• The Planning Institute of Jamaica (PIOJ) is reporting that the economy grew by an estimated 1.9% year-over-year for the December 2023 quarter. Speaking during the PIOJ’s quarterly briefing on February 21, Director General, Dr. Wayne Henry, said the out-turn for the review quarter largely reflected the impact of higher levels of employment, increased productive capacity in the mining and quarrying industry and an increase in consumer confidence associated with the perceived favourable prospects for job opportunities.
• The Goods Producing Industry grew by an estimated 2.3%, driven by improved performances in three of the four industries – Agriculture, Forestry and Fishing; Mining and Quarrying; and Construction. The agriculture, forestry and fishing sector grew by 2.4%, due to an increase in hectares reaped and higher output per hectare for five of nine domestic crop groups. Real value added for the Mining and Quarrying Industry also rose by an estimated 23.6%, reflecting an expansion in alumina production as crude bauxite output declined.
• Real value added for Construction was estimated to have expanded by 1.4%, primarily due to increased supplies of cement and asphalt, as well as higher sales from firms operating within the sector. However, the overall pace of growth was stymied by a 27.8% decline in housing starts by the National Housing Trust (NHT) as well as a 2.4 percentage points decrease in the value of mortgages distributed by the entity.
• However, the Manufacturing Industry contracted by 0.3%, stemming from lower outputs in the sub-industries – Food, Beverages & Tobacco, and Other Manufacturing.
• Overall, the country’s short- to medium-term economic prospects are positive. Economic growth is anticipated for the remainder of fiscal year 2023/24. For the January to March 2024 quarter, it is projected that the economy will grow within the range of 1.5% to 2.5%, resulting in a fiscal year growth (April 2023 to March 2024) within the range of 1.5% to 2.5%.
• However, this outlook is consequent on the continued growth in the economies of Jamaica’s main trading partners, which augurs well for increased external demand in areas like tourism.

(Sources: JIS & PIOJ)

• Trinidad and Tobago has hired two remediation and salvage firms to help clean up an ongoing oil spill off Tobago and salvage the leaking barge, the country's Ministry of Energy said this week.
• It has been almost two weeks since the oil spill was first discovered off Tobago's Atlantic coast after a barge ran aground on a reef. The spill has entered the Caribbean Sea, threatening nearby Venezuela and Grenada.
• "An international partnership comprised of T&T Salvage LLC and QT Environmental Inc, both subject matter experts and licensed oil spill removal organizations, has been engaged on-water oil recovery, survey, and plans to conduct cargo lightering and wreck removal," the ministry said.
• Tobago officials stated that the barge, which was being towed by a tug boat when it went aground, carried as much as 35,000 barrels of fuel oil.
• Several beach and golf resorts in Tobago popular with foreign tourists have closed access to the ocean. The nearby Scarborough cruise ship port is also being protected from the spill by containment booms.

(Source: Reuters)

• The European Union (EU) removed the Bahamas, Belize, Seychelles, and Turks and Caicos from its tax havens blacklist on Tuesday, February 20.
• The EU list of non-cooperative jurisdictions for tax purposes was established in December 2017. It is part of the EU’s external strategy on taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide.
• Concerning the Bahamas and Turks and Caicos Islands, since October 2022, deficiencies in the enforcement of economic substance requirements have been identified in both of these jurisdictions by the OECD Forum of Harmful Tax Practices (FHTP).
• In the FHTP’s most recent assessment, the recommendations to both jurisdictions to remedy these deficiencies were converted from “hard” to “soft” recommendations, which allowed the Code of Conduct Group to consider these jurisdictions compliant with the standard for jurisdictions with no or only a nominal corporate income tax.
• That said, the list, approved by the EU's member states, now counts 12 jurisdictions deemed non-cooperative for tax purposes, particularly when it comes to sharing tax information. The remaining jurisdictions are American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.
• This EU list of non-cooperative tax jurisdictions (Annex I) includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms.

(Source: Council of the EU and the European Council)

• The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth likely remained solid in February. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Feb 17, the Labour Department said on Thursday. Economists polled by Reuters had forecast 218,000 claims for the latest week.
• Claims are hovering at historically low levels, despite high profile layoffs at the start of the year. Difficulties finding labour during and after the COVID-19 pandemic have generally left employers reluctant to reduce head count. Worker productivity has also increased while the economy continues to expand despite hefty interest rate increases from the Federal Reserve.
• Minutes of the U.S. central bank's Jan. 30-31 meeting published on Wednesday showed officials continued to view the labour market as "tight," but several "noted that recent job gains were concentrated in a few sectors, which, in their view, pointed to downside risks to the outlook for employment."
• The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of February's employment report.

