• A robust strategy that will better enable Jamaicans to tap into the vast potential of the local tourism sector is being developed by the Government. The move is in partnership with the Inter-American Development Bank (IDB) and involves key stakeholders in the industry. It will address economic growth, environmental sustainability, cultural preservation, and quality of life issues.
• Addressing the first Tourism Strategy Development Workshop at the Montego Bay Convention Centre in Rose Hall, St. James, on June 2, Tourism Minister, Hon. Edmund Bartlett, said that a well-defined tourism strategy and action plan “will help us identify the strengths and weaknesses of our tourism industry, chart our goals and objectives, and define the road map to achieve them”.
• He noted that while the country remains a prime tourist destination, attracting millions of visitors from all over the world every year, it has to evolve to maintain a competitive edge over rival destinations.
• As such, the Minister highlighted that the need for a strong and comprehensive tourism strategy will further drive economic growth and development.
• The focus on the sector is important given that tourism now generates direct employment for 175,000 Jamaicans and indirect employment for more than 354,000 others, including farmers, craft vendors, entertainers and transportation operators. The development of the strategy aims to make tourism inclusive, and an even bigger driver of economic development in years to come.

(Source: JIS News)

• Fitch forecasts a slight deceleration in growth for Trinidad and Tobago from its 2022 estimate of 2.7% to 2.2% in 2023. This is broadly consistent with the latest data points which show that real GDP grew just 2.5% y-o-y in Q322, compared to 5.7% in Q222, and is underpinned by Fitch’s expectation of still-high inflation and fairly weak export growth in the quarters ahead.
• Notably, most of the deceleration will be driven by private consumption which, despite a solid labour market, will suffer from high inflation impacted by lower energy subsidies. Private consumption growth will contribute just 1.8 percentage points (pp) to headline real GDP growth in 2023, compared to 2.7 pp in 2022. 
• Net exports, meanwhile, will serve as a drag on headline growth given a somewhat bleak outlook for US growth and limited hydrocarbon production growth in 2023. Fitch forecasts that net exports will reduce headline real GDP growth by 0.3pp in 2023, compared to a 1.0pp reduction in 2022.
• Overall, Fitch believes that real GDP growth will average just 1.9% between 2024-2027, largely weighed down by a poor medium-term outlook for exports. Notwithstanding, inflation pressures are expected to ease over time coupled with the full recovery in tourist arrivals, which will help keep private consumption growth somewhat elevated in the medium term.

(Source: Fitch Solutions)

• Brazil's economy rebounded more than expected in the first quarter, boosted by a strong farm sector, paving the way for a rosier annual outlook, although high-interest rates are still expected to trigger a sharp slowdown.
• The country's gross domestic product (GDP) expanded by 1.9% in the three months through March, rebounding from a revised 0.1% contraction in the previous quarter, data from the Brazilian Institute of Geography and Statistics (IBGE) showed.
• Growth from the prior quarter exceeded the 1.3% median forecast in a Reuters poll of economists, largely driven by a 21.6% surge in agriculture. The service sector expanded by 0.6%, while the industry declined by 0.1%.
• On the demand side, household consumption rose by 0.2%, while government spending increased by 0.3%.
• Compared to a year earlier, Latin America's largest economy grew by 4.0% in the first quarter, also more than the projected 3.0% expansion.
• Notably, private economists surveyed weekly by the central bank have also improved their GDP estimate, now predicting 1.26% growth that still represents a sharp deceleration from the 2.9% increase in 2022.

