• Jamaica’s Business Process Outsourcing (BPO) sector has recorded phenomenal growth over the past four decades, transforming from a modest operation in the Montego Bay Free Zone to a sprawling industry encompassing over three million square feet of space islandwide.
• According to Vice President, BPO and Logistics, Port Authority of Jamaica (PAJ), Gloria Henry, this expansion has been fuelled by increasing private sector investment and strategic stakeholder vision to position Jamaica as a key player in the global logistics hub.
• The shift from public to private sector dominance has been a key driver of this growth. Up to 15 years ago, the public sector, through the PAJ, was the primary provider of BPO space. The private sector now accounts for 67% of the space occupied, a testament to the industry’s increasing attractiveness and potential.
• The PAJ has been pivotal in catalysing the BPO industry, facilitating its transition from traditional box processing to higher-value services.
• Meanwhile, Jamaica is being strategically positioned to capitalise on the $1.5Tn third-party logistics (3PL) space. The Cayman Special Economic Zone (SEZ¹) is expected to play a significant role in this endeavour, leveraging the synergies between BPO and 3PL. Given its proximity to Jamaica and its attractive tax incentives, the SEZ serves as a strategic hub for linking Jamaica’s BPO sector to the 3PL industry. By providing high-value support services, the SEZ acts as a regional enabler that can strengthen and expand Jamaica’s BPO operations.
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  ¹The Cayman Special Economic Zone (SEZ) is a designated area within the Cayman Islands that offers attractive incentives for international businesses to set up a physical presence, allowing them to operate essentially tax-free and with streamlined processes, primarily focused on attracting companies in sectors like technology, media, and financial services.

(Source: JIS)

• U.S. Treasury Secretary Scott Bessent said on Friday that Mexico has proposed matching U.S. tariffs on China in a move that he described as "very interesting" and one that Canada should match.
• Top Mexican officials have met with members of Trump's cabinet this week for trade talks ahead of a March 4 deadline, when U.S. President Donald Trump's proposed tariffs on Mexican and Canadian imports are set to get into effect alongside an additional 10% duty on Chinese imports. The Mexican and Canadian governments did not immediately respond to requests for comment. The Chinese embassy in Washington said unilateral tariff hikes by the U.S. severely violate World Trade Organization rules and harm the interests of China, the U.S. and the world.
• Embassy spokesperson, Liu Pengyu highlighted that pressuring, coercion and threat are not the right way to deal with China. Instead, mutual respect is the basic prerequisite. Bloomberg, citing a person familiar, has reported that the proposed tariffs by Mexico on China would focus on cars and auto parts. The move is likely a response by Mexico City to avoid a looming 25% tariff by the United States on Mexican goods.
• Mexican President Claudia Sheinbaum's administration has said for months that it is carefully considering Washington and Ottawa's policies towards China, saying even before Trump's reelection that it sought to be "more aligned" in addressing potential unfair Chinese trade practices.
• Mexican Deputy Economy Minister Vidal Llerenas noted that Mexico could adopt further trade measures beyond tariffs it has slapped on cheap goods mostly from China, including counterfeit products, which had entered under previous low-cost exemptions known as "de minimis."

(Source: Reuters)

• Barbados Chamber of Commerce and Industry (BCCI) head James Clarke has called for urgent reforms to address persistent delays at the Bridgetown Port, warning that inefficiencies are stifling business operations and undermining the country’s economic growth.
• Clarke called for urgent action to streamline port logistics, reduce bureaucratic red tape, and modernise trade and investment policies to position Barbados as a more competitive global player. The BCCI president said port bottlenecks remain one of the most pressing concerns for the local business community, highlighting frustrations over costly delays and inefficiencies that have plagued importers and exporters alike.
• These issues, he stressed, must be addressed as part of a broader strategy to improve the ease of doing business in the country. “Delays at the port continue to affect our business community, impacting supply chains and creating unnecessary hurdles for trade,” Clarke added.
• Addressing an audience of business leaders and policymakers, Clarke outlined the chamber’s agenda for 2025, identifying regulatory reform, digital transformation, and business advocacy as key priorities. He said the chamber would continue working closely with the government and social partners to implement policies aimed at reducing bureaucracy, modernising business practices, and making Barbados a more attractive destination for investment.

