• British High Commissioner to Jamaica, His Excellency Asif Ahmad, has expressed confidence in the country’s ability to achieve its goal of becoming a global logistics hub. 
• Delivering an address at the Jamaica Special Economic Zone Authority (JSEZA) Virtual Summit held recently, he cited his experience witnessing the successful implementation and growth of special economic zones in Singapore, Thailand and the Philippines. 
• “It is with the benefit of seeing successes on the ground in these fast-growing economies that I have confidence in lending my support to what Jamaica wants to achieve as a logistics and business hub,” said Mr. Ahmad. 
• Commenting on Jamaica’s international partnership with the United Kingdom (UK), he underscored the UK’s commitment to the process for development. “In recent years, we have committed over $20 billion as part of our development assistance programme. Our strategy is to work in areas that will sustain growth and not lock Jamaica into perpetual dependence. In fact, Jamaica is on the path to sustainable growth,” Mr. Ahmad noted. 
• These areas of partnership include disaster mitigation, market expansion and plugging the country into the global financial system. 
• “The logistics picture for air and sea transport is improving. The political climate in Jamaica is good for business. Successive governments, elected in smooth electoral processes, have adopted the same economic policies. There is cross-party support for the special economic zones. The focus is on making Jamaica an attractive place to do business. Alongside macroeconomic resilience, there is political stability and a reliable legal framework,” the High Commissioner said.

(Source: JIS)

• Production of natural gas, the main commodity in Trinidad and Tobago (T&T), has been declining since 2015. Future gas output is projected to stay below 2017 numbers and then decline at a higher rate after 2024. 
• In order to maintain the same level of production in the mid-term, the country needs to stimulate the exploration sector and pour investments in less explored areas such as deepwater offshore T&T, says GlobalData. 
• According to the company’s latest report, ‘Trinidad and Tobago Exploration & Production, 2021,’ natural gas production in T&T is expected to grow by an average of 2% in the next three years and reach more than 3,400 million cubic feet per day (MMcf/d). However, in 2024, production will start declining at a rate of 3% to a value of 3,200 MMcf/d in 2025, assuming no new projects are brought online to compensate. 
• Svetlana Doh, Upstream Oil & Gas Analyst at GlobalData, said: “There are 10 planned or announced projects expected to come online between 2020 and 2024, which will gradually supply 150 MMcf/d of natural gas in 2021 and almost 1.1 bcf/d in 2025. 
• The largest production growth is coming from offshore Colibri and Matapal fields, operated by Royal Dutch Shell and BP, respectively. Both assets account for almost 43% of overall additional production from future fields.

(Source: Offshore)

• Government spending will fuel growth in Venezuela’s banking sector in 2021, continuing a trend that began in late 2020.  
• Asset, loan and deposit growth spiked in Venezuela in late 2020 and early 2021, fueled by public spending by the Partido Socialista Unido de Venezuela (PSUV)-led government, as part of its response to the COVID-19 pandemic and to shore up its popular support ahead of the December 2020 National Assembly election. 
• Public spending has been the primary driver of the sector’s asset growth over recent years, reflected in the dominance of the sector’s holdings of government bonds in the mix of total assets. For example, in March 2021 bonds comprised 66.0% of the total asset portfolio, compared to 4.9% for client loans. 
• Fitch Solutions forecasts that asset growth will reach 2,020.8% y-o-y at end-2021, in line with 2,139.4% at the end of 2020, though these headline figures largely reflect extremely high inflation in the country.   
• In the longer term, the agency expects that the sector will benefit from growing dollarization and a gradual economic recovery, though nominal asset and loan growth will likely slow.

