• The Government’s revenues for April to July 2024 (Q2 2024) outperformed the budget by 4.5%. Total revenues and grants amounted to $301.9Bn, ahead of budget projections by $12.9Bn with tax revenues totalling $270.8Bn, and non-tax revenue, $27.5Bn. This result represents a $21.3Bn increase year-over-year in total revenues compared to Q2 2023, reflecting ongoing improvements in domestic economic activities.
• Q2 2024 revenues also exceeded the budget by $3.7Bn, or 1.4%, for the review period. This was mainly due to total income and profits being $5.5Bn above expectations but was partially offset by lower-than-anticipated receipts from production, consumption, and international trade. Additionally, travel tax, which brought in $9.5Bn, fell $2.1Bn short of its target due to slower-than-expected visitor arrivals. 
• Non-tax revenue, which surpassed the budget by $7Bn was positively affected by the Government of Jamaica's drawdown on its insurance policies with the Caribbean Catastrophe Risk Insurance Facility (CCRIF).
• On the other hand, expenditures of $336.2Bn were marginally behind budget by $6.2Bn or 1.8%, but actually $37.1Bn higher than the total spending for Q2 2023.
• During the review period, central government operations led to a fiscal deficit of $34.3Bn, which was lower than the budgeted deficit of $53.4Bn but higher than the $18.4Bn deficit recorded for Q2 2023. The primary surplus totalled $21.7Bn, exceeding the budgeted surplus of $2.3Bn, though it was $12.9Bn less than the surplus reported for the same period in 2023.
• Given the anticipated sluggish growth in Q2 and the projected contraction for Q3 due to the effects of Hurricane Beryl, we expect a decrease in economic activity, leading to lower tax revenues. Additionally, with the expected rise in infrastructure expenditures for repairs on roads and schools, Q3 2024’s fiscal deficit will likely be wider than Q2 2024.

(Source: EPOC &NCBCM Research)

• The Barbados-based Caribbean Development Bank (CDB) is funding a feasibility study for the establishment of a Regional Credit Enhancement Facility (RCEF) for micro, small and medium-sized enterprises (MSMEs).
• It said the US$160,000 study would explore viable solutions to the recurring challenges MSMEs face in accessing financing and potentially pave the way for enhanced financial support structures in the future.
• CDB's acting project director L O'Reilly Lewis said that: 'Even with extensive investments in loans and equity, many Caribbean MSMEs continue to face substantial funding gaps because of underdeveloped financial systems. This study will help us better understand the market needs and design a facility that could effectively address these gaps if the demand is validated'.
• According to the CDB, once the demand is validated, the RCEF is expected to offer MSMEs guarantees and other financial products and support services that enhance their bankability.
• 'It is envisioned that the facility will also support financial institutions in expanding credit access, provide training to enhance the capabilities of financial institutions, guarantee schemes and MSMEs, and streamline processes for all involved. Additionally, the solutions will focus on the inclusion of traditionally underserved groups such as women, youth, and those in the creative industries,' the bank said.
• Recognising that MSMEs are pivotal to the region's economy, the CBD has revised its approach to focus on enhancing financial accessibility and supporting sustainable business practices.
• 'We are constantly looking for ways to support these enterprises, which are the backbone of many Caribbean economies. The results of the study will lead to practical solutions that can help our MSMEs overcome finance-related obstacles and drive their growth,' said Lisa Harding, the CDB's acting head of the Private Sector Division.

(Source: Trinidad Express Newspaper)