(Source: Barbados Today)

• Canadian manufacturing activity contracted for the first time in six months in February as an uncertain trade outlook led to firms turning the most pessimistic since the start of the COVID-19 pandemic.
• The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) fell to 47.8 from 51.6 in January, its first move below the 50.0 no-change mark since August. A reading below 50 indicates a contraction in the sector.
• Output fell noticeably, driven lower by a steeper decline in new orders as product markets, both in Canada and abroad, were paralysed by concerns over the applicability and size of tariffs in the coming months. The output index fell to 47.5 from 52.3 in January, and the new orders index was at 45.4, its lowest level since July.
• U.S. President Donald Trump has proposed 25% tariffs on Mexican and Canadian goods that are due to go into effect on March 4. Canada sends about 75% of its exports to the United States.
• "Understandably, manufacturers grew increasingly downbeat about the future ... This meant firms also adopted an increasingly cautious approach to purchasing and employment," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. The measure of future output fell to 48.5 from 57.1 in January, marking the second-lowest level in survey data going back to July 2012. April 2020 was the only month when sentiment was weaker.
• A stronger U.S. dollar and suppliers adjusting prices in anticipation of tariffs contributed to increased input prices, S&P Global said. The input price index was at 58.9, its highest level since April 2023. The Bank of Canada has worried that tariffs could raise inflation even as they reduce prospects for economic growth.

(Source: Reuters)

• With less than two weeks before a March 14 deadline, Republicans and Democrats in the U.S. Congress appear to be nowhere close to a deal to avert a government shutdown that would throw Washington into deeper turmoil. The talks have been complicated by President Donald Trump, who has ignored spending laws passed by Congress, suspended foreign aid and fired tens of thousands of federal workers.
• Both sides say his actions are the biggest sticking point as they seek to reach a deal that would provide government funding beyond March 14, when it is due to expire. Democrats say they are trying to secure guarantees that would prevent Trump and his budget-slashing point person, billionaire Elon Musk, from firing more workers or cancelling more government programs. Republicans say Democrats are trying to undo Trump's actions, which they call a nonstarter.
• The spending deal only covers a portion of the budget, funding agencies like the Department of Defense and the Environmental Protection Agency. It would not address the country's rising borrowing costs or rapidly growing benefit programs like Social Security and Medicare.
• Republicans are separately pushing to extend the tax cuts that Trump signed into law in 2017. One version, which narrowly passed the House last week, would cut taxes by $4.5Tn and reduce spending by $2Tn over a decade. Independent analysts say that would further add to the nation's $36Tn debt load.
• Failure to reach a spending deal by March 14 would force the government to furlough hundreds of thousands of workers and shutter "nonessential" operations, such as financial regulation and trash pickup at national parks.
• The last government shutdown was also the longest, ending in January 2019 after 35 days, as Trump, during his first term in office, and lawmakers clashed over his effort to build a wall along the U.S.-Mexico border. With no clear resolution in sight, lawmakers have already begun pointing fingers.

(Sources: Reuters)

• Jamaica’s Minister of Industry, Investment, and Commerce, Aubyn Hill, is once again calling on banks to lower their interest rates on loans, arguing that high borrowing costs are stifling economic growth.
• Despite the Bank of Jamaica (BOJ) reducing its policy rate four times between August and December 2024, commercial banks have yet to follow suit. Hill pointed out that banks benefit the most in a growing economy because of the increased number of transactions. However, for the economy to grow, it is crucial to have reasonable and relatively low interest rates.
• The concern over high lending rates is particularly significant for micro, small, and medium-sized enterprises (MSMEs), which form the backbone of Jamaica’s economy. MSMEs account for 97% of Jamaican businesses, employ 80% of the workforce, and contribute 44% of the country’s GDP. Yet, access to affordable financing remains a persistent challenge.
• Jamaica’s lending rates remain significantly higher than those in the United States, where mortgage and auto loan interest rates are considerably lower. For example, while mortgage rates in the U.S. currently range between 6-7%, Jamaican borrowers often face rates exceeding 8-10%—sometimes higher depending on the financial institution. Car loans in Jamaica can carry double-digit interest rates, compared to U.S. rates that are typically in the 5-8%. This discrepancy creates a barrier for Jamaicans abroad who may be considering investing in property or business ventures back home.
• High interest rates can slow down the growth of local businesses, making it harder for entrepreneurs, especially in tech and manufacturing, to obtain the necessary capital to expand. This is one of the key reasons why initiatives like the DBJ’s Boosting Innovation, Growth, and Entrepreneurship Ecosystems (BIGEE) program, funded by the Inter-American Development Bank (IDB), are so important. The newly announced partnership between CEDA and DBJ will introduce a grant-funding program to support local tech entrepreneurs who secure corporate partnerships, with funding of up to US$75,000 per innovator.
• As global investors and members of the diaspora evaluate their options, Jamaica’s high interest rates continue to be a major factor in investment decisions. Until lending institutions lower rates in line with BOJ’s policy shifts, the country may struggle to attract the level of business expansion and foreign capital needed to sustain long-term economic growth.

