Service Companies (ESCOs) initiative would be a self-sufficient and profitable enterprise that can help reduce Trinidad and Tobago's energy consumption substantially over a five-year period”, National Energy stated in a release.
• Both companies signed a Letter of Interest at Bermudez's Offices, taking the lead as the first manufacturing entity to participate in the pilot project.
• During the first phase of the Project, National Energy will conduct a Level One walk-through energy audit of Bermudez to 1) define the project scope and 2) estimate potential energy savings that will assist with the preparation of an Energy Feasibility Study and Concept Report.
• 'Following this stage, both companies will finalise the implementation of energy efficiency (EE) and renewable energy (RE) measures at Bermudez,' the release stated.
• Commenting on the launch of the Super ESCO initiative, National Energy President, Dr Vernon Paltoo, stated that 'the Project signifies yet another exemplary collaboration between the public and private sector, working together towards the common goal of achieving a sustainable energy future for Trinidad and Tobago. This project also plays a pivotal role in facilitating this country's transition towards a low-carbon future.'

(Source: CariCris)

• Federal Reserve Chairman Jerome Powell talked tough on inflation Wednesday, saying at a forum that he expects multiple interest rate increases ahead and possibly at an aggressive pace.
• “We believe there’s more restriction coming,” Powell said during a monetary policy session in Sintra, Portugal. “What’s really driving it is a very strong labour market.” The comments reiterate a position taken by Powell’s fellow policymakers at their June meeting, during which they indicated the likelihood of another half percentage point of increases through the end of 2023.
• Assuming a quarter point per meeting, that would mean two more hikes. Previous comments from Powell pointed to a possibility of the rises coming at alternate meetings, though he said Wednesday that might not be the case depending on how the data comes in.
• “I wouldn’t take, you know, moving at consecutive meetings off the table,” he said during an exchange moderated by CNBC’s Sara Eisen. The question-and-answer session took place at a forum sponsored by the European Central Bank.
• Central to the Fed’s current thinking is the belief that the 10 straight rate hikes haven’t had time to work their way through the economy. Therefore, officials can’t be sure whether the policy meets the “sufficiently restrictive” standard to bring inflation down to the Fed’s 2% target.
• “There’s a significant possibility that there will be a downturn,” Powell said, adding that it’s not “the most likely case, but it’s certainly possible.”
• Asked about banking stresses, Powell said the issues in March that led to the closure of Silicon Valley Bank and two other institutions did weigh into this thinking at the last meeting. Though Powell repeatedly has stressed that he considers the general state of the U.S. banking industry to be solid, he said the Fed needs to be mindful that there could be some issues with credit availability. Recent surveys have shown a general tightening in standards and declining demand for loans.

(Source: CNBC)

• Nearly 2.5 million households in Britain are at a "high risk" of financial vulnerability or other problems and may need support to pay their bills, according to a new study tracking the impact of the cost-of-living crisis. The analysis is based on the number of households that are registered with the Vulnerability Registration Service (VRS) - which notifies companies of financial problems affecting their clients - and extrapolated across the country's population.
• Produced by the VRS and data firm Outra, the study predicted that in addition to the 2.4 million households at "high risk," 6.3 million were at an "elevated" risk of vulnerability, meaning they may need some support to pay their bills. There were an estimated 28 million households in the United Kingdom in 2022.
• Britain is undergoing the biggest squeeze on living standards since records began in the 1950s as wages fail to keep up with soaring inflation, which will intensify as mortgages and rents increase on higher borrowing costs.
• So far, corporate results and official data suggest most consumers have managed to keep up their pace of spending, with savings built up during the COVID pandemic above their 2019 levels and the unemployment rate close to its lowest since 1974.
• However, the extent of inflation's toll on consumers was laid bare in official retail figures last week which showed spending in value terms in May was 17% higher than in February 2020, shortly before the pandemic hit.
• Finance Minister Jeremy Hunt met regulators on Wednesday to discuss what they were doing to prevent profiteering by companies. A new Consumer Duty comes into force on July 31, setting new standards of consumer protections, including for those deemed to be vulnerable.

(Source: Reuters)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government is working to reduce Jamaica’s climatic vulnerability by instituting a “suite of financial instruments that can pay out in the event of a natural disaster”.
• He noted that Jamaica became the first small country globally to independently sponsor a catastrophe bond that provides fiscal resources to respond to catastrophic events.
• This bond is complemented by other products, namely the Inter-American Development Bank (IDB) Credit Contingent Claim, the Caribbean Catastrophe Risk Insurance Facility (CCRIF), and a Natural Disaster Fund for which work is still in progress. The suite will provide the country with some degree of resilience building to the possibility of climate shocks.
• It is also important that the country work towards increasing its resilience to energy commodities, as about US$2 billion worth of energy commodities is imported per year (about 11% of GDP)
• He noted that the dependence on imports can potentially undermine Jamaica’s economy in the event of a price spike and that the Government is working on a transition to renewable energy to reduce structural vulnerability. The government’s objective is to produce about 33% of electricity from renewables by 2033 up from about 11% currently.

