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Cruise Industry Recruitment Drive Results in 3,609 Jamaicans Being Employed Published: 28 July 2022

  • The recent cruise industry recruitment exercise held on June 23rd, has, so far, resulted in the employment of 3,609 Jamaicans.
  • The process is still ongoing by the Royal Caribbean Cruise Lines, and it is anticipated that over 5,000 Jamaicans will be employed at the end of it. Additionally, another recruitment drive will be held later in the year to meet the target of employing approximately 10,000 Jamaican workers.
  • This recruitment drive came at an opportune time, when the cruise sector and tourism by extension are showing signs of growth and is a telling indicator that Jamaican workers are viewed positively on the global stage.
  • This is expected to contribute to a further decline in the unemployment rate which fell to a new record low of 6% in April 2022, and will further drive consumption and by extension, economic growth.

(Source: JIS News)

 

House Approves Electricity (Net Billing) Regulations Published: 28 July 2022

  • The House of Representatives, on July 26, approved the Electricity (Net Billing) Regulations 2022, which are intended to provide opportunities for fuel diversification, development, and deployment of renewable energy sources.
  • The policy establishes the framework for the transformation of Jamaica’s energy sector from an overdependence on petroleum and high customer prices. “This steady progression has seen the movement of the target for renewable energy shifting from 20% to the current 50%, in order to reduce our dependence on fossil fuel,” said the Minister of Science, Energy and Technology.
  • Minister Vaz noted that consultations were held to develop the regulations, noting that they are intended to provide the legal framework for the generation of electricity by self-generators.
  • The aim is to provide the parameters to ensure that the grid is not negatively affected by net billing arrangements; to enable the structured alignment with the integrated resource plan for distributed energy resources on the grid; facilitate energy sector investment, while ensuring transparency, safety, affordability, accessibility, sustainability, continuity, reliability and consumer protection.
  • This should increase the contribution of distributed renewable energy in the energy supply mix, while allowing wide scale participation in the energy sector.

(Source: JIS News)

Barbadian Current Account Deficit Will Narrow In 2022 As Increased Tourism Drives Exports Published: 28 July 2022

  • Barbados’ current account deficit will narrow to 2.8% of GDP in 2022, from 5.2% in 2021, as high vaccination rates in key source markets drive a rebound in overnight tourist arrivals and hence services exports.
  • The services trade surplus will widen to 20.3% of GDP in 2022, from 15.6% in 2021, as overnight arrivals continue to rise. In the year through May, Barbados received 333,739 overnight arrivals, slightly below the 373,015 arrivals recorded in the same period in 2019, but well above the 28,829 received through May 2021. In the coming months, it is expected that arrivals will continue to increase as vaccination rates continue rising, restrictions are eased and aversion to international travel dissipates.
  • Stronger domestic activity and higher commodity prices will result in a 12.3% goods import growth in 2022, pushing the goods trade deficit to 22.8% of GDP, from 23.9% in 2021, partially counteracting the effect of a wider services trade surplus.
  • However, lower growth in its key source markets—US, UK, and Canada—will limit remittance receipts in the near term. The removal of the pandemic-era stimulus and rising inflation will cap the disposable incomes of Barbadians abroad, undermining inflows as income levels fall.

(Source: Fitch Solutions)

Brazil's Public Debt Rises 2.5% In June, Interest Rates Keep Soaring Published: 28 July 2022

  • Brazil's federal public debt grew 2.51% in June relative to May, and the average cost of domestic debt issuance kept soaring amid greater risk aversion.
  • The debt stock reached 5.846Trn reais ($1.10Trn), mainly driven by the increase of 76Bn reais in interest amid higher debt servicing costs, while the net issuance of domestic debt reached 67.3Bn reais, its lowest value for the month since 2018.
  • According to the National Treasury of Brazil, the average interest rate on the domestic federal debt rose to 12.0% from 11.69% in May, its highest level since May 2017, owing to higher interest rates. The central bank has already raised its benchmark interest rate to 13.25% from a 2% record-low in March last year, penciling in another hike for August 3 to curb inflation.
  • In addition to the troubled external environment marked by fears of recession and monetary tightening in major economies, the increase in risk levels came after Congress cracked open a constitutional spending cap to allow a burst of election-year expenditures.
  • Despite the situation, the Treasury stressed that its liquidity reserve rose to 1.221Trn reais ($230.80Bn) in June, having been fueled throughout the semester by central bank results from last year, untying of resources from public funds and additional dividends from the Brazilian Development Bank (BNDES). Such events totaled 139Bn reais, exceeding the financial effect of lower emissions due to market volatility.