• Remittances to the Dominican Republic reached $7.10Bn during the first eight months of 2024 (8M 2024), marking a 5.1% increase compared to the same period last year, according to the Dominican Republic’s Central Bank. In August alone, US$952.3Mn was received, reflecting a 10.7% rise from August 2023.
• The Central Bank highlighted the significance of remittances, primarily from the U.S., in boosting consumption, investment and support for vulnerable sectors. U.S.-based Dominicans sent US$713.5Mn back to the country, representing 82% of total remittances.
• The Central Bank also noted that favourable U.S. economic conditions, such as a slight decrease in unemployment and an expanding services sector, contributed to the remittance growth.
• The Dominican Republic expects to receive over US$10.50Bn in remittances by the end of 2024, with foreign exchange earnings projected to surpass US$42.60Bn in 2024.
• Jamaica, on the other hand, noted a decline in its remittance flows for 7M 2024.  Total remittance flows of US$1.88Bn between January and July 2024, are 0.61% below the same period last year, likely attributable to the high base effects of the post-pandemic remittance surge to Jamaica.
• In Jamaica, remittances climbed to a historic high of US$3.5Bn in 2021, due to changing market conditions and restrictions under the pandemic that pushed more remitters to utilise the formal means of money transfers. Since then, the market has seen two years of shrinkage, to US$3.44Bn in 2022 and US$3.37Bn in 2023. Therefore, be noted that the marginal year-on-year decline is in line with a normalizing of flows that had increased significantly during the Covid-19 pandemic.

 (Sources: Dominican Today & NCBCM Research)

• U.S. retail sales unexpectedly rose in August as a decline in receipts at auto dealerships was more than offset by strength in online purchases. This suggests that the economy remained on solid footing through much of the third quarter.
• The report from the Commerce Department on Tuesday also showed retail sales were a bit stronger than initially thought in July. It combined with the decline in the unemployment rate last month to push against financial market expectations for a half-percentage-point interest rate cut from the Federal Reserve on Wednesday. U.S. central bank officials started a two-day policy meeting on Tuesday.
• The Atlanta Fed raised its third-quarter GDP growth estimate to a 3.0% annualised rate from a 2.5% pace after the data. This would be on par with the 3.0% economic growth in the second quarter. "There does not appear to be any reason for Fed officials to start out with a larger 50 basis points rate cut because whatever stress there is in the labour market, it isn't translating into weaker economic demand," said Christopher Rupkey, chief economist at FWDBONDS. "If this is an economy on the brink of recession, consumers certainly don't see it," he added.
• Retail sales increased 0.1% last month after an upwardly revised 1.1% surge in July, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, falling 0.2% after a previously reported 1.0% jump in July. Estimates ranged from a 0.6% decline to a 0.6% gain. Retail sales also increased 2.1% on a year-on-year basis in August. Online store sales rebounded 1.4% after falling 0.4% in July. Sales at gasoline stations dropped 1.2%, reflecting lower prices at the pump. Cheaper gasoline is likely freeing money for other spending.

(Source: Reuters)

• Canada's annual inflation rate reached the central bank's 2.0% target in August, data showed on Tuesday, fuelling hopes for a 50-basis-point interest rate cut by the country's central bank next month.
• The consumer price index posted its smallest rate of increase since February 2021 and the closely watched core price measures also cooled to their lowest levels in 40 months, Statistics Canada said. Consumer prices fell 0.2% on a month-on-month basis, it said.
• "We expect central bankers to slash their policy rate by 50 basis points next month in an effort to expedite the return to a more neutral setting," Royce Mendes, head of macro strategy at Desjardins Group, wrote in a report.
• The easing of price pressures was primarily helped by a drop in the prices of gasoline, telephone services and clothing and footwear, while shelter costs - mortgage and rents - continued to cool at a tepid pace as rents maintained their relentless rise.

(Source: Reuters)

