• The Planning Institute of Jamaica (PIOJ) is reporting a growth in financing support to the micro, small and medium-sized enterprise (MSME) sector. Data from the Bank of Jamaica (BOJ) indicate that loans to local business firms increased by 18.5% in 2023 relative to 2022.
• Government initiatives such as the provision of funds to organisations for on-lending, tax incentives and business development programmes, alongside private-sector initiatives, played a crucial role in fostering this growth.
• Addressing the opening ceremony of the Ministry of Industry, Investment and Commerce’s MSME Business Roadshow at the JUICI Empowerment Centre in Clarendon on Thursday (February 20), Director General of the PIOJ, Dr. Wayne Henry, said that growing confidence in and recognition of the impact of the country’s economic performance is driving increased financing of these industries.
• He noted that the sector’s development continues to be guided by the Vision 2030 National Development Plan and the Associated Medium-Term Social Economic Policy Framework 2021-2024.
• Sales from MSMEs increased by 1.2%, reaching a total of $207.40Bn, driven by the strong performance of micro and medium-sized firms in sectors such as electricity and water supply, mining and quarrying, and manufacturing.
• The MSME sector plays a critical role in advancing the fundamental component of Jamaica’s economic structure as they play essential roles in promoting equity, preserving wealth, fostering economic growth, generating employment opportunities, facilitating sustainable development, encouraging employment and expanding the private sector. Furthermore, they contribute about 44% to the country’s GDP and account for 60-70% of all jobs.

(Source: JIS)

• The private-sector arm of the Inter-American Development Bank, IDB Invest, and the Japan International Cooperation Agency (JICA) have announced a US$1Bn contribution from JICA to establish the JICA Trust Fund for Achieving Development in Latin America and the Caribbean (TADAC).
• This initiative, the agency's first private-sector fund with the IDB and its largest private-sector fund in Latin America and the Caribbean, aims to catalyse greater private investment by co-financing projects that drive sustainable growth, a release stated.
• IDB Invest stated that as Latin America and the Caribbean face a growing financing gap, it is adopting an 'originate-to-share' business model. This model emphasises collaboration and co-financing with other development institutions to mobilise private investment and maximise capital efficiency. The TADAC Fund will therefore further strengthen these efforts.
• ‘This US$1Bn fund represents a historic milestone in our ongoing partnership with JICA-the agency's first private-sector fund with the IDB and its largest private-sector fund in Latin America and the Caribbean. By leveraging our combined resources and expertise, we are poised to drive transformative change across Latin America and the Caribbean. This initiative will not only catalyse private investment but also foster sustainable development, innovation, and economic growth in the region,' said IDB President Ilan Goldfajn.
• Dr Akihiko Tanaka, president of JICA, emphasised the importance of this collaboration, stating that 'JICA is committed to supporting private-sector efforts to solve the deep-rooted social issues in Latin America and the Caribbean. This investment in partnership with IDB Invest will contribute to closing the financial gap to achieve the Sustainable Development Goals (SDGs) in the region.'

(Source: Trinidad Express Newspaper)

• Trinidad and Tobago plans to ask U.S. President Donald Trump's administration to extend a license for Shell (Shell), and Trinidad's National Gas Company (NGC) to develop a key gas project in Venezuela, four sources close to the preparations said.
• The U.S. license was first granted in early 2023 as an exemption to Washington's sanctions on Venezuela. It enabled NGC and Shell to move forward on planning and preparation for the Dragon natural gas project off Venezuela's coast, aimed at supplying gas to Trinidad from around 2027. Washington amended the license in 2023 to allow payments in hard currency or in kind to Venezuela and its state-owned oil and natural gas company, PDVSA (Petróleos de Venezuela, S.A.), for gas supplies and extended the expiration date to October 2025.
• U.S. sanctions target the entire Venezuelan oil and gas industry, which is controlled by PDVSA, meaning countries like Trinidad and private operators that abide by the measures require U.S. licenses to export or pay revenue to sanctioned entities including the government, the Central Bank and PDVSA.
• Shell and NGC will, therefore, need an extension to begin production once they make a final investment decision on the project which is expected this year. According to planning by the two companies, Dragon's initial production flow should be around 200 million cubic feet per day, one of the sources said.
• Trinidad's Prime Minister Keith Rowley this month said his government would soon brief Washington on the importance of keeping U.S. licenses to develop gas projects with Venezuela for reasons of regional energy security. He did not elaborate on the planned talks. Both companies have been working closely with Trinidad's Energy Minister Stuart Young and Venezuela's Vice President Delcy Rodriguez, who have separately visited the survey vessel.

