• Bananas and plantains are expected to return to the market in good supply by February 2025. Addressing Wednesday’s (September 25) post-Cabinet press briefing at Jamaica House, Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green, said both crops contribute more than $13Bn annually to Jamaica’s economy and were severely impacted by Hurricane Beryl.
• Detailed assessments revealed that approximately 64 percent of the crops in production were damaged, translating to more than $1.8Bn needed to resuscitate the crops.
• The minister noted that at least 73 major banana farmers lost over 50% of their crops and that it normally takes seven to nine months for banana crops to recover. In response, the government initially allocated $40Mn through the Banana Board, providing assistance to about 2,300 banana farmers. This support includes fertiliser and a six-week recovery plan to help restore their crops.
• Notably, in August 2024, monthly food prices rose by 4.3%, driven primarily by a 15.5% increase in ‘Vegetables, tubers, plantains, cooking bananas, and pulses.’ The increase in agricultural produce was one of the primary drivers of the spike in inflation in August due to supply shortages following the damage wrought by Hurricane Beryl. We anticipate that banana and plantain prices are likely to remain elevated until production normalises.
• PanJam is also likely to see its earnings adversely impacted for the September quarter as Subsidiary, JP Farms lost over 90% of its crops due to Hurricane Beryl. PanJam recently acquired JP’s core operating businesses, including JP Farms, in exchange for a 34.5% ownership stake in PanJam. Management noted that it has commenced its recovery efforts and aims to restore full production and sales by the first quarter of 2025.

(Sources: JIS & NCBCM Research)

• The Financial Services Commission (FSC) continues its active regulation of Stocks and Securities Limited (SSL), with a focus on ensuring that the company strictly adheres to the requirements set forth in the Securities Act to safeguard the interests of SSL’s clients and maintain the integrity of the financial system.
• The FSC reported that on July 31, 2024, it issued directions to SSL, requiring periodic updates, including the status of payouts to clients, to enforce transparency and accountability during the company’s winding-up process.
• Based on the latest information provided by the Trustee, SSL is advanced in its plans to make a payout to SSL clients. The payout is primarily from the proceeds of the sale of the International Securities Client Portfolio, with an approximate value in excess of USD 30 million.
• To ensure full compliance with the directions, the FSC will be closely monitoring SSL’s actions throughout this process. It continues to collaborate closely with law enforcement agencies to ensure the pursuit and successful completion of thorough investigations of any improprieties at SSL and will provide further updates as necessary.

(Source: FSC)

• Grenada’s Finance Minister, Dennis Cornwall, has announced that the Government anticipates the Escape Clause of the Fiscal Resilience Act (FRA) will continue for the year 2025, given that the Government will still be recovering from the impact of Hurricane Beryl.
• Addressing the opening ceremony of the Ministry of Finance budget retreat on Tuesday, September 24, 2024, Cornwall announced that the Escape Clause of the FRA, which went into effect on September 6, will be significant for Grenada’s recovery.
• As of September 6, 2024, Grenada activated the suspension law of the Fiscal Resilience Act, applicable for the fiscal year January to December 2024, which provides for the suspension of the requirements for public debt target and primary balance rule during a fiscal year when the condition for suspension is applicable. However, the finance minister has now noted that a further suspension will be required in 2025 as recovery and reconstruction efforts accelerate.
• That said, the FRA makes provisions for the Ministry of Finance to take certain responsibilities if the suspension order is published in the first half or second half of any given year. The legislation states that when the suspension order is published within the second half of the year, “the medium-term economic and fiscal strategy report accompanying the national budget for the new fiscal year shall include the measures proposed to facilitate compliance with the public debt target and primary balance rule in the new fiscal year, including the size and nature of the revenue and expenditure measures for the national budget for the new fiscal year.”
• Cornwall told participants attending the retreat that the Government’s priority will be building resilience in the aftermath of Hurricane Beryl and its focus must remain steadfast. “Accordingly, the 2025 budget should prioritise anything that elevates health, education and social welfare. By investing in our people, we are laying the groundwork for a fair and a more prosperous Grenada,” he said, pointing out that each programme should be designed to enhance the quality of life of citizens and address critical local needs with compassion.
• “We should continue our efforts to diversify our economy. Our focus for 2025 should be on us presenting a dynamic and competitive economy while showing that our infrastructure can withstand the challenges that are caused by climate change and other extreme weather events.”