• Jamaica’s 12-month point-to-point (P2P) inflation for August 2024 was 6.5%, snapping 5 consecutive months of P2P inflation staying within the Bank of Jamaica’s (BOJ’s) 4% to 6% target range. August’s P2P inflation outcome was 1.4 percentage points (pp) higher than the P2P rate for July 2024 and is the highest since January 2024 at 7.4%.
• This P2P increase was primarily driven by monthly rises in the price of 'Food and Non-Alcoholic Beverages' and 'Housing, Water, Electricity, Gas, and Other Fuels'. The August P2P inflation jolt was anticipated by the BOJ in the aftermath of Hurricane Beryl given its impact on the price of agricultural produce. But it also negatively affected energy prices.
• In August 2024, the ‘Food and Non-Alcoholic Beverages’ division saw its highest monthly increase since the CPI revision in April 2020. Monthly food prices rose by 4.3%, driven by a 15.5% increase in ‘Vegetables, tubers, plantains, cooking bananas, and pulses,’ due to supply shortages following the damage wrought by Hurricane Beryl.
• The ‘Housing, Water, Electricity, Gas and Other Fuels’ division, which rose by 3.7%, had the second largest impact on the monthly inflation rate. This was largely influenced by a 10.6% increase in the group ‘Electricity, Gas and Other Fuels’ due to increased electricity rates.
• There was a temporary unavailability of Liquified Natural Gas (LNG) just before Hurricane Beryl. New Fortress Energy, the LNG supplier, took its gas facility offline as a precaution to protect it from potential hurricane damage. Consequently, local power provider JPS had to switch to a more costly alternative automotive diesel oil (ADO) which led to a 32% increase in the fuel rate for the July to August electricity billing cycle.
• Despite the diminishing impact of the October 2023 taxi fare hike on P2P expected next month, the BOJ still predicts that “while there will be an uptick in headline inflation over the next three to five months resulting from the effects of Hurricane Beryl, this uptick will be temporary”. Following this period, inflation is projected to be largely within the target range for the subsequent two years.
• In its communication following its latest meeting, the BOJ’s Monetary Policy Committee (MPC) emphasised that current economic conditions are favourable for sustaining low, stable, and predictable inflation going forward which could pave the way for further rate cuts. This viewpoint remains unchanged despite preliminary estimates suggesting a significant slowdown in Q2 GDP and the expected contraction in Q3, attributed to the ongoing effects of Hurricane Beryl.

(Source: STATIN, BOJ & NCBCM Research)

• The Bank of Jamaica (BOJ) is holding consultations with key stakeholders on the Twin Peaks Model as it looks to implement a practice period before supporting legislation is passed.
• Discussions are underway with the Insurance Association of Jamaica (IAJ), Jamaica Bankers Association (JBA), Jamaica Securities Dealers Association (JSDA), Pension Industry Association of Jamaica (PIAJ) and other stakeholders.
• This was disclosed by BOJ’s Governor and Financial Services Commission (FSC) Chairman, Richard Byles, during the inaugural IAJ business conference at the Jamaica Pegasus Hotel on September 11^th.
• The Twin Peaks aims to restructure oversight responsibilities in the local financial sector. The BOJ will oversee all financial institutions from a prudential perspective, focusing on balance sheets, profit and loss, and other operational aspects. Meanwhile, the FSC will oversee financial market conduct and customer protection.
• According to Mr. Byles, although the Twin Peaks legislation is not anticipated to be enacted until 2026, some aspects need to be implemented beforehand. These aspects encompass enhanced market conduct standards and consumer protection, similar to the recent ABM operation guidelines for deposit-taking institutions.
• Mr. Byles said the discussions will also enable stakeholders from the various groups to raise any concerns about the new regulatory model. “It is a way for them to see what we want and for us to know what is possible, and what may be a bit too far at this point in time,” the Governor further stated.

(Source: JIS)

• While data on cyber risks in Trinidad and Tobago are limited, evidence and public reports suggest that firms have been experiencing various types of cybercrime, including ransomware, phishing, and data breaches, leading to significant losses, according to the Central Bank of Trinidad and Tobago's (CBTT) latest financial stability report.
• 'Trinidad and Tobago witnessed a surge in cyberattacks affecting public and private sector organisations in 2023. The country's increased adoption of digital technologies and the growing number of connected devices have amplified the vulnerability to such attacks. The Trinidad and Tobago Cybersecurity Incident Response Team of the Ministry of National Security reported a notable increase in successful attacks, particularly ransomware. Between 2019 and 2023, there were 205 successful cyberattacks, of which 52 occurred in 2023. Although specific details of the attacks were not available, some were publicly reported in 2023,' the Financial Stability Report 2023 stated.
• The CBTT stated that this country's insurance sector appeared to be the main target of cyberattacks, with four insurance companies reporting incidents during 2019-2023.
• 'These ranged from a ransomware attack in 2019, a malware attack in 2021, a data breach in 2022 involving less than 5% of accessed client-related information, and the detection of ongoing ransomware activity in 2023 with no evidence of data loss,' it stated.
• The report stated that the increased digitalisation of financial services, and the rise in e-payments and e-commerce in Trinidad and Tobago have led to greater exposure to cyber risks and challenges.
• Additionally, the report stated that financial institutions need to take steps to reduce their exposure to cyber risks, but that cybercrimes are constantly evolving and present an imminent risk to the financial industry's stability. Ultimately, the overall risk to domestic financial stability is characterised as 'elevated' given the pick-up in the number of cyberattacks and the ongoing expansion of the digital economy.

