• Minister of Transport and Mining, Hon. Robert Montague, says that the impending revitalization of railway service between downtown Kingston and Marcus Garvey Drive is expected to bring economic activities to the communities along the line.
• The train will stop in the communities along the line and allow persons to vend or offer other services, but no “big-box” stores will be allowed. “This is an opportunity for the ‘little-man’, and only people from these communities will be allowed to interact with passengers”, said the minister.
• The Minister said that there is also a plan to rent coaches to businesses to facilitate shopping while passengers ride. This, he said, would be the next project for the Jamaica Railway Corporation (JRC).

(Source: JIS News)

• The World Bank Board of Executive Directors approved today a US$100Mn COVID-19 Response and Recovery Development Policy Loan for The Bahamas. The operation will support the country’s efforts to provide COVID-19 relief and lay the foundation for a resilient economic recovery.
• The Bahamas has faced severe socioeconomic impacts due to the pandemic, which led to a sudden stop in tourism and an estimated economic contraction of 16.2% in 2020. Unemployment, which was already on the rise after Hurricane Dorian, increased further, and poverty is also estimated to have increased.
• This operation aims to help The Bahamas enhance COVID-19 relief and resilience, strengthen financial stability and the business environment, and improve fiscal sustainability and resilience. It includes measures to enhance unemployment benefits and provide food assistance to those workers and households most affected by the COVID-19 crisis, and measures to develop an inclusive vaccination policy.
• It also supports reform actions undertaken by the country to expand coverage of deposit insurance, strengthen the crisis management framework, strengthen public financial management, and improve governance of the Central Bank.

(Source: The World Bank)

• Disunity among Honduras’ opposition parties and a lack of a second round of voting increases the likelihood that the ruling Partido Nacional (PN)’s candidate, Nasry Asfura, wins the November 2021 presidential elections.
• However, Fitch Solutions notes that persistent links between Asfura and President Juan Orlando Hernández and criminal activities will place a ceiling on support for the PN, potentially limiting the ruling party’s policymaking ability. 
• A recent electoral reform will assuage some concerns about the legitimacy of the vote, though Honduras’ recent electoral history underscores significant risks of a disputed outcome and political unrest.

(Source: Fitch Solutions)

• Surging prices of raw materials means “margins are compressed,” explains Li, owner of Huizhou Baizhan Glass Co. Ltd., in the southern Chinese province of Guangdong, which makes about $30 million in annual revenue. With the global economic recovery still uneven, “the future is very unclear, so there is not much push to expand capacity,” he adds.
• The combination of higher input prices, uncertainty about export prospects and a weak recovery in domestic consumer demand meant Chinese manufacturing investment from January to April was 0.4% below the same period in 2019, according to official statistics (comparing to 2019 strips out the distortion of last year’s pandemic data).
• Due to the vast size of China’s manufacturing sector, that poses a risk both to the nation’s growth -- which is currently predicted to reach 8.5% in 2021, according to a Bloomberg tally of economists’ estimates -- and to a global economy that’s grappling with supply shortages and rising prices.
• Input shortages mean some manufacturers aren’t able to make use of their existing facilities, so expansion would be of little use.
• Additionally, weaker-than-expected investment could have a “sizable” impact on GDP growth this year, said Citigroup Inc.’s China economist, Li-gang Liu. Lower investment may dent imports of capital goods and equipment from developed economies like Japan and Germany, “which in turn could drag their economic recovery and rebound as well,” he added.

(Source: Bloomberg)

• JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon sharply criticized U.S. President Joe Biden’s proposed tax hikes, which are aimed at people making more than $400,000 as well as corporations
• At a House Financial Services hearing on Thursday, Dimon said the planned increases are “a mistake” that would ship capital and brains overseas. 
• “The tax increase is actually four times what the tax decrease was from 2017,” he said. “You all know the phrase the devil is in the details, well the details here are all that matter, not the top line of 28%,” he said, referring to Biden’s proposed corporate tax rate.
• Dimon, on Thursday said he’s worried about the ability of the U.S. firms to compete with those from other nations, “If you want to have a healthy, growing, competitive America against the rest of the world, you need a global, competitive tax rate,” he said. “It would be detrimental to a lot of companies, it would push a lot of capital overseas.”

(Source: Bloomberg)

• Minister of Industry, Investment and Commerce, Hon. Audley Shaw has said recently that the Caribbean Cement Company Limited’s (CCC) planned investment of another $1.75Bn will contribute to the continued development of the construction sector.
• The current plan is for the company to invest this sum of money over the next three years with the aim of improving its efficiencies and continuing to increase its capacity. This investment will bolster the continued growth in the construction sector as it has proven to be one of the few sectors that have shown consistent growth during the phase of the pandemic.
• The Minister had pointed out that the company has invested approximately $12.5Bn between 2016 and 2020 to expand its capacity and to increase production. This has resulted in CCC boosting its production capacity to 1.32Mn metric tonnes of cement per annum, the highest amount of cement it has produced in Jamaica. This activity in the construction sector will provide an opportunity for growth through investment in other areas such as housing.
• Supported by planned infrastructure and construction projects in 2021, we expect cement consumption to exceed last year’s figures. Additionally, at 14.4%, the potential upside on our current fair value estimate of $98.48 is marginally above the cost of equity of 14.1%. Therefore, NCBCM Research is now changing its recommendation on CCC from a HOLD to a BUY.