(Source: Now Grenada)

• Bermuda’s economy has demonstrated notable growth and resilience. During the first quarter of 2024 (Q1 2024), Bermuda’s economy grew by an estimated 7.1%, adjusted for inflation, signifying strong expansion compared to the previous year. This economic growth resulted from increased household expenditure and a rise in the export of goods and services.
• Evidenced by both real and nominal GDP figures, such growth highlights the economy’s resilience and the effectiveness of supportive government policies and prevailing market conditions, according to Bermuda’s Minister of Economy and Labour, Jason Hayward.
• Consumer spending in Q1 2024 increased 1.2% year-over-year to US$793.4Mn. This increase reflects modest yet positive growth in the total amount of money consumers spent on goods and services during the quarter. The increase in consumer spending in Bermuda also demonstrates a positive economic environment, with growth in both service consumption and investment in durable goods likely due to higher employment incomes.
• Of note, employment income rose by 11% compared to 2023 levels. Notable increases in employment income were observed across various industries, including International Business (17.1%), Hotels & Restaurants (6.7%), Banking Insurance & Real Estate (8.2%), Public Administration & Defense (7.4%), and Transport and Communication (14.9%).
• Tourism, which is vital to Bermuda’s economy, also showed growth in the first quarter of 2024. For Q1 2024, Bermuda welcomed 25,761 air visitors, an increase from 24,661 in 2023. Visitor’s estimated expenditure also rose, reaching US$52.6Mn, up from US$48.7Mn the previous year.
• Overall, economic growth in Bermuda will continue to be driven by infrastructure projects, the construction sector, and its position as a global leader in the insurance and reinsurance sector along with steady tourism growth. Furthermore, inflation rates in the sovereign remain somewhat contained and should provide some tailwinds for personal consumption and by extension economic growth. Bermuda’s economy is on track to grow about 3.0% in 2024 before slowing to 1% thereafter, somewhat in line with pre-pandemic growth performance, following an estimated increase of 4.0% in 2023 and 6.4% in 2022 (S&P).

(Sources: BerNews, S&P & NCBCM Research)

• Wage pressures are easing across the eurozone, driven in great part by lower additional compensation paid on top of negotiated wages, likely contributing to a further moderation of inflation, a European Central Bank study argued on Wednesday. Wage growth has been rapid for years, driven significantly by so-called "wage drift", or actual payments made to employees on top of negotiated wages.
• Wage drift has been driven by bonuses, inflation compensation payments and longer hours worked. However, the most recent data show a closing gap between negotiated and actual payments, a likely sign that inflation pressures will ease as the ECB has long predicted.
• "We are now at a point in the disinflation process where the upward pressure coming from wage drift is easing," the ECB said in an Economic Bulletin article. "The recent moderation of the growth in compensation per employee has been driven by an easing of wage drift."
• Instead, it will be negotiated wage growth that will once again become the main indicator for the ECB, but even there, signs of moderation are increasingly apparent. Negotiated wage growth slowed to 3.5% in the second quarter from 4.8% three months earlier, hitting its lowest level since late 2022. While this is still faster than the 3%, which is considered consistent with the ECB's 2% inflation target, the central bank hopes that a further slowdown will let price growth sink back to its target in late 2025.
• Germany, the euro zone's biggest economy, however, expects big wage increases well into 2025, raising some doubts about the ECB's outlook. "As inflation compensation is increasingly embedded in collective wage bargaining, high negotiated wage growth has been sustaining the current levels of growth in compensation per employee," the ECB said.
• "As inflation surge…there may be some residual real wage catch-up, but the upward pressure on negotiated wage growth is likely to subside," the ECB added.

