• The United States reaffirmed the crucial nature of its partnership with the Caribbean Community (CARICOM) as a two-day meeting commenced in Grenada on Wednesday, January 10, 2024. 
• The Technical Working Group meeting, orchestrated by the United States Agency for International Development (USAID) in collaboration with the Grenada government and the CARICOM Secretariat, signals a significant step forward in the joint efforts to combat the pressing issue of youth crime and violence.
• USAID emphasises that the Caribbean Basin Security Initiative (CBSI) serves as a testament to the importance of adaptability in response to evolving circumstances. 
• This collaborative initiative underscores the commitment of the United States to work hand in hand with CARICOM nations in tackling shared challenges.
• Since its inception in 2010, the United States has been actively engaged with Caribbean governments through CBSI. The overarching goals have been to curtail illicit trafficking, enhance citizen security, and confront the underlying factors contributing to crime and violence in the region.

(Source: Caribbean National Weekly)

• According to the International Monetary Fund (IMF), global economic growth will remain "resilient" this year after a stronger-than-expected 2023, but work is needed to boost global growth rates above an anemic 3% range in the medium term.
• IMF spokesperson Julie Kozack explained that the global economy appeared headed for a "soft landing" with inflation subsiding and labour markets resilient, but low-income countries could still fall further behind.
• Kozack said dire predictions of recessions in many regions that were prevalent a year ago did not materialize in 2023. "So we've had a relatively resilient global economy so far. We expect that resilience to continue into 2024," Kozack said, noting that inflation was coming down.
• However, the news is "not all good" because recent and near-term growth of about 3% is lower than previous pre-COVID global average growth rates of around 3.8%. "So we do have work to do to lift global growth, especially over the medium term," she noted, adding that the situation pointed to the need for sound policies and reforms that could raise productivity.
• Asked if the economic resilience in 2024 would spread beyond the United States, Kozack said there is a divergence of fortunes among countries and regions, with a risk that low-income countries could fall further behind. "Low-income countries are having the hardest time recovering from a series of shocks, including the pandemic, the food and oil price shocks," as such, the Fund’s work in 2024 will have a strong focus on helping its most vulnerable member countries.

(Source: Reuters)

• The rocky path of getting inflation back to the U.S. Federal Reserve's 2% target rate reflected in the latest Consumer Price Index (CPI) figures suggests that it would likely be too soon for the central bank to cut its policy rate in March, Cleveland Fed President Loretta Mester said on Thursday.
• Overall consumer price inflation on a 12-month basis rose to 3.4% in December from 3.1% the month before. However, excluding volatile food and energy costs, the pace of price increases fell to 3.9% from 4%, showing ongoing moderation in underlying price pressures.
• "I think March is probably too early in my estimation for a rate decline because I think we need to see some more evidence," Mester said. "I think the December CPI report just shows there is more work to do, and that work is going to take restrictive monetary policy."
• Mester cited the need for goods, housing, and shelter, excluding housing categories in the inflation measurement to "see more progress" as well as for wage gains to slow. Earlier on Thursday, the difficulty in bringing inflation back down was underscored by a stronger-than-expected reading on price pressures as Americans paid more for shelter and healthcare.
• Furthermore, inflation figures followed the closely watched monthly jobs report last Friday, which showed a still-resilient labor market, with employers adding 216,000 jobs in December and annual wage growth edging up. The data could deter the Fed from rate cuts.
• Investors are still maintaining bets, though, that the Fed will begin to cut its policy rate at the following meeting in March, according to an analysis of fed funds futures contracts by the CME Group. The Fed's rate-setting committee next meets on January 30-31, when the central bank is expected to keep its policy rate unchanged in the current 5.25% - 5.50% range.

