• Barbados is set to benefit from millions of dollars in concessionary funding from one of its main development partners for several private sector-led projects across several sectors. Officials of the Inter-American Development Bank (IDB) Group gave this indication during an interview with Barbados TODAY on Tuesday, June 6, 2023.
• Following a meeting with several Government and private sector officials on Monday, James Scriven, Chief Executive Officer of the IDB Invest, the private sector arm of the IDB Group, said “we are under-invested today in Barbados”. He further outlined that the IDB Group was keen on continuing to increase its funding for projects in Bridgetown and the rest of the region. “We should be investing around US$100 to US$150 million a year into the Barbadian economy,” said Scriven.
• He explained that those investments would be targeted into several specific areas including infrastructure development, renewable energy, manufacturing, tourism-related projects, digitisation, agriculture, the blue economy and climate change mitigation. He said IDB Invest was also keen on partnering with financial institutions to provide financing.
• He noted that for Barbados, the amount of funding for various projects could easily jump to around US$350 million in the short term. “Today we have a portfolio of about US$100 million. We are expanding it and want to expand. We are in discussions about an additional US$350 million in business in all these areas,” he said.
• A part of that amount is expected to go towards funding projects related to the Barbados Water Authority (BWA) in the form of a revolving loan to allow Barbadians to purchase water tanks to better prepare for drought conditions. This comes a day after Prime Minister Mia Mottley announced that her administration had approached the IDB Invest for funding assistance for water storage tanks.
• Barbados is already benefiting from some US$90 million in funding from the IDB Invest for modernisation projects at the Bridgetown Port. The lending institution is also expected to provide funding for a joint Barbados Port Inc. and private sector bulk storage and handling facility project at the Bridgetown Port.

(Source: Barbados Today)

• Goldman Sachs Group Inc. lowered its estimate of the odds of a US recession over the next 12 months to 25% based on the waning banking sector stress and the bipartisan agreement to suspend the nation’s debt limit.
• The move reverses Goldman’s mid-March upgrade of recession probability to 35% after the collapse of Silicon Valley Bank. “We have become more confident in our baseline estimate that the banking stress will subtract only a modest 0.4% from real GDP growth this year in the US, as regional bank stocks have stabilized, deposit outflows have slowed, lending volumes have held up, and lending surveys point to only limited tightening ahead,” Jan Hatzius, Goldman’s Chief Economist said in a note. He also stated that the tail risk of a disruptive debt ceiling fight has disappeared. 
• Goldman’s 2023 growth forecast is 1.8%. The consensus of forecasters surveyed by Bloomberg is 1.1%. It remains unclear whether the Federal Reserve policymakers need to cause a recession to bring inflation – still over 4% - back to their 2% target, with the key factor being if the labour market can “rebalance smoothly”, said Hatzius.
• Fed officials at their June 13-14 meeting appear likely to signal additional interest-rate hikes ahead via their quarterly forecasts for the federal funds rate, Hatzius wrote. Goldman economists expect the US central bank to lift its policy rate by another 25 basis points, most likely in July, to a peak target rate range of 5.25% to 5.5%.
• “Subsequently, we see a long pause of about a year, followed by very gradual cuts,” Hatzius wrote. “On a probability-weighted basis, we continue to think that the rates market is underpricing the outlook for the funds rate over the next 1 to 2 years.”

(Source: Bloomberg)  

• Wage growth in US job postings has been softening for more than a year now, and at the current rate, it could return to pre-pandemic levels by early 2024, according to Indeed Hiring Lab.
• Advertising wages rose 5.3% in May from a year earlier, a marked decline from the peak of 9.3% in January 2022. The slowdown has affected various industries, but it’s been particularly pronounced in low-wage sectors – for the type of positions that saw the biggest gains as the economy recovered from the pandemic.
• At this current rate of deceleration, wage growth would return to its 2019 average of 3.1% late this year or early 2024. Among the sectors that are seeing a sharp pullback is the software industry, which has been through waves of layoffs in recent months following a hiring spree at the height of the pandemic. Across now riding to Indeed data, job postings in that sector dropped by almost 60% over the past year, and advertised growth is now less than half of what it was last November
• Other data has shown pullbacks in earnings growth. The Atlanta Fed’s wage growth tracker dropped to 6.1% in April after peaking at 6.7% last June.

