• Petrojam Limited, the government-owned oil refinery, plans to build an extra asphalt storage tank this year to increase its inventory capacity and meet the rising demand for its products.
• This move comes in light of anticipated increases in asphalt sales volumes from 154 kilo-barrels in the fiscal year 2023/24 to 234 kilo-barrels in 2024/25, supported by a planned capital expenditure of US$22.54Mn.
• The Jamaica Public Bodies Estimates of Revenue and Expenditure for the fiscal year ending March 2025 detail this and other scheduled activities by Petrojam. Additionally, the company's operational plan for 2024/25 includes 71 days allocated for essential capital maintenance and improvements to the plant.
• During this period, work will be undertaken to facilitate, among other things, catalyst regeneration, electrical infrastructure upgrading, replacement of pipelines, recycling of compressors as well as effecting of repairs to several tanks across the entity’s plant on Marcus Garvey Drive in Kingston.
• Amid the rising demand, Petrojam aims to increase its crude oil sales to 14.14Mn barrels in 2024/25, up from 12.68Mn barrels the previous year.
• Petrojam Limited, the island’s sole oil refinery, was incorporated in October 1982 as a wholly owned subsidiary of the Petroleum Corporation of Jamaica (PCJ). The facility processes crude oil, sourced primarily from Brazil, Ecuador and Colombia, into various finished products, including liquefied petroleum gas (LPG), auto diesel oil, turbo fuel, heavy fuel oil, asphalt, and unleaded gasoline.

(Source: JIS)

• Concerns were voiced that Bahamas Power & Light’s (BPL) new rate structure could undermine economic competitiveness and increase inflation by raising energy costs for many businesses.
• Jobeth Coleby-Davis, Minister of energy and transport, wrote to Tribune Business that BPL’s revised fuel charge arrangement, effective July 1, 2024, applies to “all classes” of customers, meaning residential as well as businesses of all sizes.
• The changes, described as the Equity Rate Adjustment, will give all consumers a 2.5 cent per kilowatt hour (kWh) discount on the first 800 kWh that they consume. But, above that threshold, BPL customers will have to pay a 1.5% charge for every kWh used over and above BPL’s actual cost of fuel.
• The Prime Minister’s Office, giving an example of how this would work, said: “If the [actual fuel charge] is 20 cents per unit (kWh), then the customer will be 17.5 cents per kWh for the first 800 units (kWh). The remaining units (kWh) will be billed at 21.5 cents.”
• However, multiple business community sources pointed out that enterprises of all sizes consume significantly more energy than 800 kWh per month, especially during the upcoming summer period.
• The Bahamian private sector is already faced with higher National Insurance Board (NIB) contribution rates and the insurable wage ceiling come July 1. The revised BPL rate structure is now another consideration entering their strategic planning mix.
• These increases could undermine the competitiveness of these businesses and erode earnings. It could also result in a higher passthrough of prices to customers, resulting in lower demand and higher inflation,.
(Sources: The Tribune & NCBCM Research)

• Antigua and Barbuda's tourism sector saw a record number of air arrivals in April 2024, up 7.8% relative to pre-pandemic levels. The Minister of Tourism reported to Cabinet that, 126,000 air arrivals from January to April 2024, surpassing the previous record of 118,000 arrivals during the same period in 2019.
• These impressive figures exclude arrivals from the 4th International Small Island Developing States (SIDS) Conference and the ICC T20 World Cup. This implies that the figure would likely be higher once reviewed.
• The United States remains the primary source market for visitors, followed by the UK, Canada, and the Caribbean.
• Antigua and Barbuda’s economy has sustained robust growth following the pandemic and is now expected to build on this in 2024. The dual-island is expected to grow by 4.75% this year, after growing by 3.86% in 2023. Notably, real economic activity is forecasted to return to pre-pandemic levels this year, driven by a rebound in tourism and construction activity - the two major contributors to GDP
(Sources: Loop Caribbean News & NCBCM Research)

