• During the first quarter of 2024, total value added at constant prices for the Jamaican economy grew by 1.4% when compared to Q1 2023, representing twelve consecutive quarters of growth. This growth was driven by an increase of 1.3% in the Services Industries and 1.9% in the Goods Producing Industries.
• Within the Goods Producing Industries, there were higher output levels in Agriculture, Forestry & Fishing (7.4%) and Mining & Quarrying (18.7%). However, there were declines in Manufacturing (0.8%), and Construction (3.7%).
• Improved performances were recorded for Hotels & Restaurants (6.9%), Transport, Storage & Communication (3.5%), Finance & Insurance Services (2.2%), Other Services (2.6%), Electricity & Water Supply (6.5%) and Real Estate, Renting & Business Activities (0.3%). However, the Services Industry’s outturn was tempered by a decline in Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment and Producers of Government Services, which was down by 2.2% and 0.5% respectively.
• When compared to the fourth quarter of 2023, the economy grew by 0.3%. This was due to growth in the Services and Goods Producing Industries of 0.1% and 0.8% respectively. The economy grew by 1.9% for the fiscal year 2023/2024 compared to the fiscal year 2022/2023.
• The 1.4% growth over the quarter was 0.5% lower than the Planning Institute of Jamaica’s (PIOJ) estimate of real value added of 1.9%. However, PIOJ noted that the performance of the local economy is expected to be generally positive for the April to June quarter, projecting that the economy should grow within the range of 1.5% to 2.5%.
• Growth during this period was largely driven by the continued strengthening of the Mining & Quarrying industry due to higher capacity utilisation at alumina refineries, increased domestic demand due to relatively high levels of employment, and continued strengthening in the global economy, which augurs well for external demand for Jamaica’s goods and services. The growth projection for FY2024/25 is within the range of 1.0% to 3.0%.

(Sources: STATIN and PIOJ)

• Despite an increase in inflation, amid generally stable global economic conditions, the Monetary Policy Committee of the Central Bank opted to maintain the repo rate at 3.50%.
• In the Monetary Policy Announcement for June 2024, the MPC said, “Domestically, the low level of inflation and buoyancy of credit were supportive of the ongoing economic recovery, although the negative interest rate differential warranted close monitoring given its potential impact on the country’s external balance.”
• In Trinidad and Tobago, the latest data from the Central Statistical Office (CSO) showed that headline inflation rose to 0.9% (year-on-year) in May 2024 from 0.5% one month earlier. With core inflation (which excludes food prices) unchanged at 0.3%, higher food prices were primarily responsible for the upward drift of inflation. Food inflation accelerated to 3.1% in May compared with 1.1% in April 2024 on account of price increases for several locally produced and imported food items. 
• Further, the MPC stated there are positive signs in terms of domestic economic recovery, “Production indicators monitored by the Central Bank during the fourth quarter of 2023 and into the first three months of 2024, such as local sales of cement and new motor vehicle sales, point to vibrancy in some non-energy sectors. Meanwhile, data from the Ministry of Energy and Energy Industries indicate that crude oil and natural gas outputs from the mature fields continued to slip over this period. “
• In terms of the financial sector, the MPC stated that the liquidity in the financial sector remained “ample” despite figures dropping slightly compared to last year.
• Finally, the report noted that interest rates on three-month treasuries in T&T continued to trend upwards, rising by 27 basis points (bps) since February 2024. That resulted in the differential between T&T and US three-month treasuries moving to -4.06% in May 2024 from 4.32% in February.

(Source: Central Bank of Trinidad and Tobago)

• The Bahamas, the first country in the world to issue a central bank digital currency (CBDC), is now preparing regulations that will require commercial banks to provide access to the e-money in a bid to stimulate adoption.
• The Bahamas' role as a CBDC pioneer (issued its "Sand Dollar" digital currency in 2020) means that what it does in the Caribbean is closely watched by the more than 130 countries, from Europe to China, that are now exploring digital versions of their currencies.
• John Rolle, the islands' central bank governor, who oversaw the Sand Dollar's launch nearly four years ago, said with take-up still limited, the carrot was turning into the stick and commercial banks were now being told of regulations that will effectively force them to distribute it.
• CBDCs have proven a point of contention between central and commercial banks, with banking lobby groups warning that the currencies could encourage deposit flight because they effectively offer the public a bank account at the central bank.
• Ordering banks to make the Sand Dollar available would require them to make significant changes to their information technology (IT) systems, but the Bahamas central bank sees it as vital to boost the CBDC's adoption and mobile payments more generally.

