• Bank of England Governor Andrew Bailey said he was concerned about the risk of "sticky and stubborn" inflation over the summer after data showed food prices still rising sharply despite a drop back to single digits for the headline inflation rate in April.
• Data published earlier on Wednesday showed the consumer price index rose by 8.7% in annual terms last month. That was down from 10.1% in March and a peak of 11.1% last October but was higher than expected by economists polled by Reuters.
• Bailey, speaking at a Wall Street Journal (WSJ) event, said the fall in April's inflation rate was "welcome" but the BoE had to focus on food prices which were up 19.0% over the 12 months to April and core inflation which gathered steam.
• Food companies had signed up for contracts that represented higher-than-usual costs after last year's energy price surge, meaning a fall in raw material prices could take a long time to work its way through to consumers.

(Source: Reuters)

• Federal Reserve officials were divided at their last meeting over where to go with interest rates, with some members seeing the need for more increases while others expected a slowdown in growth to remove the need to tighten further, minutes released Wednesday showed.
• Essentially, the debate came down to two scenarios. One that was advocated by “some” members judged that progress in reducing inflation was “unacceptably slow” and would necessitate further hikes. The other, backed by “several” FOMC members, saw slowing economic growth in which “further policy firming after this meeting may not be necessary.”
• While the future expectations differed, there appeared to be strong agreement that a path in which the Fed has hiked rates 10 times for a total of 5 percentage points since March 2022 is no longer as certain.
• FOMC officials also spent some time discussing the problems in the banking industry that have seen multiple medium-sized institutions shuttered. The minutes noted that members are ready to use their tools to make sure the financial system has enough liquidity to cover its needs. At the March meeting, Fed economists had noted that the expected credit contraction from the banking stresses likely would tip the economy into recession.
• They repeated that assertion at the May meeting, though they noted that if credit tightness abated, that would be an upside risk for economic growth. The minutes noted that the scenario for less impact from banking is “viewed as only a little less likely than the baseline.”
• Chair Jerome Powell weighed in last week, providing little indication he’s thinking about rate cuts though he said that the banking issues could negate the need for increases.

(Source: CNBC)

• Jamaica’s economy is estimated to have grown in the range of 4% to 5.5% for the fiscal year 2022/23. This outturn, according to Bank of Jamaica (BOJ) Governor, Richard Byles, is consistent with the range previously anticipated by the institution.
• Mr. Byles, who noted that the economy continues to grow strongly, indicated that the estimated outturn for the January to March 2023 quarter ranged between 3.5 and 4.5%. This, he pointed out, “is a faster growth rate than the 3.8% recorded for the October to December 2022 quarter”. However, this figure was below the outturn of 6.4% recorded in the January – March 2022 quarter.
• Mr. Byles said there are also signs that the economy continues to expand for the April to June 2023 quarter, and overall gross domestic product (GDP) growth for the fiscal year 2023/24 is projected to be in the range of 1 to 3%.
• He noted that the Bank expects that growth this year will be largely driven by the resumption of production at the JAMALCO alumina plant, supported by some improvement in agriculture and manufacturing production.

(Source: JIS News)

• The Dominican Republic's economy is expected to grow around 4% in 2023, the International Monetary Fund (IMF) said on Monday, May 22, slowing from the 4.9% increase in 2022.
• The economy is "one of the most dynamic and resilient in the Western Hemisphere over the last two decades," the IMF said in a statement, crediting the island nation's "sound" post-pandemic reforms.
• The strong recovery began moderating at the end of 2022 in response to tighter global financial conditions, lower global demand, and the appropriate withdrawal of policy stimulus, contributing to inflation's convergence to its target.
• The report noted that in the near term, policy priorities should remain focused on continuing to ensure macroeconomic and financial stability; and in the medium term, further enhancements to policy frameworks, the business climate, governance, and social safety nets can foster more inclusive growth.
• The fund said the economic outlook for the Dominican Republic is positive, though subject to high uncertainty, mostly global, with downside risks including further tightening global financial conditions and a sharper slowdown in global growth dominating the short run.