(Source: JIS)

• Jamaica's expenditure on imports was valued at US$1,193.4 million for the period January to February 2023, an increase of 12.9% over the same period of 2022. This increase was due mainly to higher imports of “Raw Materials/Intermediate Goods”, “Fuels and Lubricants” and “Consumer Goods” which rose by 3.2%, 20.3% and 13.3% respectively.
• Earnings from total exports for the current review period amounted to US$325.4 million, 54.6% above the comparable 2022 period. This was due primarily to a 133.1% increase in the value of exports of “Crude Materials (excl. Fuels)”. Re-exports also increased during the January to February 2023 review period to US$84.7 million compared to US$32.2 million in 2022.
• Jamaica’s top five (5) import partners for the period were the United States of America (USA), China, Japan, Colombia and Turkey. Expenditure on imports from these countries increased to US$773.6 million, 16.5% above the US$663.9 million recorded in the similar 2022 period. This was due chiefly to higher imports of fuels from the USA.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, the Russian Federation, Latvia and the United Kingdom. Exports to these countries increased by 75.3 per cent to US$256.1 million.
• This brings Jamaica's trade deficit for the period to US$868 million, which is US$21.5 million more than what was recorded over the same period last year. The country's deficit in goods and services was 14.0% of total GDP in 2019 and is anticipated to increase to 21.2% of GDP in 2023.

(Sources: STATIN and Fitch Solutions)

• Colombia's Congress approved raising the government's 2023 budget by some 16.9 trillion pesos ($4.1 billion) in overnight votes on Friday, with education and health to receive the biggest boosts to funding.
• Leftist President Gustavo Petro has pledged to fight deep inequality in the Andean country - where about half of the people live in some form of poverty - through sweeping reforms to the healthcare system, pensions, and work rules.
• Congress initially approved a budget bill worth 405.6 trillion pesos - the highest budget in the country's history - last October, but has now voted to increase that by 16.9 trillion pesos, taking the total to 422.5 trillion pesos.
• The additional funds, approved during extra sessions tacked onto the end of the normal legislative period, are mostly earnings from a tax reform pushed through by Petro's government last year, which raised duties on oil and coal.
• Notably, the resources will go toward economic reactivation, via programs which could be executed in the second half, the finance ministry said in a statement. Education will receive 2.2 trillion pesos extra, according to a draft version of the bill, while health will receive a little over 2 trillion pesos and housing some 1.5 trillion.
• Petro's labour reform must be proposed anew when the next legislative session begins on July 20, where the debate will continue on the health and pension reforms, which have received initial approvals in congressional committees.

(Source: Reuters)

• Despite IMF-backed fiscal austerity measures, Fitch Solutions is maintaining its Short-Term Political Risk Index (STPRI) score of 84.6 out of 100 for Barbados.
•  In December 2022, the IMF Executive Board agreed on both an Extended Fund Facility (EFF) and a Resilience and Sustainability Facility (RSF) deal with the former aimed at enhancing the country’s medium-term fiscal trajectory, particularly by reducing the country’s debt-to-GDP ratio. 
• While in theory cutting public spending could lead to public backlash, Fitch does not see a major risk to social stability in Barbados in the near term. The FY2023/24 budget (running from April 1, 2023, to March 31, 2024) has steered away from introducing any new tax measures; on the contrary, the personal tax allowance for pensioners rose by BBD5,000 to BBD45,000.
• Furthermore, the government agreed to implement a 3.0% wage bill increase this fiscal year, following negotiations with unions. These developments suggest that while the government is committed to consolidating its public finances, it is unlikely to do so in sensitive areas that would affect the government’s popularity and induce major discontent.
• The country’s high STPRI score relative to its neighbours’ is mostly driven by low unemployment and peaking inflation, coupled with broad policy continuity and stability.
• Downside risks to Fitch’s view come from the potential for deeper-than-anticipated fiscal austerity measures and a slower-than-expected economic recovery.

(Source: Fitch Solutions)

• The U.S. will enter a downturn in the fourth quarter, followed by a “year of contraction and a European recession in 2024,” according to HSBC Asset Management. In its midyear outlook, the British banking giant’s asset manager said recession warnings are “flashing red” for many economies, while fiscal and monetary policies are out of sync with stock and bond markets.
• Joseph Little, global chief strategist at HSBC Asset Management, said while some parts of the economy have remained resilient thus far, the balance of risks “points to high recession risk now,” with Europe lagging the U.S. but the macro trajectory generally “aligned.” Little also stated that corporate defaults have also been creeping up as well.
• “The coming recession scenario will be more like the early 1990s recession, with our central scenario being a 1-2% drawdown in GDP,” Little added. HSBC expects the recession in Western economies to result in a “difficult, choppy outlook for markets” for two reasons. “First, we have the rapid tightening of financial conditions that’s caused a downturn in the credit cycle. Second, markets do not appear to be pricing a particularly pessimistic view of the world,” he said.
• Little suggested that this recession will not be sufficient to “purge” all inflation pressures from the system, and therefore developed economies face a regime of “somewhat higher inflation and interest rates over time.”
• “As a result, we take a cautious overall view on risk and cyclicality in portfolios. Interest rate exposure is appealing — particularly the Treasury curve — the front end and mid part of the curve,” Little said, adding that the firm sees “some value” in European bonds, too.
• “In credit, we are selective and focus on higher quality credits in investment grade over speculative investment grade credits. We are cautious on developed market stocks.”

(Source: CNBC)