(Source: Reuters)

• U.S. consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February while 12-month inflation expectations surged, offering further signs that Americans were growing anxious about the potential negative economic impact of the policies of President Donald Trump's administration. At the same time, consumers' average inflation expectations rose to 6%, the highest since May 2023.
• The Conference Board survey on Tuesday noted that "comments on the current administration and its policies dominated the responses." It followed on the heels of surveys last week showing steep declines in business and consumer sentiment in February. Tariffs on imports, which Trump has already imposed or is planning to impose, have been singled out as the major issue in almost every household and business survey.
• Economists said unprecedented layoffs of federal government workers were also taking a toll on consumers' psyche, which posed a risk to spending, the main engine of the economy.
• The Conference Board's consumer confidence index dropped 7 points, the biggest decline since August 2021, to 98.3 this month. Economists polled by Reuters had forecast the index falling to only 102.5. The third straight monthly decrease pushed the index to the lowest level since June 2024. It is now at the bottom of the range that has prevailed since 2022.
• The Federal Reserve is likely to resume cutting interest rates in June and could reduce short-term borrowing costs again in September, traders bet on Tuesday as they took on board the implications of a widely watched survey that showed consumer confidence dove this month, and inflation expectations surged.

(Source: Reuters)

• The European Central Bank has room to cut its interest rates further if inflation eases to its 2% goal this year as it expects, ECB policymaker Joachim Nagel said on Tuesday, adding the outlook for prices was "encouraging".
• The ECB is widely expected to cut rates for a fifth straight time next week after seeing inflation fall from double digits after Russia's 2022 invasion of Ukraine to just over 2% in recent months. Nagel said incoming data, especially the latest developments on price growth, suggested the ECB was likely to achieve its target this year.
• "This would allow us on the Governing Council to lower the key interest rates further," he said in a speech as he presented the Bundesbank's annual accounts. "Overall...the outlook for prices is fairly encouraging," he added while cautioning about "persistently elevated core inflation and the undiminished strength of services inflation".

(Source: Reuters)

• According to PIOJ, the Jamaican economy is estimated to have contracted by 1.8% for the quarter ended December 2024 (Q4 2024), relative to the corresponding quarter of 2023, reflecting declines in both the Services and the Goods-Producing industries. The estimated out-turn for the review quarter largely reflected the impact of the lingering effects of Hurricane Beryl from the previous quarter, coupled with Tropical Storm Rafael and other hydrological events during the review quarter. Overall, the Goods-Producing Industry is estimated to have contracted by 4.7%, while the Services industry is estimated to have declined by 0.7%.
• During the quarter, all Goods-Producing industries are estimated to have declined, with agriculture being the most significantly impacted, contracting by 12.0%. The outturn was the result of damage to crops, as well as delays in reaping and replanting caused by the series of hydrological events. The industry’s performance was due to lower output in all sub-components of the industry, with the exception of Animal Farming.
• Mining & Quarrying, Manufacturing, and Construction also experienced declines of 3.2%,0.7% and 2.1% respectively. The decline in the Mining & Quarrying industry was due to a fall in the production of alumina and crude bauxite. A contraction in the Other Manufacturing sub-industry, which outweighed the estimated growth in the Food, Beverages, and Tobacco Industry, weighed on the performance of the Manufacturing Industry. This was primarily due to a reduction in the Refinery Service Factor, as the refinery was closed for 39 days during the review quarter, compared to 32 days in the same quarter of 2023. Estimated downturns in both the Building Construction and Other Construction sectors was behind the contraction in Construction.
• The performance of the Services Industry reflects the lower real value added in five of the eight sectors. Producers of Government Services were estimated to have remained unchanged. Among the declining sectors were Electricity & Water Supply, which fell due to lower electricity consumption, Wholesale & Retail Trade; Repair & Installation of Machinery (WRTRIM) due to reduced sales in key sub-categories, and the Hotels & Restaurants industry, which reflects the decrease in stopover arrivals.
• Furthermore, visitor arrivals to the island continue to be negatively impacted by the impact of a fall in airlifts due to supply-side issues with Boeing; two travel advisories issued during 2024; and to a lesser extent, industrial disputes, which halted operations at some hotels.
• Despite two consecutive quarters of economic decline, the PIOJ is maintaining that Jamaica is not in a recession, as a recession cannot be determined solely by GDP. However, significant challenges persist, particularly due to hydrological shocks, which have impacted the Tourism, Electricity & Water Supply, and Agriculture, Forestry & Fishing Industries. Based on the latest available data, the PIOJ is forecasting that the economy will return to positive growth in the January-March 2025 quarter.