(Sources: IMF & Reuters)

• The inflation rate for TT for April was 7.3%, the Central Statistical Office (CSO) has published. This represented a decrease from the 7.8% recorded in March. However, this is up from the inflation rate of 4.3% for the comparative period last year.
• The Index for Food and Non-Alcoholic Beverages decreased from 146.1 units in March 2023 to 144.5 units in April 2023, reflecting a decrease of 1.1%. Contributing significantly to this decrease was the general downward movement in the prices of some agricultural produce. This is in line with the Central Banks' hopes for falling inflation.
• However, the full impact of these price decreases was offset by the general increases in the prices of chilled or frozen beef, fresh beef, chilled or frozen pork, onions, cheddar cheese, eddoes, whole fresh chickens, fresh steak, celery and carbonated soft drinks.
• At its meeting on March 31, 2023, the Central Bank of Trinidad & Tobago (CBTT) kept its repo rate at 3.50%; the rate has been fixed since March 2020.
• Currently, a ‘low and stable rate of inflation’ remains one of CBTT’s main objectives while shaping monetary policy. The expectation for continued ease in world food prices and shipping prices should aid with falling inflation in T&T in the coming quarters.

(Sources: Trinidad Express Newspapers & Fitch Solutions)

• The U.S. government could fall behind on its bills next month - and even default on its debt - if Congress doesn't raise a $31.4 trillion cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets.
• What follows is a timeline showing how a cascade of missed payments could unfold, based on the U.S. Treasury's warning that it could run out of cash as early as June 1, and daily tax receipts and spending obligations projected by the Bipartisan Policy Center, a Washington-based think tank.
• On June 1, US Treasury’s cash would be depleted and the US $21Bn in tax revenues would not adequately cover the promised US $101Bn in spending obligations promised by Congress. With debt principal payments coming due - including more than $100 billion on June 1 - the Treasury would borrow just enough to cover what's due and stay under the debt limit. If investors declined to lend that money out of fear they wouldn't get paid back, America could start missing payments and enter default on its debt, rocking the global financial system.
• On June 2, even if Washington kept paying debts on time, stock markets would likely be swooning. That could put pressure on Republican House Speaker Kevin McCarthy and Democratic President Joe Biden to act quickly.  Republicans, who control one chamber in Congress, are demanding steep spending cuts in exchange for their support for raising the debt ceiling.
• Without a deal, Pensioners and other Social Security beneficiaries wouldn't get the $25 billion owed them. States wouldn't receive the $2 billion they are owed for Medicaid health insurance subsidies for the poor.
• On June 9, more than a week into the crisis, it's possible some checks could finally go out. The U.S. Treasury would have collected about $105 billion in taxes since it stopped being able to add to the debt, enough to cover the bills from June 1. However, more bills would keep coming due, and schools expecting $1 billion in federal funding would have to do without.
• Things would get extra dicey on June 15 when the Treasury is due to pay investors about $2 billion in interest payments on the national debt. The Treasury said in 2014 - following another near-collision with the debt ceiling - that it is technically capable of prioritizing interest payments over other obligations. Provided that capability panned out, the day's inflow of business tax receipts would give the Treasury enough cash to make the debt payment. However, revenues wouldn't cover all the other bills due June 15, such as military salaries.

(Source: Reuters)

• Local businesses are encouraged to utilize the various trade agreements that are available under preferential terms to boost earnings and increase exports for the country.
• Industry, Investment, and Commerce Minister, Senator the Hon. Aubyn Hill, in making the call, said that these agreements give local producers a competitive advantage in accessing regional and international markets. He encouraged businesses to study the many trade agreements to grow the country’s export exponentially and increase employment.
• Jamaica is a party to or beneficiary of arrangements, which enable local businesses to access international markets under preferential terms. Among these is the CARIFORUM/European Union (EU) Economic Partnership Agreement (EPA), which enables the export of goods and services to the 28 countries of the EU. All goods from Jamaica enter the EU duty- and quota-free.
• There are also CARICOM bilateral agreements that give Jamaica duty-free entry for a wide range of goods to markets in Venezuela, Colombia, Dominican Republic, Costa Rica, and Cuba, and the country is able to supply goods to Venezuela through specific terms and conditions under the PetroCaribe Trade compensation mechanism.
• Minister Hill said the Trade Board Limited and the Ministry’s affiliated agencies are working to increase public awareness about the use and benefits of trade agreements, as well as to understand those factors that impact exporters’ ability to access or understand the information related to market entry requirements, or how to meet them.
• He highlighted that the Step-Up Export with Trade Agreements seminar serves as a public awareness tool that is intended to support export-led growth. Organized by the Trade Board, the event aimed to highlight the results of a one-year project in which 100 exporters were trained. The project explored the qualifying criteria under nine trade agreements as a means of increasing the uptake of the benefits. This will ultimately contribute to the volume of locally manufactured or produced items that are exported.