(Source: Reuters)

• On Sept. 24, 2024, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, it affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings on Jamaica, its 'B' short-term foreign and local currency sovereign credit ratings, and its transfer and convertibility assessment of 'BB'.
• The positive outlook reflects the possibility of an upgrade if continued strengthening of the policy framework raises the likelihood of more sustainable public finances and balanced economic growth over the long term.
• Furthermore, S&P expects renewed GDP growth and improved budget balances in 2025 after temporary setbacks in 2024 due to Hurricane Beryl. It now expects a 1.5% contraction in the economy for 2024 versus its pre-hurricane expectation of 1.6% growth. As the country recovers, growth should resume, and by 2026 and 2027 should return to the trend of 1%-2% annually.
• Jamaica's net debt to GDP is falling and is now below 60% of GDP. The government's interest burden remains high but is also decreasing. As such, the interest burden is expected to fall modestly to 16.8% of government revenues in fiscal 2025 and to less than 15% by 2027.
• Additionally, in 2024, the Bank of Jamaica began reducing its policy rate, which stands at 6.75% as at August 2024. The Bank is expected to maintain cautious monetary policy, which combined with tight fiscal policy, will keep inflation within the target band over the next several years.
• With that said, external shocks are still a risk for Jamaica. To address the country's vulnerabilities to weather-related events, the government has created a disaster risk policy framework to build resiliency and respond faster in the aftermath of a disaster, which served Jamaica well at the onset of the pandemic. Although Jamaica has made progress on mitigating the fiscal risks, its economy and infrastructure remain vulnerable to physical risks.
• Overall, S&P believes Jamaica's institutions are strengthening, leading to improved public finances, more economic stability, and greater resilience to shocks, as demonstrated by the country's experience following a recent hurricane.

(Source: S&P Ratings)

• Prime Minister, Dr. the Most Hon. Andrew Holness, says the Government will be making significant long-term investments in improving Jamaica’s road infrastructure.
• “It is going to be a 20-year journey for us to get all our roads into the conditions where we can drive in comfort on all of them. Going forward, the Government is making the commitment, with the budgetary allocations from our [positive] economic performance, to build new roads, improve those roads, and maintain them. For the first time, we are in a position that we can project to be able to do this,” he disclosed.
• The Prime Minister was addressing a Diaspora town hall at the Lehman Center for the Performing Arts in New York on Saturday (September 21).
• Holness noted that Jamaica’s stable economic performance has been pivotal in facilitating investments in the island’s critical infrastructures. Key among these are developments slated to be carried out under the $40 billion Shared Prosperity Through Accelerated Improvement to our Road Network (SPARK) Programme.
• He highlighted that with stable revenues and a long-term projected investment path, business operators can feel confident in investments they make. He went on to state that the country’s improved economic structure is critical to facilitating these investments and emphasised the importance of the Diaspora’s role in growing the economy.

(Source: JIS)

• Costa Rica is set to undergo a transformative environmental and economic boost with the program “Ecosystem-based Adaptation to Increase Climate Resilience in the Central American Dry Corridor and Arid Zones of the Dominican Republic.”, a key initiative aimed at addressing the pressing challenges posed by climate change in the region.
• The Central American Bank for Economic Integration (CABEI) received a disbursement of US$7.2Mn from the Green Climate Fund (GCF) to begin implementing this program, which will benefit more than 2.4 million people in Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the Dominican Republic.
• The disbursement of US$7.2Mn is the first installment of a larger GCF allocation to CABEI for this program, totalling US$174.3Mn. This funding will support a variety of activities in the region, including rainwater harvesting systems to help communities capture and store water during the rainy season for use in drier periods.
• The program will also introduce soil conservation techniques, such as contour ploughing and terracing, to prevent soil erosion and maintain fertility in the dry corridor. Additionally, it will promote diversified livelihoods like agroforestry and ecotourism, reducing dependence on agriculture and increasing income sources. Community agroforestry initiatives, including watershed tree planting, will enhance soil health, reduce erosion, and provide shade for crops, boosting resilience to climate change.
• The program seeks to improve the resilience of communities and ecosystems in this region by promoting ecosystem-based adaptation (EbA) measures for sustainable land and water management and livelihood diversification. It also aims to facilitate access to reimbursable resources (funds that need to be repaid) for the implementation of EbA and other measures to increase resilience to extreme weather events, such as severe droughts and heavy rainfall.