(Source: Reuters)

• Britain's economy kept up its early 2024 momentum with a survey showing strong growth for services firms and business optimism at a two-year high, but inflation pressures are likely to keep the Bank of England wary about cutting borrowing costs.
• Adding to signs that Britain's shallow recession of last year is likely to be short-lived, the preliminary February S&P Global/CIPS UK Composite Purchasing Managers' Index (PMI), which spans services and manufacturing firms, rose to 53.3, the highest in nine months, from January's 52.9. Economists polled by Reuters had forecast no change from January's reading.
• There were potential areas for concern for the BoE in the survey including strong growth in wages among services firms and Red Sea tensions hitting factory supplies, pushing a measure of price increases by businesses to its highest since July.
• Among services firms, the PMI's headline measure held at 54.3. Manufacturing remained below the no-growth threshold of 50.0 but edged up to 47.1 from 47.0 in January. Chris Williamson, S&P Global Market Intelligence's Chief Business Economist, said the survey pointed to the economy growing by 0.2% or 0.3% in the first three months of 2024 after contracting in the third and fourth quarters of last year.
• That is likely to be a relief for Prime Minister Rishi Sunak who has had to endure taunts of "Rishi's recession" from the opposition Labour Party which is riding high in opinion polls ahead of a national election expected later this year.
• Williamson said the pick-up was being led by demand for financial services amid expectations of imminent rate cuts while manufacturing activity continued to contract and consumer-facing services firms were still battling cost-of-living pressures.

(Source: Reuters)

• The Bank of Jamaica’s (BOJ) Monetary Policy Committee (MPC), at its meetings on 16 and 19 February 2024, unanimously agreed to maintain the policy interest rate at 7.0%. However, the committee decided to further tighten Jamaican dollar liquidity conditions.
• The MPC’s decision was influenced by Jamaica’s elevated headline inflation of 7.4% in January 2024, which drifted further outside the range when compared to December. The inflationary surge reflects the impact of higher regulated prices, including the first of a two-part increase in public passenger vehicle (PPV) fares effective October 2023, the effect of wage increases throughout the economy, as well as high agricultural food prices. Partly offsetting the impact of these factors was a reduction in Jamaica Urban Transit Company fares.
• Given the shocks to headline inflation, core inflation (which excludes food and fuel prices from the Consumer Price Index (CPI)) was 5.9% at January 2024, broadly consistent with the average for 2023, but lower than the 9.7% and 7.1% at January 2022 and January 2023, respectively.
• The longer-term inflation outlook continues to be generally positive. Key drivers of headline inflation, such as inflation expectations and the exchange rate, have remained generally stable. Grain prices have also declined and are projected to continue to fall in the context of buoyant supplies. However, as a result of the above-noted price shocks, inflation is forecasted to remain above the Bank’s target range over the March 2024 and June 2025 quarters.
• The risks to the inflation outlook remain elevated. On the upside, higher-than-projected second-round effects from the PPV fare increases, higher wage adjustments, and a further deterioration in supply chain conditions could influence higher inflation. The factors that could result in lower-than-projected inflation include weaker-than-projected global growth, which could reduce domestic demand, and imported inflation, resulting in lower levels of price changes.
• Future monetary policy decisions will, therefore, continue to depend on incoming data related to the strength of the potential risks to inflation noted above. Importantly, the MPC emphasised that it is prepared to take the necessary actions, including further interest rate increases, if the upside risks to inflation highlighted above materialise. The date of the next policy rate decision announcement is March 29, 2023.

(Source: BOJ)

• Mayaro MP and Opposition spokesperson on trade and industry Rushton Paray says international media outlets have been monitoring the country's response to the Tobago oil spill. In a statement, Paray said the "lacklustre response" has drawn international attention.
• “The recent oil spill disaster in Tobago has drawn widespread attention from international media outlets, shedding light on the Rowley administration's mishandling of the crisis and subsequent lacklustre response”, said Paray.
• He asserted that international media identified the issue as a catastrophe days before Prime Minister Dr Keith Rowley visited the island on February 11 - the incident had first been reported to the Tobago Emergency Management Agency (TEMA) on February 7.
• Furthermore, he noted that Dr Rowley lacked concrete answers to pertinent inquiries or a clear timeline for the cleanup efforts even upon visiting the incident. He went on to say, "Numerous foreign news agencies have criticised the government's slow and inadequate reaction to the emergency, highlighting its failure to swiftly contain the spill and hold those responsible to account.”
• Since the disaster volunteers have come forward to assist with clean-up operations following reports of the spill - the vessel, now identified as the Gulfstream, was reportedly being tugged to Guyana when it overturned. 