(Source: Trinidad Express Newspaper)

• Peru's economy has expanded for the fourth consecutive month in July 2024, fueled by all sectors except agriculture, official data showed on Sunday, September 15, continuing the country's recovery following a recession last year.
• For years, Peru has been one of South America's top economic performers. However, last year, the economy shrank 0.6%, affected by adverse weather, lower private investment and ripple effects from anti-government protests that hit mining.
• The 4.47% year-on-year growth in July according to the INEI, outdid an estimate from the chief economist of Peru's central bank last week, who expected expansion of around 4%. (The INEI is the Spanish acronym for the Government of Peru's National Institute of Statistics and Information),
• The chief economist expects larger investments to help the recovery, in line with the Peruvian government’s 2024 growth target of 3.2%. The July growth marks a significant jump from the month before when Peru, the world's third-largest copper producer, logged an economic expansion of 0.21%.
• Manufacturing in July rose 10.91%, while the mining and hydrocarbons sector expanded 3.10%, driven by metallic mining activity including growth in molybdenum concentrate and silver. However, production of zinc, copper and iron decreased.
• On the other hand, the agriculture sector shrank by 3.93%, due to smaller planted areas, weather issues and some early harvesting, which led to lower volumes of olives, dry beans, paprika, potatoes, cocoa and hard yellow corn.

(Source: Reuters)

• Despite three interest rate cuts since June, Canadian consumers still appear to be feeling more stressed than their neighbours in the U.S., where the Federal Reserve has yet to start any reductions in borrowing costs.
• The persistent financial pressure reflects the vagaries of the Canadian mortgage structure, a surge in rents and a heavy debt load carried by many households. All three have crimped disposable incomes. With more mortgage renewals imminent and high population growth, putting more upward pressure on rents, analysts and economists say Canadians will feel stressed well into next year and after, keeping economic growth muted.
• The outlook remains muted even though Canada got a head start in lowering borrowing costs. In June 2024, Canada was the first economic power to cut rates in the current cycle. It has followed up with two more cuts, bringing the key policy rate to 4.25%.
• Canada's inflation-adjusted per-person expenditure has fallen by 2% since the peak of 2022 and 1.1% annually in the second quarter, showing that consumers are reeling under the burden. By comparison, inflation-adjusted spending in the U.S. grew 2.7% annually in July and is generally considered to be in line with the pre-pandemic trend. This divergence mainly reflects the differing structure of Canadian and U.S. mortgages.
• "What you're seeing in the U.S. is a preponderance of 30-year fixed-rate mortgages," said Randall Bartlett, senior director of Canadian economics at Desjardins. "It's very predictable for households," he said. By contrast, most Canadian mortgages are either variable rate or adjustable after four or five years. For homeowners with low-interest loans now coming up for renewal, they can expect their payments to jump, even with the Bank of Canada's current series of cuts.
• About C$400 billion ($294.55 billion) worth of mortgages are set to renew in 2025, out of which more than two-thirds are four- or five-year contracts. The 2025 figure is more than 30% of the value of mortgages being renewed this year. "It's a wall of mortgage renewals coming up," Bartlett said, and added that this would keep many Canadians under stress way into 2025 and 2026.

(Source: Reuters)