• The U.S. Federal Reserve may have just ducked out of the presidential campaign spotlight with a fresh set of forecasts showing no interest rate cuts are likely until after Election Day.
• They issued projections showing greater hesitance than before about starting reductions in high borrowing costs that have made it more costly for Americans to buy anything on credit. This dynamic contributed to consumers' persistently poor view of the economy and Democratic President Joe Biden's management of it.
• As recently as March, Fed officials were forecasting interest rates would fall by 75 basis points this year, an outlook that would have meant cuts beginning this summer and continuing up to the Nov. 5 presidential election. That could have opened the Fed to criticism that it was tilting the scales late in the rematch between Biden and Republican former President Donald Trump.
• Now though, amid stickier-than-expected inflation and a still-strong job market, officials have scrapped that forecast for one with just a single quarter-point cut this year, suggesting no action is likely before their final meeting of the year in December. A delay until after the election could now be a headwind for Biden, who polls show receives low marks for his handling of the economy, despite near-record low unemployment, record-high household wealth and above-trend growth.
(Source: Reuters)

• China's consumer inflation held steady in May while producer price declines eased, but the underlying trend suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.
• Weak consumption in China has kept a lid on consumer prices since 2023 despite many rounds of support measures as confidence remains low amid a protracted property sector crisis. Economists say a further round of stronger and coordinated fiscal and monetary stimulus steps are required to sustainably increase demand.
• China’s consumer price index (CPI) rose 0.3% in May from a year earlier, matching a gain in April, data from the National Bureau of Statistics (NBS) showed on Wednesday, below a 0.4% increase forecast in a Reuters poll. Producer prices, which have been stuck in deflation since September 2022, fell at a slower 1.4% pace in May after contracting 2.5% in April, compared with a forecast 1.5% decline.
• "For investors, the key question is whether China's PPI inflation could turn positive in the second half of this year, given the recent rise in commodity prices, particularly copper," said Zhou Hao, chief economist at Guotai Junan International. "Overall, today's inflation report suggests that a moderate reflation is still ongoing, while a low inflation is likely to remain the base case," Zhou added.
• China has also vowed to create more jobs linked to major projects, roll out measures to promote domestic demand targeted for youths and pledge greater fiscal stimulus to shore up growth.
(Source: Reuters)

• OMNI Industries Limited (OMNI) successfully listed on the Jamaica Stock Exchange (JSE) Junior Market and began trading under the symbol OMNI, on Tuesday, June 11, 2024. OMNI is the first listing on the Junior Market for 2024.
• Dr. Marlene Street Forrest, Managing Director of the JSE, stated, “This augur[s] well for the economy and for wealth creation and for long-term investment. Despite the challenging times, OMNI’s 500,000,000 Ordinary Shares were oversubscribed. Its Initial Public Offer (IPO) allowed the Company to raise capital of $500m and to add 2,686 investors to its register of shareholders.”
• Mr. Patrick Kumst, OMNI’s Managing Director, said, “Looking ahead, our strategic vision is clear. We plan to modernize our operations by upgrading our existing equipment and investing in new more efficient machines. This is not only to enhance our production capacity but also to drive operational efficiencies and cost savings. We are also committed to expanding our product offerings and exploring new markets in the Region.  Innovation and operational excellence are at the heart of our journey.”
• On its first day of trading, the availability of OMNI’s shares on the Junior Market was met with high demand and trading of OMNI’s shares had to be halted due to the vigorous demand for the stock and an increase in price, which triggered the JSE’s Circuit Breaker Rule.
• The JSE’s Circuit Breaker Rule is activated when a stock’s price rises above 15% or falls below 15% of its price during the trading day. OMNI began trading at a list price of $1.00 and increased to $1.30 at the end of its first trading day, on Tuesday. This represents a 30% increase in the stock price.

(Source: JSE)

• Minister of Finance and the Public Service, Dr Nigel Clarke, announced plans for Jamaica's financial sector regulation under the Twin Peaks Model. This model will see the Bank of Jamaica (BOJ) supervising banks and non-bank financial institutions for prudential matters while the Financial Services Commission (FSC) will focus on market conduct and consumer protection.
• Clarke was speaking during a statement to the House of Representatives on Tuesday (June 11). He said a Twin Peaks Concept Paper, which outlines the legal and operational contours of the model, was prepared and submitted for his approval by the BOJ-FSC Twin Peaks Steering Committee, Chaired by Central Bank Governor, Richard Byles, in 2023
• “The Concept Paper has been approved and we are now in the final stages of the preparation of a Cabinet Submission for the consideration and approval of Cabinet, following which formal drafting instructions will be issued for the development of the Bill to address proposed changes to the law to give effect to the Twin Peaks Model of Financial Regulation in Jamaica,” the Minister stated.
• He noted that now, it would be better to focus the limited resources on developing legislation for a comprehensive and robust regulatory framework that the Twin Peaks model will deliver, rather than interim legislation to address consumer protection gaps for financial services.
• He further noted that given the timelines and urgent need to begin addressing some of the deficiencies identified in the shortest possible time. The Steering Committee proposed that a period of Practice of the Twin Peaks arrangements, within the constraints of the existing statutory provisions, occur before the legal cutover from the current framework to the new model.
• The Twin Peaks Practice Period is intended to enable capacity building and closer collaboration between the regulators, pending the legislation’s passage, to enable the model’s implementation. In anticipation of the proposed legislative changes, the objective of the practice is to prepare team members for Twin Peaks implementation through opportunities for real-world experience supervising and regulating deposit-taking institutions (DTIs) and non-DTIs, within the constraints of the existing regulatory framework.