(Source: Reuters)

U.S. Economy Contracts For Second-Straight Quarter, GDP Falls At 0.9% Pace In Q2 Published: 28 July 2022

  • The U.S. economy contracted again in the second quarter amid aggressive monetary policy tightening from the federal reserve to combat high inflation, which could fan financial market fears that the economy was already in a recession.
  • The Bureau of Economic Analysis' advance estimate of Q2 U.S. gross domestic product (GDP) showed a 0.9% annualized decrease in economic growth for the three-month period ended June 30. This was slightly lower than the Federal Reserve Bank of Atlanta’s Q2 GDP estimate of -1.2%.
  • This follows from the contraction reported in Q1. During the first quarter, U.S. economic activity unexpectedly contracted for the first time since the second quarter of 2020, when the COVID-19 pandemic upended the global economy. The government's third and final estimate of first-quarter GDP showed a 1.6% annualized drop in economic growth to start 2022.
  • The government's preliminary reading on second-quarter GDP — the broadest measure of economic activity — comes one day after Federal Reserve Chair Jerome Powell told reporters at a press conference that he did not believe the economy is in a recession, even as other economic indicators show signs of softening.
  • Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.
  • The National Bureau of Economic Research (NBER), says a formal recession "is a significant decline in economic activity that is spread across the economy and that lasts more than a few months, normally visible in production, employment, real income, and other indicators."
  • Job averaged 456,700 per month in H1 2022, which is generating strong wage gains. Still, the risks of a downturn have increased. Homebuilding and house sales have weakened while business and consumer sentiment have softened in recent months. 

(Source: Yahoo Finance)

JP Morgan Forecasts Eurozone Recession As Gas Crisis Looms Published: 28 July 2022

  • The euro zone's looming gas crisis along with Italy's renewed political troubles will push the bloc into a mild recession by early next year and limit European Central Bank interest rate hikes, JPMorgan has warned.
  • The bank's economists cut their economic forecasts, predicting eurozone GDP growth to slow to 0.5% this quarter and then contract 0.5% in both the fourth quarter and the first quarter of next year, representing two consecutive quarters of contraction- the informal definition of a recession.
  • "Our new forecasts assume gas prices at 150 euros/MWh," the bank said in a note on Wednesday, July 27, 2022, adding that combined with strains like in Italy, it would add up to a 2% hit to the euro zone GDP.
  • It was also added that those higher prices would push up headline inflation by 1.2 percentage points in the near term although it would drop again next year due to the economy's negative reaction.
  • "We expect the ECB to deliver another 50 basis points of hikes by year-end," compared to 75 bps expected previously JPMorgan added. "We now expect 25 bp in September and 25bp in October" removing an additional 25bp hike that had been forecasted for December, the U.S. bank said.

(Source: Reuters)

Costa Rica's BCCR To Continue Its Hiking Cycle Through End-2022 Published: 27 July 2022

  • The Banco Central de Costa Rica (BCCR) is expected to continue its rate hiking cycle at its upcoming meetings, bringing the benchmark rate to 8.50% by end-2022, in an effort to tame a sharp surge in inflation.
  • This is an upward revision of the previous forecast of 5.00%. After cutting the policy rate to a low of 0.75% after the outbreak of the COVID-19 pandemic, the BCCR began a rate hiking cycle in December 2021 as inflation began to rise.
  • Inflation is expected to moderate in H2 2022 to 7.9% by end-2022, as supply chain disruptions improve and commodity prices come down from recent highs. Nevertheless, given that this remains far above the BCCR’s target range of 2.0% to 4.0%, at 10.1% in June 2022, and the risk that inflation expectations could become increasingly unanchored, notably, the BCCR will continue to respond with further rate hikes. 
  • Commodity price growth is expected to ease into 2023 as disruptions that have driven up import prices through H1 2022 ease, interest rate hikes filter through the economy, and base effects become more favourable. That said, the inflation and policy rates are expected to average 6.0% and 7%, respectively, by end-2023.