(Source: Reuters)

• U.S. manufacturing contracted for a third straight month in June as demand remained subdued, while a drop in a measure of prices paid by factories for inputs to a six-month low suggested that inflation could continue to subside. Manufacturing is being pressured by higher interest rates and softening demand for goods, though business investment has largely held up.
• The ISM's manufacturing PMI slipped to 48.5 last month from 48.7 in May. A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.3% of the economy. The PMI remains above the 42.5 level, which the ISM says over a period indicates an expansion of the overall economy.
• Economists polled by Reuters had forecast the PMI to climb to 49.1. It has indicated a contraction in manufacturing in 19 of the last 20 months. 62% of manufacturing gross domestic product contracted, up from 55% in May.
• The share of sector GDP registering a composite PMI at or below 45 — a good barometer of overall manufacturing weakness — jumped to 14% from 4% in the prior month. Eight manufacturing industries, including primary metals and chemical products, reported growth. Machinery, transportation equipment, electrical equipment, appliances and components as well as computer and electronic products were among the nine industries that contracted
• The ISM survey's forward-looking new orders sub-index rose to a still-subdued 49.3 reading from 45.4 in May. Output at factories decreased for the first time since February. The production sub-index fell to 48.5 from 50.2 in May.

• Manufacturing activity across the eurozone took a turn for the worse last month as demand fell faster despite factories cutting their prices, a survey showed.
• HCOB's final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 45.8 in June from May's 47.3, just ahead of a 45.6 preliminary estimate. It has been below the 50-mark separating growth from contraction for two years.
• An index measuring output, which feeds into a composite PMI due on Wednesday and seen as a good gauge of economic health, sank from May's 49.3 to a six-month low of 46.1, albeit just ahead of the 46.0 flash estimate.

• "The PMI indices for all eurozone countries, except Italy, deteriorated in June. However, we are inclined to see this more as a temporary blip rather than a sign of a prolonged downturn," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
• "Manufacturing growth was seen in other parts of the world in June, such as the United States, Britain, and India, according to their respective flash PMI. This global recovery provides a supportive backdrop for eurozone manufacturers." The new orders index dropped to 44.4 from 47.3. That drop came despite factories cutting prices charged for a fourteenth month, although less steeply than in previous months.
• "It's rather depressing that forward-looking new orders are falling at an accelerated pace," de la Rubia added. "This decline comes after a record stretch of 25 consecutive months of falling demand, but a vague hope that things were improving in May when the respective index showed some increase."

(Source: Reuters)

• Output prices in the Mining and Quarrying industry rose by 0.5% in May 2024. In contrast, the manufacturing industry's prices stayed relatively stable according to new data from the Statistical Institute of Jamaica (STATIN).
• The movement in the Mining & Quarrying industry was attributed to a similar 0.5% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• For the Manufacturing industry, there was a decline of 0.8% in the index for the major group ‘Refined Petroleum Products’, while there was a 0.1% increase for the heaviest-weighted major group, ‘Food, Beverages & Tobacco’.
• Against the backdrop of May’s outturn, the point-to-point index (May 2023 – May 2024) for the Mining & Quarrying industry declined by 2.4%. This reflected a 2.6% fall in the index for the major group ‘Bauxite Mining & Alumina Processing’. In contrast, driven by the major groups ‘Refined Petroleum Products’ (13.0%) and ‘Food, Beverages & Tobacco’ (1.2%), the point-to-point index for the Manufacturing industry increased by 3.0%.
• Geopolitical tensions in Europe and the Middle East pose risks that could disrupt the oil prices and the supply chain, resulting in higher producer costs. However, as businesses transition to renewables globally, there could be lower oil demand. Additionally, the increase in global oil production, led by the US and other American countries, may lead to a fall in prices. Moreover, OPEC+ has signalled plans to gradually unwind voluntary cuts earlier than anticipated, thus sparking concerns about whether the market can absorb those additional barrels heading into 2025.
•  Mining and Quarrying Prices have been trending down and could be further influenced by fluctuations in the exchange rate as well as greater demand for aluminium.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experienced over time. Currently, the industries being tracked are Manufacturing Industry and Mining and Quarrying.

 (Source: STATIN, NCBCM Research)

• Petroleum marketing company FESCO says it has increased its production and distribution capacity for Liquefied Petroleum Gas (LPG) or cooking gas.
• Jeremy Barnes, the Managing Director of FESCO, announced the commissioning of two new distribution plants. His remarks were made at the latest Mayberry Investor Forum. 
• He noted that there are two LPG filling plants located at Bernard Lodge and in Naggo Head, St. Catherine. He further noted the commissioning of two new sites, one in Discovery Bay and one in Stony Hill. This means that the company’s footprint of LPG plants to date is four.
•  "So we're actually packaging and distributing LPG to retail households, either directly or indirectly through dealers or directly to customers' homes…we're big now in the retail space on both LPG and also in gasolene, because we're now operating service stations, not just distributing to dealer-owned dealer-operated service stations”, Mr. Barnes highlighted.  
• This increase in its capacity is expected to boost revenues, profits, and ultimately shareholder value. According to Mr Barnes, Fesco is the largest locally-owned distributor of transportation fuels by location and volume.