(Source: JIS)

• The World Bank approved a project to help Guyana adapt to climate change and reduce flood risk in its coastal regions. This initiative is set to benefit around 320,000 people, approximately 40% of the country’s population, including the most vulnerable.
• Guyana is among the most vulnerable countries to climate change. Studies have shown that rising sea levels expose 100% of the country's coastal agriculture and 66.4% of its coastal urban areas to flooding and erosion, with potential GDP exceeding 46.4%.
• The new Coastal Adaptation and Resilience Project, valued at US$45Mn will build on existing efforts to enhance flood risk management in Guyana. The project will repair or replace more than 45 drainage infrastructure assets, focusing on sluices. A Sluice is a sliding gate or device for controlling water flow.
• The project will work closely with Guyana’s Ministry of Agriculture to help it effectively manage and operate the drainage system. It will upgrade the National Drainage and Irrigation Authority's asset management system, develop technical standards for flood risk management in urban areas, and provide training to enhance personnel capacity for system operation and maintenance.
• Adverse climate shocks are key challenges that could negatively impact the Guyanese economy and weaken the macroeconomic outlook. Receiving funding like this from the World Bank, along with funding from the Food and Agriculture Organisation of the United Nations (FAO) toward Climate-Smart Agriculture and Food Systems should boost climate change adaptation while investing steadily in people, physical infrastructure, and institutions.

(Sources: The World Bank Group & NCBCM Research)

• Consumer prices in Brazil accelerated more than expected in May, data from statistics agency IBGE (the Brazilian Institute of Geography and Statistics) showed on June 11, 2024. A jump in food costs helped drive annual inflation further from the central bank's target.
• Prices as measured by Brazil's benchmark IPCA (the Extended National Consumer Price) index rose 0.46% last month, above the market forecast of 0.42%, according to a Reuters poll of economists, up from the 0.38% increase in April.
• Meanwhile, 12-month inflation in Latin America's largest economy hit 3.93%, up from 3.69% in the previous month and above the expected 3.89%. The statistics agency noted that recent devastating floods in the Rio Grande do Sul, a major farming state, contributed to the rise in food costs and the inflation outturn.
• The data puts the monetary authority's ongoing easing cycle at risk, economists say, with investors pricing in a pause in the rate-cutting process when policymakers meet again later this month.
• In May, Brazil’s central bank cut its benchmark rate by 25 basis points (0.25%) to 10.50% after six reductions twice that size. Board members have voiced concerns about rising inflation expectations for this year and the next. The bank targets a 3% inflation rate, with a tolerance band of plus or minus 1.5 percentage points.

(Source: Reuters)

• The Federal Reserve held interest rates steady on Wednesday and pushed the start of rate cuts to as late as December.
• With growth and unemployment lodged at levels better than the U.S. central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates unchanged until the economy signals that something else is needed. These signals include a more convincing decline in price pressures or a jump in the unemployment rate.
• So far, Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and there was no reason to think that can't go on.
• The result is the Fed expecting a slow decline in inflation back towards its 2% target, with their preferred inflation measure - the personal consumption expenditures (PCE) index - virtually unchanged at the end of this year from its current level and the number of rate cuts held to a single 25 basis point reduction. However, rate cuts are projected to gather pace next year, with Powell deferring on the timing.
• Inflation data published hours before the policy statement release and updated projections showed the consumer price index (CPI) was flat month-over-month (MoM) in May, causing some analysts to argue the latest projections were already "stale."
• Investors in contracts tied to the Fed's benchmark interest rate largely kept bets intact that the central bank would approve quarter-percentage-point reductions in September and December.
• Under the current projections, absent a surprise in upcoming inflation or jobs data, the cuts would likely not begin until December, moving the Fed's decision out of the Nov. 5 U.S. presidential election cycle.

(Source: Reuters)