(Sources: Trinidad and Tobago Loop News)

• Maintaining that all developments are being done within Guyana’s territory, President Dr Irfaan Ali has reassured investors that they need not worry because it is clear where Guyana’s borders are.
• During an interview with Bloomberg on Tuesday, February 20, the President again rejected the Bolivarian Republic of Venezuela’s spurious claim over Guyana’s territory.
• According to Dr Ali “The greatest assurance that we can offer is that Guyana is sure of its territorial integrity, we are sure of our borders and in 1899, our borders were settled. Venezuela participated in the settlement of those borders. So, there is absolutely no doubt as to where our borders are.”
• Dr Ali further noted that the matter is currently before the International Court of Justice (ICJ) and that Guyana has fully submitted itself to international law. “We are a country that respects the rule of law. We are a country that abides by international law, and that is why we respectfully ask Venezuela to participate and be a responsible member of the international community and to respect the outcome of the ICJ.”, Ali said.
• Dr Ali stated that the nation is partnering with many countries both regionally and internationally. He made note of CARICOM’s support for its territorial integrity along with support from Brazil, France, Canada, the UK, and most of the international community.
• Finally, he stated that Guyana is working with Venezuela now and through CARICOM to ensure that the situation does not escalate, given that Guyana’s primary focus is to ensure that the region remains stable and peaceful. This is also reinforced by the Argyle Declaration agreed upon by Venezuela and Guyana, following a meeting between both nations’ Presidents brokered by CARICOM, CELAC, and Brazil.

(Source: Guyana Chronicle)

• Policymakers at the Federal Reserve are cautious about the risks of cutting interest rates too soon, emphasizing uncertainty about the appropriate duration of current borrowing costs.
• Participants highlight uncertainty about maintaining a restrictive monetary policy to reach the Fed's 2% inflation target. While most warn against quick easing, some note risks of an overly restrictive stance.
• The minutes seemed to reinforce the recent message of Fed policymakers that they would be in no hurry to deliver on rate cuts, stressing the need for greater confidence in falling inflation before rate cuts can commence. Still, investors anticipate rate cuts in June.
• The rapid easing in financial conditions during the fourth quarter, after the Fed began signaling that its rate hikes were likely over, had largely run its course by the time officials gathered at the end of January. Since then, the picture has been mixed: Treasury yields have increased by more than a quarter of a percentage point, bringing an end for the time being to a decline in consumer and corporate borrowing costs, but stocks have continued to march to record highs.
• Given what seemed to be falling inflation on the horizon, Ryan Sweet, chief U.S. economist at Oxford Economics, said the concern of Fed policymakers about cutting rates too soon "seems odd," and suggested that risks may be tilting towards overly tight policy beginning to weigh on the economy.
• "If the central bank waits for clear signs that the labour market, or the broader economy, is deteriorating, they will be behind the curve," Sweet wrote. "This could turn a 'soft landing' into a bumpier one."

 (Source: Reuters)

• Japan's government downgraded its view on the economy in February, the first downgrade since November 2023. The downgrade is attributed to sluggish consumer spending, slow wage recovery, and lackluster industrial output.
• The government also slashed its assessment of consumer spending for the first time in two years, stating that the pickup seems to be "stalling." Japan's economy unexpectedly slipped into recession in the fourth quarter of 2023, losing its position as the world's third-largest economy to Germany.
• The nation's real wages fell for 21 straight months in December, impacting household spending due to inflation outpacing wage recovery. The government cut its view on industrial output for the first time since March 2023, citing a production stoppage at Toyota Motor's small-car unit Daihatsu over safety issues.
• Recovery in capital spending is also "stalling" due to firms' solid capital spending plans not being realized, partly because of a labour shortage.
• The government highlighted the need to pay "full attention" to the impact of an earthquake in Japan's Noto peninsula on New Year's Day, which killed about 240 people. Analysts believe the earthquake will have only a small short-term impact on the economy.

(Source: Reuters)