(Source: Caribbean National Weekly)

• The Panama Canal Authority is pushing forward with a key project to expand its water resources for canal operations while also emphasising the vital trade role of its operations. The authority is taking the necessary steps to prepare for the future ignoring the threats from Donald Trump.
• There have been reports of an uneasy standstill after Panama hosted the visit by U.S. Secretary of State Marco Rubio. Panama took some public moves including serving official notice to China that it was withdrawing from the Belt and Road initiatives while also emphasising the country’s sovereignty.
• The Panama Canal Board of Directors at the end of last week approved the next critical phase of the canal with the authorisation to move forward on a new man-made lake to supply water for residents and the operations of the canal.
• It is a key component of the water management plan developed in Panama in response to the 2023-2024 drought that severely restricted canal operations, which officials had said could come within four years without intervention. They are seeking to maintain the momentum that has returned to the Canal’s operations.
• The board authorised moving forward with the necessary resources for the construction of the lake in the Indio River Watershed. The project is expected to start by 2027 and take up to six years.
• The Water Projects Program was created to guarantee water supply for over 50% of the country’s population, nearby communities, and canal operations, as well as to foster other productive activities across the country. The resolution also includes funds allocated for compensation, resettlement, and support for families and property owners who may be affected by the project.

(Source: The Maritime Executive)

• La Niña conditions have returned, bringing increased uncertainty in weather patterns across the Southern Cone (Argentina, Brazil, Chile, Paraguay and Uruguay).
• El Niño and La Niña are the warm and cool phases of a natural climate pattern across the tropical Pacific known as El Niño-Southern Oscillation, or “ENSO” for short. The two different phases represent variations in ocean surface temperatures in the central and eastern tropical Pacific Ocean, affecting wind and rainfall patterns.  La Niña typically brings wetter conditions to Central America and northern South America, while central and southern South America usually experience drier conditions.
• From 2020 to 2023, there were three consecutive La Niña events, referred to as the "triple dip." This was one of the longest-lasting occurrences in recent history, leading to severe droughts and wildfires across much of the Southern Cone.
• As the upcoming La Niña period unfolds, extreme weather patterns are set to continue. Even though this La Niña is expected to be weak, major wildfires and record-breaking heat have already been recorded in the region.
• Drought conditions present significant risks to key summer crops, particularly soybeans and corn, which dominate agricultural output in the region. For all countries in the region, lower global soybean prices, coupled with weaker demand from key trading partners like China, will weigh further on export revenues against a challenging global macro backdrop.
• That said, ongoing geopolitical uncertainties continue to pose risks to trade, potentially diverting exports and also increasing volatility in commodity prices. Additionally, if the La Niña cycle extends beyond March, drier conditions could persist for a longer period, further stressing crops and increasing production losses.

(Source: Fitch Connect)

• Mortgage interest rates dropped again last week, hitting the lowest level in two months, but demand for mortgages didn’t respond. Total mortgage application volume fell 1.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.88% from 6.93%. Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market. This pushed mortgage rates lower, with the 30-year fixed rate decreasing to 6.88%, the lowest rate since mid-December.
• Applications to refinance a home loan, which had been surging through much of January and early February, fell 4% for the week but were 45% higher than the same week one year ago. Last year at this time, mortgage rates were 16 basis points higher. “Although overall refinance application activity remained fairly weak, FHA refinance applications saw an 8.0% increase over the week,” Joel Kan, MBA’s vice president and deputy chief economist added.
• Applications for a mortgage to purchase a home were flat for the week and 3.0% higher than the same week one year ago. The resale market is seeing more supply, partly because homes are sitting on the market longer. While there are more options, prices are not easing much, as inventories are still historically low.

(Source: CNBC)

• An ominous measure that the Federal Reserve considers a near surefire recession signal again has reared its head in the bond market. The 10-year Treasury yield passed below that of the 3-month note in trading Wednesday. This is known as an “inverted yield curve.”
• At the end of January, when the 10-year yield was about 0.31 percentage points clear of the 3-month, the probability was just 23.0%. However, that is almost certain to change as the relationship has shifted dramatically in February. The reason the move is considered a recession indicator is the expectation that the Fed will cut short-term rates in response to an economic retreat in the future.
• Of note, yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in October 2022, and there’s still been no recession 2½ years later. Therefore, while there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under President Donald Trump may not happen due to his tariff-focused trade agenda.
• Recent sentiment surveys have reflected consumer and investor angst over prospects that growth could slow under his leadership with inflation perking up just as it appeared to be easing.
• In the University of Michigan’s monthly survey, respondents put their longer-term view on inflation, over the next five years, at its highest level since 1995. On Tuesday, the Conference Board reported that its forward-looking expectations index had sunk back down to levels consistent with recession in February.
• Still, most of the “hard” economic data such as consumer and labour market indicators have held positive even in the face of downbeat sentiment.

(Source: CNBC)