(Source: Bloomberg)

• Mirco-lender Dolla Financial Services has announced that it will expand further in the region shortly. 
• In that regard, the company says it is awaiting consent from the Bank of Jamaica, to proceed with operations in St. Lucia and Barbados. In addition to Jamaica, the company is already operating in Guyana.
• Regional expansion is one of the strategies being used by Dolla to increase revenues and profit. In 2021, the Group established its fully-owned subsidiary, Dolla Guyana Inc, which contributed 11% to its total income and 13% to its profit before taxes in 2022. The expansion of its operation in other territories will enlarge the company’s loan portfolio, allowing it to generate income and returns for its shareholders.

(Source: RJR News)

• The Ministry of Industry, Investment, and Commerce is looking to further expand the local business process outsourcing (BPO) sector. Portfolio Minister, Senator the Hon. Aubyn Hill, said the sector remains a vital asset to Jamaica’s labour force.
• He noted that “It is a sector which the Ministry has a special interest in expanding; BPO is vital to us. We have to find new areas and new ways to employ our people and the skills business, the knowledge business is where we are going to have to expand.”
• Currently, it is estimated that the BPO sector contributes approximately $136 billion to the Jamaican economy annually, noting that this is equivalent to about six per cent of gross domestic product (GDP) annually. He emphasized that training and upskilling of citizens are critical to creating a fit-for-purpose workforce to respond to the demands of the modern labour market.
• Minister Hill was addressing the official opening of 76 Red Hills Road (RHR) Business Centre in Kingston on Wednesday (May 31). It is approximately 140,400 sq. ft. and includes 97,200 sq ft. of BPO facilities, which will yield roughly 1,800 direct jobs with additional indirect employment.
• This initiative is a significant investment within the Red Hills Road community and within the context of the Special Economic Zones and the business process outsourcing sector. This investment is an approved SEZ development business centre and is an important addition to Jamaica’s economic growth efforts.

(Source: JIS News)

• Fitch now forecasts that Brazil will see 1.7% real GDP growth in 2023, up from 1.2% previously, after a strong Q123 GDP print and solid economic data thus far in Q223.
• Real GDP growth came in at 4.0% y-o-y in Q123, well above Bloomberg consensus of 3.1%, and 1.9% q-o-q seasonally adjusted (consensus: 1.2%). This followed a series of solid high-frequency data releases, which saw Fitch revising up its real GDP growth forecast from 1.0% to 1.2% in early May.
• The growth in Q123 was largely driven by private consumption (which added 2.3 percentage points (pp) to overall growth) and net exports (0.7pp, in part due to a strong performance by the agricultural sector).
• Fitch’s forecast places them above Bloomberg consensus of 1.0% (which will likely rise post-Q123 print), though Fitch still expects the economy will slow sharply in the rest of the year as high interest rates weigh on private demand and investment.
• Fitch has also lowered its 2024 forecast from 2.2% to 2.0%, given the less favourable base of comparison (consensus: 1.6%).
• The risks to this forecast will materialize in the form of good economic data in H123 that leads the Banco Central do Brasil to keep a hawkish stance for longer, resulting in weaker growth than currently expected in late 2023 and 2024.

(Source: Fitch Solutions)

• One out of every $5 spent by the Government on its recurrent costs during the upcoming 2023-2024 fiscal year will go towards paying the $612.726Mn interest bill on its outstanding $11Bn-plus national debt.
• Documents accompanying the 2023-2024 Budget reveal that 19.99% of recurrent, or fixed cost, spending is earmarked to cover debt servicing costs which remain the largest single line item in the Davis administration's expenditure Budget for the 12 months to end-June 2014.
• With subsidies to loss-making state-owned enterprises (SOEs) consuming a further $408.098Mn, some $1.02Bn of recurrent spending - equivalent to one-third of the total, or one out of every $3 spent by the Government - will go on this and interest payments alone.
• The Budget forecasts reveal that central government debt, in absolute terms, is not forecast to peak until the upcoming fiscal year when it is forecast to hit $11.74Bn. It is then projected to decline relatively slowly and will still be above $11Bn in the 2026-2027 fiscal year, with the Government relying on a growing economy to keep the debt-to-GDP ratio (88.6% in 2022) in check.
• In the meantime, The Bahamas' elevated debt levels and interest bill (debt servicing costs) will continue to suck much-needed taxpayer dollars and funding away from essential Bahamian public services such as health, education, social services and national security.