(Source: Reuters)

• Stock markets are ignoring a “laundry list” of potential risks in their recent bull run, and a big downturn could be incoming, according to Julian Howard, investment director for multi-asset solutions at GAM Investments. Despite the risks associated with a steep rise in interest rates over the past 15 months, tech stocks particularly led the charge so far this year, as investors rushed to gain exposure to the AI boom.
• In light of the latest round of economic data, economists are beginning to increase the probability of further interest rate hikes from the U.S. Federal Reserve, with the U.S. economy and jobs market still resilient, while core inflation is proving stickier than expected.
• Some Fed policymakers had in recent weeks expressed willingness to pause the cycle of rate hikes at the central bank’s June meeting, and the market is now pricing around an 80% chance of this outcome, according to the CME Group FedWatch tool. However, several Fed officials and economists have hinted that further monetary tightening could be needed later in the year.
• Morgan Stanley also predicted in a research note last week that slower real and nominal U.S. growth will lead to sharp downgrades to earnings forecasts, which will slam the brakes on the stock rally stateside. Morgan Stanley strategists said various “big-picture” indicators continued to recommend that investors adopt a “defensive posture.”

(Source: CNBC)                           

• Sluggish global demand deepened the decline in manufacturing activity across Europe and remained a major challenge for many of Asia's big exporters, business surveys for May showed on Thursday.
• Purchasing managers' indices (PMIs) for the eurozone moved further below breakeven despite factories cutting prices for the first time since September 2020. In Britain, output fell for a third month in a row and new orders declined at the fastest pace in four.
• While PMIs from China and Japan showed swings in factory activity to growth last month, they stood in contrast to weak indicators from South Korea, Vietnam and Taiwan, where declines continued.
• "The weakness in demand in the manufacturing sector, which has become increasingly evident since the beginning of the year in falling PMI readings, has now led the surveyed companies to reduce their production for the second month in a row," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
• "The decline in new orders from home and abroad signals that the weakness in output is likely to persist for several more months." The decline was broad-based on activity falling in the currency union's four biggest economies - Germany, France, Italy and Spain. Factories cutting prices as the costs of production dropped at the fastest pace since February 2016 failed to stem a fall in demand.
• That price drop will likely be welcomed by policymakers at the European Central Bank who have failed so far to get inflation back to target despite embarking on their most aggressive policy-tightening programme in the Bank's history.

(Source: Reuters)                        

• Preliminary data for January and February 2023 show an increase in visitor arrivals and expenditure, relative to the corresponding period last year. Director General for the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry, said that stopover arrivals rose by 55.5 per cent to 457,996 visitors for the period.
• Additionally, he reported that cruise passenger arrivals increased to 300,237 from 110 ship calls, up from 49,870 visitors from 41 vessels for the corresponding timeline in 2022.
• He further highlighted that total visitor expenditure increased to US$761.6 million relative to US$276 million in the corresponding period of last year. He was speaking during the PIOJ’s semi-virtual quarterly media briefing on Tuesday (May 30).
• Henry said the ‘Hotels and Restaurants’ subsector of the Services Industry continues to benefit from increased travel, in light of continued growth in Jamaica’s main visitor source markets, coupled with effective marketing strategies. He indicated that the subsector grew by an estimated 30.8 per cent for the January to March 2023 quarter. The out-turn was the largest of the five subsectors under the Services Industry, all of which expanded.
• This enabled the industry to grow by an estimated 3.8 per cent over the March 2023 quarter. Dr. Henry said the ‘Transport, Storage and Communication’ subsector recorded the second highest out-turn of 4.3 per cent, which was partly due to an estimated increase in the ‘Transport and Storage’ component. The growth reflected in the air transport component was credited to increased passenger movements, up 46.5 per cent.
• The Services Industry’s estimated out-turn enabled Jamaica’s economy to grow by approximately 2.7 per cent, according to the PIOJ, despite the Goods Producing Industry contracting by 0.7 per cent.