(Source: Fitch Solutions)

 Trinidad and Tobago’s Inflation Up 4.5% In June Published: 27 July 2022

 

  • The Central Statistical Office (CSO) has announced that the inflation rate for the period January to June 2022 over January to June 2021, was 4.5%.
  • The general upward movement in the prices of chicken, oil, beef, brown sugar, powdered milk, etc. were the primary drivers for the inflation outturn. However, the full impact of these price increases was offset by the general falloff in the prices of carite; onion; cabbage; carrots; milo; pumpkin; apples; shrimp – fresh; sweet potatoes and parboiled rice.
  • Fitch Solutions projects that inflation will close the year at 5.5% in 2022, and 3.8% in 203. Inflation will subside in the medium-to-long term once the economic recovery takes hold, and the Central Bank of Trinidad & Tobago (CBTT) allows the T&T dollar to gradually depreciate.

(Sources: Trinidad and Tobago Guardian & NCBCM Research)

Fed Unveils 75-Basis-Point Rate Hike, Flags Weakening Economic Data Published: 27 July 2022

  • The Federal Reserve raised its benchmark overnight interest rate by 75 basis points on July 27, 2022 in an effort to cool the most intense breakout of inflation since the 1980s, with "ongoing increases" in borrowing costs still ahead despite evidence of a slowing economy. 
  • Coming on top of a 75-basis-point hike last month and smaller moves in May and March, the Fed has raised its policy rate by a total of 225 basis points this year as it battles a 1980s-level breakout of inflation with 1980s-style monetary policy.
  • The policy rate is now at the level most Fed officials feel has a neutral economic impact, in effect marking the end of pandemic-era efforts to encourage household and business spending with cheap money. The rate also matches the high point of the central bank's previous tightening cycle from late 2015 to late 2018, a level reached this time in the span of just four months.
  • The Fed Chair stated that, “While another unusually large increase could be appropriate at our next meeting, that will depend on the data between now and then.” Forecasts in mid-June showed officials expected to raise rates to about 3.4% this year and 3.8% in 2023.

(Source: Reuters.com)

Wheat Prices Rise As Missile Strike Threatens Ukraine Export Pact Published: 27 July 2022

  • Russia, Ukraine, the United Nations, and Turkey signed the deal on Friday, July 22, 2022, to reopen three Ukrainian Black Sea ports for grain exports. The deal is valid for 120 days and targets monthly exports of 5 million tonnes of grains.
  • Ukraine pressed ahead on Sunday, July 24, 2022, with efforts to restart grain exports from its Black Sea ports under the new deal but warned that deliveries would suffer if a Russian missile strike on Odesa was a sign of more to come.
  • Wheat futures on the Chicago Board of Trade rose nearly 4% to $7.86 a bushel on Monday, July 25, 2022, regaining much of the ground lost on July 22, 2022, as prices fell nearly 6% after the pact was announced. Moreover, Chicago corn futures rose 2% to $5.75-3/4 a bushel while soybeans were 0.9% up at $13.28 a bushel. This came as a missile strike on the Ukrainian port of Odesa over the weekend raised doubts about whether it will be possible to implement last week's agreement to open a corridor for grain exports from the war-torn country.
  • The Kremlin said on Monday, July 25, 2022, that the missile strike would not affect the export of grain. However, along with the uncertainty about how long it will take to clear the mines, ship owners are skeptic of sailing to Ukraine, regardless of the freight rate as they think their ship will be hit by missiles.
  • The decline in shipments from one of the world's biggest grain exporters has helped to fuel food inflation across the globe and U.N. agencies have warned it could lead to starvation and mass migration on an unprecedented scale if exportation is not resumed.

(Source: Investing.com)