(Source: Fitch Solutions)

• The World Bank on Tuesday raised its global growth forecast to 5.6% for 2021, marking the strongest recovery from a recession in 80 years. This growth will be driven by the U.S. stimulus spending and faster growth in China. However, overall global growth will held back by "highly unequal" access to COVID-19 vaccines. 
• The development lender's latest Global Economic Prospects report showed a 1.5-percentage-point increase from forecasts made in January, before the Biden administration took office and enacted a $1.9 trillion U.S. COVID-19 aid package. 
• Since then, vaccines have become much more widely distributed in the United States and some other wealthy countries, boosting their output, as forecasts lag for emerging market and low-income countries. 
• "This recovery is uneven and largely reflects sharp rebounds in some major economies -- most notably the United States, owing to substantial fiscal support -- amid highly unequal vaccine access," the World Bank said in the report. Many emerging market and developing economies were seeing elevated COVID-19 caseloads, obstacles to vaccination and withdrawal of support, the bank said. 
• If vaccine distribution to developing countries can be accelerated, World Bank economist Ayhan Kose said that 2022 global GDP growth, currently forecast at 4.3%, could increase substantially to around 5%.

(Source: Reuters)

• The United States will target China with a new "strike force" to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries. 
• The "supply chain trade strike force," led by the U.S. trade representative, is looking for specific violations that contributed to a hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters. 
• Officials also said the Department of Commerce is considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the United States largely obtains from China.  
• President Joe Biden ordered the review of critical supply chains in February, requiring executive agencies to report back within 100 days on risks to U.S. access to critical goods like those used in pharmaceuticals as well as rare earth minerals, for which the United States is dependent on overseas sources. 
• Though not explicitly directed at China, the review is part of a broader Biden administration strategy to shore up U.S. competitiveness in the face of challenges posed by the world's second-largest economy.

(Source: Reuters)

• Influenced primarily by an 8.1% contraction in the Services Industry, Jamaica’s GDP declined by 5.7% in the first quarter of 2021 when compared to Q1 2020. 
• The pandemic and the measures implemented to stem the spread continue to weigh on service delivery and as such all sectors within the Services Industry reported a falloff in output, with the exception of the Producers of Government Services which was effectively flat at 0.1%. The largest reduction was seen in the hotels and restaurants industry (-56.2%) due to the 71.9% reduction in stop-over arrivals and the sustained suspension of cruise activities. 
• The Goods Producing Industry on the other hand grew by 3.0% mainly due to increased output levels in Construction (+12.6%) reflecting growth in both the Other Construction and Building Construction components. Growth in Mining & Quarrying (+6.2%) was also a major contributor to the expansion in the goods-producing industry outturn due to increased production of both alumina and crude bauxite. However, the Agriculture, Forestry & Fishing and Manufacturing industries declined by 2.0% and 1.4%, respectively owing to the impact of adverse weather conditions and decreases in both the Food, Beverages & Tobacco and the Other Manufacturing sub-industries. 
• Despite the current negative YoY quarterly performance, real GDP is projected to increase within the range of 7.0% to 9.0% YoY during the April–June 2021 quarter (PIOJ). The forecast is driven by the commencement of the recovery process relative to the low output levels recorded in the corresponding period of 2020, the relaxation of some COVID-19 containment measures compared to a year ago and increased domestic demand due to continued expansion in employment level. Furthermore, the continued roll-out of vaccination programmes globally augurs well for the world economy and a strengthening of external demand for Jamaica’s goods and services.

Source: (PIOJ)

• The Senate has approved legislation to formally merge the functions of the Agricultural Marketing Corporation (AMC) under the Agro-Investment Corporation (AIC). The Bill seeks to formalize the relationship between the AIC and the AMC by amending the Agro-Investment Corporation Act to entrust the functions of the AMC to the AIC and repeal the Agricultural Marketing Corporation Act. 
• The Bill also seeks to strengthen the effectiveness of the AIC by increasing its membership and diversifying the qualifications and skill sets of the members. A further increase in the functions of the AIC, including empowering the entity to mobilize and manage a pool of funds to be used to enhance the competitiveness of Jamaican agriculture in the domestic and global markets is also part of the objective of the bill. 
• The Bill was led by Minister of State in the Ministry of Foreign Affairs and Foreign Trade, Hon. Leslie Campbell, who said the merger is consistent with the Government’s Public Sector Master Rationalization plan, which is aimed at creating a more efficient and effective public sector by merging public bodies that share synergies of functions and resources.