 (Source: Mayberry Investor Forum & NCBCM  Research)

• Brazil's central government posted a larger-than-expected primary budget deficit in May, pressured by increased pension benefits, the Treasury said on Wednesday, June 26.
• The deficit, excluding interest payments, totalled 60.983Bn reais (US$11.06Bn), larger than the 54.2Bn reais shortfall forecast by economists in a Reuters poll.
• Government spending rose by 14% in real terms from a year earlier, driven by an uptick in pension benefits, compared to a 9% increase in net revenues.
• Tax collection in Brazil has been hitting successive monthly records. However, the market does not see this as enough to back the government's fiscal target of erasing the primary deficit this year. This is due to the rapid expansion of many mandatory expenditures and President Luiz Inacio Lula da Silva's reluctance to cut spending.
• Treasury Secretary Rogerio Ceron said that changes to the 2024 fiscal target are not on the table, underlining that the government believes the target to be "viable."
• Speaking at a press conference, he acknowledged the importance of addressing the growth of pensions to avoid incompatible dynamics with the spending limit. Ceron indicated that additional measures would be taken if needed to meet the fiscal target. He further added that a review of registries is underway to identify beneficiaries ineligible for government support policies.
• Overall, the Treasury said that in the 12 months through May, the central government's primary deficit reached 2.36% of gross domestic product (GDP).

 (Source: Reuters)

• Dates have been set by the International Court of Justice (ICJ) for written second-round pleadings by Guyana and Venezuela in the ongoing border case.
• Per the ICJ’s order, Guyana has until December 9, 2024, to make submissions. Venezuela has until August 11 of the following year.
• Agents from both Guyana and Venezuela had determined earlier this month that the second round of written pleadings was necessary after Venezuela’s Counter-Memorial in April. Guyana had initially suggested October 8 to make its submission while Venezuela wanted 12 months after to make theirs, a timeline considered excessive to Guyana.
• The case concerns the validity of the 1899 Arbitral Award, which determined the boundary between the two South American nations more than a hundred years ago. In 1962, some 63 years after accepting the boundary, Venezuela claimed the Award was null and void, reanimating a claim for two-thirds of Guyana’s territory.
• After years of discussions between the two countries under the United Nations Good Offices Process failed to deliver a resolution, UN Secretary-General Antonio Guterres referred the matter to the ICJ in 2018. In international law, 'good offices' refers to diplomatic and humanitarian initiatives by a third country or a neutral institution aimed at resolving a bilateral or international conflict.
• Furthermore, diplomatic tension between Guyana and Venezuela remains high over the disputed territory of Essequibo. In March 2024, Venezuela’s President Nicolás Maduro passed a law declaring the border region of Essequibo, which belongs to Guyana, a Venezuelan federal state.

(Sources: Oil Now & NCBCM Research)

• China's manufacturing activity likely contracted for a second month in June, a Reuters poll showed on Thursday. This has led to renewed calls for fresh stimulus after a string of recent indicators showed the economy struggling to get back on its feet.
• The official purchasing managers' index (PMI) was forecast at 49.5, unchanged from April, according to the median forecast of 19 economists in the poll. The 50-point mark separates growth from contraction in activity.
• All the while, a protracted property crisis continues to drag on domestic demand. Retail sales last month beat forecasts, but were aided by a five-day public holiday boost, while public sector investment grew just 0.1% in the January-May period, reflecting weak consumer and investor confidence.
• Policy support and strong exports should help China’s $18.6Tn economy grow 5.5% this year, said Julian Evans-Pritchard, head of China Economics at Capital Economics. However, he was "less sanguine about the medium-term outlook." Officials are under pressure to fire up new growth engines to reduce the economy's reliance on property, an objective analysts say may be incompatible with keeping growth steady at around 5%, which is the target for this year.
• Chinese Premier Li Qiang on Tuesday told delegates at a World Economic Forum meeting in the northeastern city of Dalian the rapid growth of new industries has strongly sustained healthy economic development. "Since the beginning of this year, China's economy has maintained an upward trend...and is expected to continue to improve steadily over the second quarter," Li added.

(Source: Reuters)