 (Source: The Tico Times)

• Mexico's annual inflation slowed more than expected in the first half of September, official data showed on Tuesday, September 24, paving the way for the country's central bank to deliver another interest rate cut at its next meeting.
• In Latin America's second-largest economy, 12-month headline inflation came in at 4.66% in early September, statistics agency INEGI (National Institute of Statistics and Geography) said, below both the previous month's 5.16% and the 4.73% forecast by economists polled by Reuters.
• The key figure remains above the Bank of Mexico's (Banxico) 3% target, plus or minus one percentage point, but will likely open the door for it to maintain a monetary easing cycle on Thursday when it is set to announce its next policy decision.
• Mexico's central bank last month lowered borrowing costs by 25 basis points to 10.75% in a divided vote. Market participants expect another 25-basis-point cut to 10.50%, according to a Reuters poll, as annual headline inflation has now slowed for four consecutive fortnights.
• "The fall in inflation, combined with the weakness of economic activity and the fact that the U.S. Fed is now easing monetary policy too, means that Banxico is all but certain to deliver another 25-basis-point cut," Capital Economics said.
• In the first half of September alone, INEGI data showed that Mexico's consumer prices increased by 0.09%, while economists in a Reuters poll projected a 0.15% rise. The lower-than-expected figure was related to a drop in food costs. Mexico's closely monitored core consumer price index, seen as a better gauge of price trends given that it strips out volatile energy and food prices, hit 0.21% in the period, with the annual rate at 3.95% - both in line with market forecasts.
• "Underlying inflation pressures are easing, and we expect inflation will continue to decline in the fourth quarter," Pantheon Macroeconomics said. "Moreover, falling expectations have enabled Banxico to implement interest rate cuts."

(Source: Reuters)

• U.S. consumer confidence dropped by the most in three years in September amid mounting fears over the labour market, though more households planned to buy a home over the next six months. The Conference Board survey on Tuesday also showed consumers expected inflation to increase in the coming year, clouding their views of the economy ahead of the Nov. 5 presidential election. The economy could determine the outcome of the vote.
• The Conference Board's consumer confidence index dropped to 98.7 this month from an upwardly revised 105.6 in August. The decline was the largest since August 2021. Economists polled by Reuters forecasted the index to rise to 104.0 from the previously reported 103.3.
• The biggest drop in confidence was among the 35 to 54 years age group. Confidence fell across most income groups, with consumers earning less than $50,000 a year experiencing the biggest decrease. The Conference Board said write-in responses about politics, including the November elections, remained below both 2020 and 2016 levels.
• The unemployment rate slipped in August after rising for four straight months. It has increased from 3.4% in April 2023 to 4.2% last month. The rise in the unemployment rate has been driven by an increase in labour supply, mostly from immigration. Layoffs remain at historically low levels.
• "The deterioration across the index's main components likely reflected consumers' concerns about the labour market and reactions to fewer hours, slower payroll increases, fewer job openings, even if the labor market remains quite healthy, with low unemployment, few layoffs and elevated wages," said Dana Peterson, chief economist at the Conference Board.
• Consumers' 12-month inflation expectations increased to 5.2% from 5.0% in August, though more mentioned lower inflation in their write-in responses. "If inflation expectations continue to rise and the labor market continues to soften, the Fed is going to have a difficult time appropriately recalibrating monetary policy," said Conrad DeQuadros, a senior economic advisor at Brean Capital.

(Source: Reuters)