(Source: Reuters)

• According to the World Bank’s Global Economic Prospects Report (2024), Jamaica’s economic growth is projected to reach 2.0% in 2024, 0.3 percentage points (pp) above its previous estimate of 1.7% in its June 2023 report. 
• The upward revision to the growth forecast in 2024 reflects stronger external demand due to improved U.S. growth expectations, as well as higher-than-expected government spending. Inflation in the region is anticipated to continue slowing, converging to national targets by late 2024. As such, central banks are expected to continue reducing rates.
• Further, as monetary policy eases, investment growth is expected to pick up in 2024 and 2025. Consequently, the local economy is also expected to continue growing in 2025, albeit at a slower pace, with real GDP growth projected to reach 1.4%. 
• The drag on economic activity from earlier monetary policy tightening is expected to diminish throughout 2024. Additionally, the expected further easing in policy rates amid moderating inflation is set to bolster growth in 2025. 
• The Bank also revised its 2023 projection to 2.3% from the 2.0% estimate in June 2023.
• However, it is important to note that there are downside risks to the forecast, including a possible escalation of the conflict in the Middle East, which could disrupt energy markets and send oil prices soaring. Additionally, persistent core inflation in advanced economies could lead to higher-than-expected global interest rates and tighter financial conditions, constraining monetary and fiscal policies in Latin America and the Caribbean. Lastly, the ongoing El Niño weather pattern heightens the risk of climate-related disruptions and disasters. 

 (Sources: World Bank and NCBCM Research) 

• Local Coffee farmers will be prioritised under the new Food Security, Agribusiness Development, Climate Smart Technologies and Export Expansion (FACE) initiative, says Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green.  
• The Minister disclosed that in the next financial year, they will launch the Crop Restoration and Establishment Programme (CREP), which is focused on rebuilding Jamaica’s coffee industry.  
• “It is tailored to suit 5,000 coffee farmers and 102,000 farm families. We’re going to be focusing on sustainable growth by ensuring that we embark on our biggest ever replanting programme that Jamaica has seen for Blue Mountain Coffee,” Mr. Green said.
• The Minister underscored that, like other agricultural crops, coffee farmers are affected by harsher climatic conditions, ageing farming populations, and increased costs for agricultural inputs. Over the next three to five years, he said, the objective is to increase output to 450,000 boxes of coffee and boost farmer productivity.
• This anticipated boost in local coffee production should bode well for companies such as Salada Foods, whose revenues and earnings would have been severely impacted due to the limited availability of Jamaican green coffee beans necessary for production of its coffee products. 

(Sources: JIS & NCBCM Research) 

• The World Bank, in its Global Economic Prospects report for Latin America and the Caribbean, noted that in 2023, the region experienced a significant economic slowdown, growing just 2.2%, down from 3.9% in 2022. This deceleration came within the context of heightened inflation, tight monetary conditions, weak global trade, and adverse weather events.
• “The economic outlook for the region suggests a gradual recovery, with growth projected to increase to 2.3% in 2024 and 2.5% in 2025. While the lingering effects of previous monetary tightening will continue to influence near-term growth, their impact is expected to diminish. As inflation slows, central banks are expected to reduce interest rates, alleviating obstacles to investment growth, the World Bank reported.
• The World Bank noted that excluding Guyana, which is experiencing a resource boom, Caribbean economies are expected to grow by 4.1% in 2024 and 3.9% in 2025, partly due to the ongoing expansion of the tourism sector.
• The Bahamas is estimated to have registered growth of 4.3% in 2023, then fall to 1.8% in 2024 and 1.6% in 2025. Barbados, which registered growth of 4.6% last year, will record 4.0% and 3.0% growth over the next two years.
• Similarly, Belize's estimated 4.5% growth last year is predicted to fall to 3.5% and 3.3% in the next two years. St Lucia's 3.2% economic growth in 2023 will decline to 2.9% and 2.3% over the next two years.
• Regarding the region's downside risks, the World Bank anticipates that escalating geopolitical tensions, especially in the Middle East, could disrupt energy markets and cause oil prices to surge.