(Source: The Tribune)

• Higher rates and overhangs from this year’s banking crisis will drastically slow economic growth for the biggest global economies, the World Bank said Tuesday. The institution said advanced economies — the U.S., Japan and euro area countries — are expected to grow by only 0.7% in 2023, down from 2.6% in 2022.
• The U.S. is projected to grow 1.1%, while the euro area and Japan are projected to see GDP growth of less than 1% in 2023. U.S. GDP growth is expected to decelerate in 2024 to 0.8% amid the higher rates.
• The bank estimates overall global growth will decelerate to 2.1% in 2023, down from 3.1% last year. Emerging and developing economies are forecast to see a slight uptick in gross domestic product to 4%, up 0.6% from the bank’s projections made in January 2023. However, World Bank chief economist Indermit Gill said excluding China, growth in developing economies would be less than 3%. This marks “one of the weakest growth rates in the last five decades,” Gill told reporters Tuesday.
• The reduced forecasts for growth reflect broad-based downgrades stemming from several overlapping shocks, the most recent of which include spillover effects from the recent banking crisis seen in the U.S. and advanced economies. Increasingly restrictive credit conditions resulting from the banking turmoil have effectively shut out emerging and developing economies from global bond markets, putting them “in dangerous waters,” said the bank.
• Fiscal weakness has dealt a further blow to low-income countries, 14 out of 28 of which are now in debt distress or at high risk of debt distress, according to the report. One-third of these countries are expected to see per capita incomes in 2024 remain at 2019 levels.

(Source: CNBC)

• Oil prices eased on Tuesday as worries of sluggish global economic growth reducing energy demand outweighed Saudi Arabia's pledge to deepen output cuts. Both crude benchmarks climbed higher for a third day in a row on Monday after Saudi Arabia, the world's top exporter, said over the weekend that its output would drop by 1 million barrels per day (bpd) to 9 million bpd in July.
• Additionally, weaker demand, stronger non-OPEC supply, slower economic growth in China and potential recessions in the U.S. and Europe mean the Saudi cut is unlikely to achieve a "sustainable price increase" into the high $80s and low $90s, Citi analysts said in a note on Tuesday.
• The U.S. dollar, meanwhile, rose to its highest level against a basket of currencies since hitting a 10-week high on May 31 as investors waited on fresh signals on whether the U.S. Federal Reserve will raise or hold interest rates in June. A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.

(Source: CNBC)

• Jamaica’s economy grew by an estimated 2.7% during the January to March 2023 quarter. This represents the eighth consecutive quarter of growth recorded, according to the Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry.
• He highlighted that the preliminary outturn for the quarter resulted in a growth of 4.3% for Fiscal Year 2022/23 and represents full recovery in overall output levels from the impact of COVID-19, one year before the projected recovery date of Fiscal Year 2023/24.
• The March 2023 outturn largely reflected the impact of increased external demand, especially for Jamaica’s Tourism product. It also reflected the resumption of operations at the Jamalco Alumina plant in Clarendon during the July to September 2022 quarter, following the facility’s closure in August 2021, due to a fire.
• A breakdown of the outturn shows that the Services Industry grew by an estimated 3.8% owing to expansion in all subsectors, buoyed by those associated with travel and tourism.
• However, the Goods Producing Industry contracted by an estimated 0.7%. Only two of the four Goods Producing Industry subsectors, ‘Mining and Quarrying’ and ‘Manufacturing’, recorded growth. ‘Mining and Quarrying’ grew by an estimated 95.9%, due to higher alumina output, which outweighed a contraction in crude bauxite production.
• The economy is projected to grow in the range of two to three per cent. This, the Director General noted, is based on the continuation of the growth momentum in most industries.

(Source: JIS News)