(Source: JIS News)

• Jamaica Promotions Corporation (JAMPRO) has launched a new online portal to provide companies with the information and resources needed to interact and do business with the government.
• The ‘Jamaica Business Gateway’ platform will enable members of the public and private sectors to easily access the essential services related to government processes required for business development.
• Speaking at the launch, held at the AC Hotel by Marriott in Kingston on May 17, President of JAMPRO, Shullette Cox, described the Gateway as one giant step closer to making digitized government services a reality.
• With the ever-changing needs of businesses and the fast-paced digital era in which people live, Ms Cox emphasized that the government must keep up the pace to fulfil those needs. The JAMPRO President explained that “the Gateway will give businesses the ability to find step-by-step information on various government processes and to complete applications online from the comfort of their own office or homes”.
• Regarding the platform’s key features, she highlighted that it has been designed to be accessible to all, regardless of geographical location or infrastructural limitations. The platform has also been designed to be compatible with a wide range of devices and operating systems, ensuring that businesses are not hindered by technological constraints. This will, in turn, will foster the ease of doing business, allow efficiency and cost savings for companies and also increase transparency in government processes.

(Source: JIS News)

• Fitch forecasts real GDP growth of 2.4% in the Cayman Islands in 2023, from an estimated 4.0% in 2022.
• According to data from the Economic and Statistics Office, real GDP growth came in at 3.8% y-o-y in Q1 2022 (latest available data). While more up-to-date data is largely not available for the Cayman Islands, Fitch estimates that real GDP will have come in at 4.0% for the full-year 2022. 
• The economy of the Cayman Islands will continue to recover from the main impacts of the Covid-19 pandemic in 2023. The main growth driver will be the continued recovery of the tourism sector, which normally comprises around 35% of GDP, second behind only the financial services sector (55%) in terms of the market’s main industries.
• However, elevated inflation will weigh on real household incomes, denting consumer confidence and thus capping private consumption growth. Inflation came in at 5.9% y-o-y in Q4 2022. Although down from a recent peak of 12.1% y-o-y in Q2 2022, Fitch still forecasts inflation to average 4.0% in 2023. 
• Fitch then sees real GDP growth slowing further to 2.1% in 2024, owing to higher base effects and as the economy settles back towards its longer-term growth trajectory.
• Additionally, gains in the tourism sector will prove harder to come by, with capacity constraints in the sector emerging as arrivals trend closer towards pre-pandemic levels. 

(Source: Fitch Solutions)

• The Dominican Republic’s tourism industry has witnessed significant growth and enhancement in terms of diversification and quality of accommodations, due to the unwavering commitment of highly prestigious hotel brands.
• This development has allowed the country to position itself in a segment that caters to a more discerning and demanding clientele.
• While the country’s tourism authorities acknowledge the importance of maintaining their core offering of sun and beach tourism, they also recognize the need to promote further diversification.
• According to Minister of Tourism David Collado, it is crucial to ensure that public beaches match the quality and amenities found in private areas to continue attracting nature-loving visitors.
• By investing in the improvement and development of public beach areas, the Dominican Republic aims to offer a diverse and appealing range of tourist experiences which will help to bolster economic growth.
• Fitch forecasts that growth will ease in the Dominican Republic from 4.9% in 2022 to 3.5% in 2023, primarily due to a weakening US economy in H223. Nonetheless, the Dominican Republic is forecasted to remain one of the Caribbean’s fastest-growing economies over the next decade once rising commodity prices and inflation subside.

(Source: Dominican Today & Fitch Solutions)