(Source: JIS)

• It is expected that the Banco Central de la República Dominicana (BCRD) will begin to hike interest rates in the coming quarters as economic activity strengthens and inflation remains elevated. The BCRD is expected to modestly raise its benchmark interest rate to 3.25% by end-2021, from the current 3.00%, as the economic recovery gains pace. 
• In 2020, the BCRD cut interest rates by 150 basis points (bps) to 3.00%, a historic low, in an effort to prop up economic activity throughout the COVID-19 pandemic. The BCRD also implemented additional measures to bolster domestic liquidity, extending approximately DOP$215.0Bn (around 5.0%) in liquidity provisions as of its May 2021 meeting. 
• However, elevated inflation will also prompt the Central Bank to begin a rate-hiking cycle.  Inflation is forecast to average 6.4% in 2021, well above the BCRD’s 3.0-5.0% target inflation range. In the year through April, higher transport costs have pushed monthly inflation to average 7.8% y-o-y, from 2020's average of 3.8%.  
• Additionally, higher global energy and food prices, which have had an outsized impact on the Dominican consumer price index basket, could extend this trend in the coming months.  
• However, if price growth significantly decelerates in the coming months and global monetary conditions remain accommodative, the BCRD may delay rate hikes until 2022.

(Source: Fitch Solutions)

• In the second round of Peru’s presidential election held on June 6, leftist Pedro Castillo currently holds a narrow lead of 50.2%, over right-wing candidate Keiko Fujimori, who has received 49.8% of the vote, with approximately 95.0% of the vote counted. Castillo, who finished first with 18.9% of the first-round vote on April 11, consistently held polling leads since mid-April. 
• Fitch Solutions expected Castillo would win the presidency, and the extremely close vote tallies are in line with expectations and previous run-off elections in Peru. In 2011 and 2016, Ollanta Humala and Pedro Pablo Kuczynski won in the second round with less than 52.0% of the vote, with both candidates defeating Keiko Fujimori. 
• This suggests enduring polarization within the Peruvian electorate and the ongoing disapproval of Keiko Fujimori and the popular force (FP) among a large chunk of the voting population, though concerns over Castillo's left-wing platform likely prompted some voters to back Fujimori.  
• If Castillo is confirmed as the winner, it will pose significant risks to policy continuity, as Castillo campaigned on uprooting the country’s business-friendly economic model and raising taxes and royalty rates on extractive sector companies. If Castillo maintains his lead, Peruvian assets will also likely sell off further, exacerbating the Peruvian sol (PEN)'s recent depreciation to historic lows against the US dollar in Q2 2021.

(Source: Fitch Solutions)

• The Federal Reserve is in the early stages of a campaign to ready markets for reducing its $120 billion in monthly asset purchases to stimulate the economy. 
• Comments by Fed officials in the past several weeks suggest the issue of tapering looks likely to be discussed as soon as the Federal Open Markets Committee meeting next week, and the Fed may be on track to begin asset reductions later this year or early next year. 
• At least five Fed officials have publicly commented on the likelihood of those discussions in recent weeks, including Patrick Harker, president of the Federal Reserve Bank of Philadelphia, Robert Kaplan of Dallas, Fed Vice Chair for bank supervision Randal Quarles and Cleveland Fed President Loretta Mester, whose comments to CNBC came after Friday’s monthly jobs report. 
• While the discussion may take place, an announcement of a decision to actually taper would be several months later, perhaps in late summer or early fall. That announcement would then put the beginning of the asset reduction further out, perhaps by year-end or early next year. Since the Fed will taper its purchases, that is, reduce the amount it buys by some amount each month, that timeline would still see the Fed purchasing billions of dollars of assets well into 2022, though at an increasingly slower pace.

(Source: CNBC News)