• Fitch Solutions forecast that Jamaica’s government will reduce its fiscal deficit to 0.1% of GDP in FY2022/23 (April 1 – March 31), from an estimated 0.3% in FY2021/22, as revenue growth outpaces spending. 
• The government ran budget surpluses from FY2017/18 to FY2019/20 to comply with consecutive IMF programmes from 2013 to 2019. However, the impact of the pandemic caused economic activity and government revenues to contract in FY2020/21, flipping the balance into deficit. 
• With the effects of the pandemic subsiding, it is expected that the government will return to a path of consolidation in the coming years as it winds down social spending initiatives enacted during the pandemic. In the short-to-medium term, it is forecasted that the government will likely increase debt repayments and contain current expenditures, resulting in a budget surplus in FY2023/24.

(Source: Fitch Solutions)

• The Caribbean’s tourism renaissance is well underway, with some destinations approaching or exceeding record visitor arrival numbers.
• Tourism officials cite pent-up traveler demand, the elimination or significant reduction in travel restrictions, the return of airlifts, upgrades and attractive deals and packages being offered by hotels, as well as a variety in destination and hotel choices available as key factors for the rebound. 
• ForwardKeys, Caribbean Hotel and Tourism Association’s (CHTA) data partner, recently reported that the Caribbean and Latin America are leading the summer outlook in terms of the return of leisure travel, noting that five destinations – Aruba, Jamaica, Dominican Republic, Mexico, and The Bahamas – are among the “most resilient” based on confirmed arrivals for the summer. 
• As such, the CHTA’s President Nicola Madden-Greig noted that, on average, hotels and resorts in the Caribbean will approach close to 80% of their record pre-pandemic performance this year, with some destinations setting all-time records. Cruise ships are returning, which is especially important to attractions, transportation providers such as independent taxis, and small- and medium-sized vendors. In addition, investment in new and upgraded hotels and resorts has not slowed, with more than 30,000 rooms in development or under construction over the next five years. 
• However, there are new challenges facing the industry, as inflation is resulting in higher operating and travel costs and the uncertainty in Eastern Europe impacts travel. However, “while the cost of travel increases worldwide due to these and other factors, we will continue to focus on providing value and exceptional traveler experiences,” said the CHTA leader.

(Source: St. Thomas Source)

• Minister of Parliamentary Affairs and Governance Gail Teixeira explained to Region Seven residents that the government’s Low-Carbon Development Strategy (LCDS) 2030 is “a mixed energy approach” to address the issue of climate change.
• She noted that the new and expanded LCDS allows for sustainable development in every sector, including agriculture, oil and gas, and infrastructure, while at the same time reducing the effects of climate change, and protecting the environment. “When we look at what we call a mixed energy approach, we will continue to exploit oil and gas to reduce the cost of electricity, so that our people will have reliable, affordable electricity, and also the manufacturers and others will have a reliable source to produce,” the minister said. 
• Citizens of Guyana will accrue tremendous benefits as the strategy will create hundreds of jobs. Notably, over the past seven years, Guyana has earned approximately US$200Mn through carbon services. This means the country was generating substantial income by sustainably managing its rainforest.

(Source: Guyana Chronicles)

• European Central Bank policymakers sparred over the size of their upcoming rate increases on Tuesday as data showed euro zone inflation rising to another record high in May. Prices have risen sharply across Europe in the past year, with the ECB initially blaming lingering supply chain problems following the COVID-19 pandemic, then the Ukraine war which has caused the cost of energy and some foods to surge. 
• Inflation in the 19 countries sharing the euro accelerated to 8.1% this month from 7.4% in April, while price pressures continued to broaden, indicating that it is not just energy pushing up the headline figure. 
• The ECB has pencilled in gradual interest rate increases in July and September but, after Tuesday's data, markets and at least one ECB rate-setter doubt that hikes worth 25 basis points each will be enough to tame fast price growth. 
• The ECB's deposit rate, currently used as its benchmark, is set at minus 50 basis points, meaning banks are charged to park their money safely at the central bank. Negative interest rates are the legacy of a decade of ultra-low inflation, which has been swept away in the space of a few months. 
• But while headline inflation is four times the ECB's 2% target, policymakers may be more worried by the rapid rise in underlying prices, which indicates that what was once seen as a transitory jump is now becoming embedded. Inflation excluding food and energy prices, watched closely by the ECB, accelerated to 4.4% year-on-year from 3.9% while an even narrower measure that also excludes alcohol and tobacco accelerated to 3.8% year-on-year from 3.5% in April.

(Source: Reuters)

• Oil prices extended a bull run on Tuesday after the EU agreed to a partial and phased ban on Russian oil and China decided to lift some coronavirus restrictions amid rising demand ahead of the peak U.S. and European summer driving season. 
• Brent crude for July, which expires on Tuesday, rose $2.11, or 1.7%, to $123.78 a barrel, after rising to $124.10 earlier in the day- its highest since March 9. The August contract rose from $1.57 to $119.17. The premium of August-loading Brent contracts over a six-month spread hit a nine-week high at close to $15 a barrel, indicating current supply tightness. 
• Both July-loading contracts are set to end May as the sixth straight month of rising prices. European Union leaders agreed in principle to cut 90% of oil imports from Russia, the bloc's toughest sanction yet on Moscow since the invasion of Ukraine three months ago. 
• Once fully adopted, sanctions on crude oil will be phased in over six months and on refined products over eight months. The embargo exempts pipeline oil from Russia as a concession to Hungary. 
• "As two-thirds of the Russian crude oil exports are seaborne around 1.5Mn barrels per day (bpd) of oil will need to be replaced by the EU," PVM analyst Tamas Varga said. "This volume is actually closer to 2.1-2.2Mn bpd as both Poland and Germany are planning to phase out pipeline purchases by the end of the year."