(Source: JIS & NCBCM Research)

• On May 13, policymakers at the Banco de México (Banxico) held the benchmark interest rate at 4.00%. This was the second consecutive hold for Banxico after a 425 basis point (bps) cutting cycle that began in August 2019 and accelerated in H1 2020 as the Covid-19 pandemic arrived.
• While Banxico expects higher inflation will be transitory as it reflects strong base effects and temporary goods shortages from logistical bottlenecks, Fitch Solutions believes that upside risks to price growth contrasted against a still-recovering economy suggest that the bank has limited room for maneuver in either direction.
• In addition, the agency sees a risk of increased financial market instability due to rising US bond yields and Mexico’s mid-term elections on June 6, which will further encourage Banxico to maintain its current stance. The bank’s statement reflected these pressures, striking a more cautious tone.
• That being said, Fitch Solutions maintains its view that Banxico will hold its benchmark rate at 4.00% through the end-2021 to support economic activity and investment before raising rates in 2022 by 25bps.
• The agency expects the bank will be cautious about raising borrowing costs amid the country’s economic recovery, particularly as the government has enacted minimal fiscal stimulus and an accommodative US Federal Reserve will ease upside pressure on Mexican interest rates in the near term.

(Source: Fitch Solutions)

• Brazil’s real will strengthen and the economy will beat expectations this year as privatizations, investment and structural reforms turn a cyclical rebound into a sustained recovery, according to Economy Minister Paulo Guedes.
• A long-delayed tax bill is making progress in the legislature while resistance to a planned overhaul of public sector careers is falling, the minister told Bloomberg News on Thursday, forecasting both proposals to be approved this year. While the first reform is designed to improve Brazil’s business environment, the second intends to reduce the costs of public servants over time.
• “As reforms make progress, everybody will see that the currency is mispriced, that it will strengthen,” Guedes said during a two-hour interview at his office in Brasilia. “The currency had an overshooting and is now finding its equilibrium.”
• The Brazilian currency lost about a quarter of its value in 2020 amid investor concerns about excessive public spending during the pandemic. A recent surge in commodity prices, coupled with aggressive interest rate hikes by the central bank and an improved fiscal outlook have helped to shore up the real in the past few weeks. It is now up about 5.8% since the end of March, the world’s best performing major currency.

(Source: Bloomberg)

• The Federal Reserve needs "several more months of data" to ensure recent weak job growth and high inflation are temporary before considering changes to its ultra-easy monetary policy, Fed Governor Christopher Waller said on Thursday.
• Waller said a "ready-to-rip" economy will eventually work through what he regards as a temporary mismatch between companies' booming demand for workers and the willingness of people on the sidelines of the labor market to take jobs while the coronavirus pandemic is continuing and unemployment benefits are available to pay the bills.
• A higher-than-expected 4.2% jump in consumer prices in the 12 months through April, meanwhile, will prove temporary as supply bottlenecks ease, and consumers spend down a surplus of savings accumulated from the flow of government aid during the pandemic, Waller said at a Global Interdependence Center forum.
• Despite the economic recovery, the country only added 266,000 jobs last month, about a quarter of the gain expected by economists in a Reuters poll. The April inflation and job results were a surprise that led to "the jaw of every forecaster hitting the floor," Waller said and confirmed the need for the U.S. central bank to tie policy changes to outcomes, rather than forecasts that might be off base, particularly coming out of a pandemic.
• Waller said he expects inflation to be above the Fed's 2% target, likely between 2.25% and 2.5%, for the next two years. He said that outcome would be in line with the central bank's effort to allow a period of higher inflation to make up for recent years in which the pace of price increases has lagged.

(Source: Reuters)

• If the buoyant Canadian dollar continues to rise it could create headwinds for exports and business investment as well as affecting monetary policy, Bank of Canada Governor Tiff Macklem said on Thursday.
• The currency has jumped about 4% since the central bank updated its projections in April, driven by surging commodity prices. Canada is a major exporter of energy, lumber, minerals, and agricultural products. The C$ hit a six-year high on Wednesday.
• "We've highlighted that a stronger dollar does create some risk," Macklem told reporters after a speech to university students in his most detailed comments yet about the potential drawbacks of a more muscular currency. "If it moves a lot further, that could have a material impact on our outlook and it is something we have to take into account in our setting of monetary policy."
• Further gains could drag down export projections. "If we're less competitive, our export profile is weaker, that also probably means that our investment profile will be weaker," he said. The Canadian dollar was trading 0.4% lower at 1.2180 to the greenback, or 82.10 U.S. cents, pressured by a sharp decline in oil prices.

(Source: Reuters)