(Source: World Bank Group)

• Mexico's headline inflation accelerated for the second month in a row in December while the closely watched core rate maintained its downward trend, official data showed on Tuesday.
• Annual headline inflation in Latin America's second-largest economy hit 4.66% in December, statistics agency INEGI said, overshooting the 4.55% expected by economists polled by Reuters and up from 4.32% in the previous month.
• The breakdown of the data showed that last month’s rise in the headline rate was due to stronger non-core inflation. Specifically, a spike in agricultural prices, with fruit and vegetable inflation hitting a two-year high.
• That said, core inflation, which strips out some volatile energy and food prices, posted its 11th consecutive monthly decline. The annual rate hit its lowest since September 2021 at 5.09%.
• Mexico's central bank has maintained a "slightly hawkish" posture in its monetary policy. It intends to sustain its key interest rate at a record peak of 11.25% while it waits for inflation to go back to the target of 3%, plus or minus one percentage point.
• "This was a poor end to the year," Pantheon Macroeconomics' Chief Latin America Economist Andres Abadia expressed, but added the general inflation picture continues to improve at the margin, and he expected headline and core inflation to decline consistently over the coming months.

(Source: Reuters)

• China's central bank faces a major hurdle in quelling the threat of deflation. Deteriorating asset quality from the property crisis and local government debt woes are pressuring central bankers to release liquidity into the banking system by cutting reserve requirements to fend off any risks of a funding crunch.
• The People's Bank of China (PBOC) is under pressure to cut interest rates as falling prices raise real borrowing costs for private businesses and households, curbing investment, hiring, and consumer spending. The PBOC's predicament highlights the need for the government to accelerate structural reforms that boost consumption, addressing a long-standing deficit in policies promised for 2023.
• However, both moves share a common problem: demand for credit in China mainly comes from the manufacturing and infrastructure sectors, whose overcapacity issues are exacerbating deflationary forces in the economy.
• Weak private sector demand for credit, reflected in falling money supply ratios, emphasizes the necessity for policies that enhance private business confidence. Despite the PBOC's efforts to ease monetary policy, weak private sector demand, rising real borrowing costs, and structural imbalances pose challenges.
• Additional monetary easing may carry the risk of increasing deflationary pressures, and analysts emphasize the importance of a comprehensive approach involving fiscal policy, and structural reforms to stimulate demand and economic growth.

(Source: Reuters)

• The International Labour Organization (ILO) forecasts a slight increase in the global unemployment rate, reaching 5.2% in 2024. This is attributed primarily to rising joblessness in advanced economies.
• The ILO's 2024 World Employment and Social Outlook report identifies deceleration in global growth as a key factor contributing to a modest fall in labour market performance. The report notes that after a brief post-pandemic recovery, aggregate labour productivity growth has slowed.
• The report raises concern about high-income countries, highlighting an anticipated negative turn in employment growth in 2024. It suggests that only modest improvements are expected in 2025, contrasting with more robust job gains in low-income and lower-middle-income countries over the next two years.

 (Source: Reuters)

• National Baking Company’s chairman, Butch Hendrickson, unveiled plans for a new $6.7Bn bread plant during the company’s announcement ceremony at the Hilton Hotel and Spa in Rose Hall, St. James, on January 8.
• Chairman Butch Hendrickson noted that the forthcoming 120,000-square-foot plant, to be built in Catherine Hall, will be a modern facility designed to increase efficiency and boost exports. He also mentioned that it will enhance operations, addressing the growing demand in the west for National’s products.
• “This investment will enable us to produce over 3,600 loaves of bread per hour, meeting our commitment to deliver fresh products faster,” he pointed out.
• The plant’s completion is scheduled for 2025 and will include new distribution centres across the island, with the first nearing completion in Mandeville. This strategic expansion will not only allow it to expand its footprint but also enhance its customer reach. The addition of the new bread plant and distribution centres positions the company to potentially capture a larger market share, particularly in western Jamaica.
• National Baking Company is the leading baked goods manufacturer in Jamaica. It was established in 1952 and is currently operating as a privately owned company.

(Source: JIS & NCBCM Research)