.(Source: JIS News)

• Lasco Manufacturing Limited (LASM) recorded a net profit of $2.08Bn for the financial year that ended March 31, 2023. This represents a 21.9% yoy increase in profitability.
• Revenues for the year were up by 18.6% yoy to $11.24Bn which was driven by upward price adjustments. Cost of sales grew by 19.3% yoy in response to input cost increases due mainly to supply chain instability and inflationary pressures. As a result of the cost of sales increasing at a faster pace than revenues, the gross margin fell, but slightly from 36.7% in 2022 to 36.3%.
• Administrative Expenses were up 14.5% yoy to $1.32Bn, primarily due to increased staff costs as well as advertising and promotion.
• LASM’s stock price has decreased by 0.95% since the start of the calendar year. The stock closed Thursday’s trading session at $4.18 and currently trades at a P/E of 8.3x which is below the Junior Market Manufacturing Sector Average of 22.3x.
• LASM continues to prioritize organic growth and incremental margin improvements, continued investments in its brands, innovation, and technology. Though price pressures are likely to continue, at least in the medium term, LASM has committed to finding the right balance between price adjustment and savings through operational efficiency and productivity gains.

(Sources: JSE and NCBCM Research)

• Fitch believes that Peru’s political crisis, set off by the impeachment of President Pedro Castillo in December 2022, is at an ebb, and they expect relative stability in the months ahead. 
• After left-wing parties unsuccessfully attempted to impeach President Dina Boluarte on April 4, there is less political will for another impeachment attempt.
• The impeachment vote was regarding Boluarte’s approval of harsher policing methods in response to mass protests, which followed the auto-coup of her predecessor Pedro Castillo.
• Boluarte’s former left-wing allies wanted her impeached, as they accused her of betraying Pedro Castillo’s left-wing ideals, and being out of touch with working farmers from rural areas. Boluarte’s position was saved by right-wing members of Congress, who approved of harsher methods in dealing with protests.
• Fitch has therefore revised Peru’s Short-Term Political Risk Index from 44.4 to 46.9 as social stability has improved in recent months, and Fitch does not see an imminent removal of another executive along with the fact that violent clashes between the government and protesters have been minimal since March.
• That said, risks remain towards greater social instability. Boluarte is still being investigated on corruption charges, while both Boluarte and Congress remain unpopular and the public remains deeply unhappy with the ruling elites.

(Source: Fitch Solutions)

• Trinidad and Tobago and Chile yesterday commenced the fourth round of negotiations for a Partial Scope Trade Agreement between the two countries.
• The fourth round will be held over a period of three consecutive days in Santiago, Chile and will build upon the success of the previous negotiating rounds held.  The First Round, which was held in August 2021, provided a meaningful introduction to the negotiations for both parties, while the Second Round was held in January 2022 and the third in December 2022.
• Negotiations will continue on issues such as market access; legal and institutional issues; sanitary and phytosanitary measures (SPS); rules of origin and origin procedures; trade facilitation; technical barriers to trade (TBT); trade remedies and competition policy.
• Among the benefits anticipated to emerge from the conclusion of the agreement are: lower import duties for locally produced goods entering the Chilean market, and elimination of known non-tariff barriers.
• Trinidad and Tobago also stands to gain from cheaper inputs for the manufacturing sector and more affordable consumer goods from Chile.
• Notably, both sides are also seeking to enhance cooperation in the areas of trade facilitation and electronic trade to facilitate trading online between the countries.

(Source: Trinidad and Tobago Guardian)

• U.S. job openings unexpectedly rose in April and data for the prior month was revised higher, pointing to persistent strength in the labour market that could compel the Federal Reserve to raise interest rates again in June.
• The Job Openings and Labor Turnover Survey, or JOLTS report, from the Labor Department on Wednesday also showed that the number of layoffs declined significantly last month. There were 1.8 job openings for every unemployed person in April, up from 1.7 in March, and well above the 1.0-1.2 range which is considered consistent with a jobs market that is not generating too much inflation.
• Demand has remained resilient despite 500 basis points worth of interest rate increases from the Fed since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation. The flow of strong data has diminished expectations that the Fed could pause further rate increases next month.
• Despite the strong demand for labour, workers are growing less confident, leading to fewer resignations. The quits rate, viewed as a measure of labour market confidence, fell to 2.4% from 2.5% in March. That aligns with a Conference Board survey on Tuesday that showed the share of people viewing jobs as "plentiful" dropped in May to the lowest level since April 2021.

(Source: Reuters)