(Source: Reuters)

• Lasco Manufacturing and Lasco Distribution Limited have both seen growth in their respective bottom lines. The manufacturing segment reported a 23.8% increase in net profit to $1.71Bn for its FY ending March 2022, while the distribution segment saw an 11.8% growth in net profit to $1.02Bn. 
• Both companies’ financial performance was supported by revenue growth. Revenue from the Manufacturing and Distribution segments grew by 15.4% and 15.0%, respectively, supported by an increase in business activity for both companies. 
• However, when their efficiency levels were assessed, both companies saw a slight decline in their respective gross margins. There was a 1.2p.p reduction in the manufacturing arm’s margin, while the Distribution arm saw a 1.4p.p reduction. This was caused by higher direct costs owing to increased costs for logistics services and materials. 
• During their FY 2022, we expect that both companies will benefit from greater resumption of economic activity supported by the withdrawal of the COVID-related restrictions under the Disaster Risk Management Act. This will however be tempered by rising commodity prices, which will negatively impact margins. 
• Lasco Manufacturing's stock price has increased by 9.7% since the start of the calendar year. The stock closed Tuesday’s trading session at $5.21 and currently trades at a P/E of 12.6x earnings which is below the Junior Market Manufacturing Sector Average of 19.5x. 
• Meanwhile, Lasco Distribution's stock price has decreased by 2.1% since the start of the calendar year. The stock closed Tuesday’s trading session at $3.32 and currently trades at a P/E of 11.5x earnings which is below the Junior Market Distribution Sector Average 23.2x.

(Sources: Company Financials and NCBCM Research)

• General Accident reported a net profit of $25.64Mn for its first quarter ended March 31, 2022, which represents a 65.2% increase relative to the corresponding period in 2021. This outturn was largely driven by an 11.4% increase in gross premium written to $3.67Bn. This comes as a result of selling more insurance policies across its three operating territories—Jamaica, Trinidad, and Barbados. 
• Genac’s investment consolidated income for the quarter was $44.00Mn compared to the prior year of $48.90Mn. Although lower, the company believes that as interest rates trend upwards, there will be a corresponding increase in its consolidated investment income over the short to medium term. 
• Overall,  the company’s presence in all three of the Caribbean’s largest insurance markets diversifies its underwriting risk and will continue to create economies of scale. Additionally, the company has been investing in digital insurance solutions which will support its business activity going forward. 
• General Accident's stock price has decreased by 2.0% since the start of the calendar year. The stock closed Tuesday’s trading session at $5.88 and currently trades at a P/E of 29.4x earnings which is above the Junior Market Financial Sector Average of 19.6x.

(Sources: Company Financials and NCBCM Research)

• The private sector in Trinidad and Tobago (T&T) will see improvements in the trading environment as a result of three new trade initiatives underway at the Ministry of Trade and Industry (MTI) and its agencies. 
• The MTI has accessed assistance from the Economic Partnership Agreement and Caribbean Community (CARICOM) Single Market and Economy (CSME) Standby Facility for Capacity Building, which is managed by the Caribbean Development Bank (CDB) with European Union (EU) funding. 
• The initiative is aimed at establishing an online focal point for trade queries, building the capacity of local entrepreneurs, generating new trade opportunities and building networks within select markets in Europe. These projects will increase efficiency and communication among state agencies and improve revenue generation in smaller, export-oriented businesses. 
• The CDB is partnering with Trinidad and Tobago’s Government across sectors and integrating trade facilitation measures in its programming to increase employment as well as revenue, and to reduce poverty in alignment with the Sustainable Development Goals (SDGs). 
• The Government of Trinidad and Tobago sees the interventions as worthwhile contributors to national development priorities focused on building competitiveness and expanding and strengthening the private sector.

(Source: CARICOM Today)

• Barbados Prime Minister Mia Mottley has tasked the ministries of her government to work with the major players in their sectors to develop strategies to protect citizens from rising prices. She explained that the increasing costs being faced by her people were “unsustainable and unacceptable”. 
• Considering what happened in the United Kingdom with the Chancellor of the Exchequer (Rishi Sunak), Mottley said that this is not a problem that is unique to the Caribbean. On May 26, Sunak unveiled a package of measures to try to ease a cost-of-living crisis for the British public, with government support amounting to £37Bn (US$46.61Bn). This support to vulnerable households is equal to one and a half per cent of the United Kingdom’s GDP.

(Source: Our Today

• Sentiment among British businesses edged higher in May, except for consumer-facing companies that are most exposed to the growing cost-of-living crunch, a survey showed on Tuesday. The Lloyds Bank Business Barometer rose in May to 38% from 33% in April, its first increase since February, despite worries about a slowing economy. 
• The Lloyds survey brought mixed news on inflation pressures. While the proportion of companies planning to raise prices eased by a percentage point to 57%, pay intentions remained strong. Some 16% of firms intend to raise pay by 4% or more in the coming year - high by the standards of the Lloyds survey. 
• Morale in the construction and manufacturing sectors improved, but in the retail sector, it fell to its lowest since March 2021 when non-essential shops were still shut due to COVID restrictions. 
• "Business confidence improved this month and firms, in general, seem able to rebuild some of their margins through price increases," said Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking. "Consumer-facing industries, such as retail, are not feeling the same confidence uplift amid the widespread reports of a squeeze on household incomes."

(Source: Reuters)