(Source: PIOJ)

• Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'. The ratings reflect stronger governance than the peer median, significant progress with debt reduction, a sound fiscal framework, and a strong political commitment to deliver large primary surpluses. Debt-to-GDP has fallen to a forecast 70.8% in fiscal 2024/2025 from a high of 135.3% of GDP in fiscal 2012/2013.
• However, the ratings remain constrained by deep structural weaknesses, including subdued growth potential owing to a high crime rate, low productivity and weak demographics, and vulnerability to external shocks including weather-related.
• Despite the economic downturn last year caused by Hurricane Beryl and extensive rain in the fall, the overall surplus in the fiscal year ending in March 2025 will be slightly better at 0.3% of GDP than fiscal year 2023/24 at 0.0% of GDP. This is in part due to one-off revenues from insurance payments as well as concession proceeds from airports.
• These large primary surpluses are expected to reduce general government debt GDP to 66.3% of GDP in fiscal year 2025/26 from 70.8% this fiscal year. Debt is expected to fall to 63.5% in fiscal 2026/2027, putting it on track to meet the government's debt target, although the 60% target is still higher than the current 'BB' median of 55.6%.
• Most notably, Jamaica has remained committed to an economic policy framework built on two key pillars: the Bank of Jamaica's (BoJ) inflation-targeting monetary policy and fiscal policy anchored on debt reduction targets. Inflation fell to 5%, the midpoint of the BOJ's target range, at year-end 2024.
• The Rating Outlook is Positive. The Positive Outlook reflects Fitch's expectation of continued improvement in debt metrics and further strengthening of the policy framework over the next few years, including climate risk mitigants.

(Source: Fitch Ratings)

• Peru's gross domestic product (GDP) will likely expand by 4% this year and rank as the second-fastest growing economy in Latin America, as inflation is seen holding for another year at around 2%.
• The Andean economy is bouncing back from recession, with the government of President Dina Boluarte and the central bank forecasting positive prospects for 2025, including fewer inflationary pressures and more investment.
• Peru's economy for decades was one of Latin America's top performers, but in recent years growth has cooled as social unrest hit the country's key mining sector amid growing political instability. At a press conference, Economy Minister, Jose Salardi, pointed to the expectation of relatively high prices for copper and gold - Peru's top mineral exports - and a push to cut regulations that should facilitate investment.
• In Latin America, Peru's expected economic growth this year would be surpassed only by Argentina's likely expansion, according to Salardi. The Economy Ministry also forecasts inflation of 2% this year, after the annual rate of rising consumer prices closed in 2024 at 1.97%. Salardi added that he aims to lower the government's budget deficit, in line with established fiscal rules.
• Peru's debt-to-GDP ratio stands at around 33%. The minister added that the ratio is expected to go down, but did not go into further detail.

(Source: Reuters)

• The Government of Barbados and the CAF (Development Bank of Latin America and the Caribbean) have signed a US$75Mn financing agreement aimed at advancing cultural heritage preservation, tourism, and modernising related infrastructure.
• The agreement was formalised between Prime Minister Hon. Mia Mottley and CAF’s Executive President Sergio Díaz-Granados on the sidelines of the 48th CARICOM Heads of Government Meeting in Barbados.
• The funding will support key initiatives under the Reclaiming Our Atlantic Destiny (ROAD) Program, which seeks to strengthen Barbados’ connection to its rich history. Prime Minister Mottley described the initiative as “a moral imperative and an economic necessity.”
• She added, “CAF has been responsible for a number of loans that have made a difference in the life of Bajans, largely because many of these loans have been to build capacity in the country—from roads, right back through to the port at one point. This time we are taking a different slant. The country has not had investment in heritage facilities for some time.”
• CAF’s Executive President Sergio Díaz-Granados commended Prime Minister Mottley’s leadership and pledged ongoing support for Barbados’ sustainable development. “Our goal is to work with you to identify new projects and programmes that we can support.
• Since 2015, CAF has approved USD 335 million in development financing for Barbados, including recent allocations for water infrastructure modernisation, climate resilience, and recovery efforts following Hurricane Beryl

(Source: Nation News)

• Russia's overheating economy is on the cusp of serious cooling, as huge fiscal stimulus, soaring interest rates, stubbornly high inflation, and Western sanctions take their toll, but after three years of war, Washington may just have thrown Moscow a lifeline.
• U.S. President Donald Trump is pushing for a quick deal to end the war in Ukraine, alarming Washington's European allies by leaving them and Ukraine out of initial talks with Russia and blaming Ukraine for Russia's 2022 invasion, political gifts for Moscow that could also bring strong economic benefits.
• Washington's push comes as Moscow faces two undesirable options, according to Oleg Vyugin, former deputy chairman of Russia's central bank. Russia can either stop inflating military spending as it presses to gain territory in Ukraine, or maintain it and pay the price with years of slow growth, high inflation and falling living standards, all of which carry political risks.
• Though government spending usually stimulates growth, non-regenerative spending on missiles at the expense of civilian sectors has caused overheating to the extent that interest rates at 21% are slowing corporate investment and inflation cannot be tamed. "For economic reasons, Russia is interested in negotiating a diplomatic end to the conflict," Vyugin said. "This will avoid further increasing the redistribution of limited resources for unproductive purposes. It's the only way to avoid stagflation."
• While Russia is unlikely to swiftly reduce defence spending, which accounts for about a third of all budget expenditure, the prospect of a deal should ease other economic pressures, could bring sanctions relief and eventually the return of Western firms.

(Source: Reuters)