• On May 8, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Trinidad and Tobago. The group noted that for the first time in a decade, Trinidad and Tobago is undergoing a gradual and sustained economic recovery.
• Real Gross Domestic Product (GDP) is estimated to have further expanded by 2.1% in 2023, reflecting a strong performance of the non-energy sector. Further to this, economic growth is projected to gain momentum in 2024, supported by the non-energy and energy sectors.
• Inflation has declined sharply, mainly due to decelerating global food and imported goods prices. Banks’ credit to the private sector continues to expand, and the financial sector appears sound and stable. Inflation is projected to remain low throughout 2024.
• The current account is estimated to have remained in a surplus in 2023, and international reserve coverage is adequate at 8.3 months of prospective total imports. However, the current account surplus will narrow mainly due to a decline in energy prices and energy exports, which is estimated at 5.7% of GDP in 2024. Overall, international reserve coverage is expected to remain adequate at 7.5 months of prospective total imports.
• On the fiscal front, the fiscal deficit in FY 2023 continued supporting the recovery and was better than budgeted, while public sector debt remained below the authorities’ soft debt target. The fiscal position is projected to remain adequate, reaching a deficit of 2.7% of GDP in FY2024. This reflects lower energy revenues, increased capital spending, and a higher wage bill due to the long-standing public wage settlement with some unions.
• The balance of risks is tilted to the downside in the near term, but there are upside risks in the medium term. In the near term, downside risks stem from external factors affecting energy markets (e.g., an abrupt global slowdown) and domestic sources, such as disappointments in energy production (e.g., delays to new projects or unexpected disruptions to current production). In the medium term, upside risks stem from new natural gas projects and the implementation of planned structural reforms, which could boost growth.

 (Source: IMF)

• At the United Nations (UN) Small Island Developing States (SIDS4) meeting, Prime Minister of Antigua and Barbuda, Gaston Browne, made a significant move by signing a declaration of intent to join CAF - Development Bank of Latin America and the Caribbean.
• Antigua and Barbuda's intention to join CAF marks a strategic move toward accessing vital long-term financial resources and technical cooperation grants aimed at advancing sustainable development. Collaborative efforts with CAF will primarily target critical areas such as climate action, green growth, sustainable tourism, energy transition, and the blue economy.
• "We are very happy to celebrate Antigua and Barbuda's intention to join CAF," said Gaston Browne. "We are fully aligned and ready to work together on the opportunities that CAF can provide to small Caribbean islands like Antigua and Barbuda to achieve greater well-being for their inhabitants."
• CAF's Executive President, Sergio Díaz-Granados, remarked, "The growing partnership between Antigua and Barbuda and CAF demonstrates our commitment to providing Caribbean SIDS with new options for development financing to support the Caribbean with tackling development issues that are affecting their communities."
• CAF was established in 1970 by six Andean countries: Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela. Since then, its shareholder base has expanded to include 21 countries and 13 private banks. With assets exceeding $53Bn and a project portfolio surpassing $34Bn, CAF stands as one of the primary sources of multilateral financing in the region.
• Currently, Trinidad and Tobago, Jamaica, and Barbados represent the CARICOM member countries of CAF. The Bahamas, Dominica, and Grenada also have access to the technical, financial, and knowledge services offered by the organisation.

(Source: CAF)

• The U.S. Federal Reserve will cut its key interest rate in September and once more this year, according to a majority of forecasters in a Reuters poll that also showed a significant risk the Fed opt for only one or none at all.
• Economists in Reuters surveys over the past few months have remained consistent in predicting two cuts, unlike markets, which until last week were pricing in one in November before flipping back to two. That shift in fed funds futures bets was partly because official data showed the U.S. economy expanded at a slower pace last quarter than estimated earlier, even as key inflation measures remained sticky.
• However, inflation, and particularly the personal consumption expenditures (PCE) price index, which the Fed targets at 2.0%, has remained elevated. Taken together with very low unemployment, that makes an early Fed rate cut very unlikely. None of the measures of inflation - the Consumer Price Index (CPI), core CPI, PCE, and core PCE - were expected to reach 2% until at least 2026, according to median forecasts in the poll.
• "The Fed will be raising its inflation forecast at the June meeting and...it would look odd to raise your inflation forecast and then cut rates quickly after that," said Michael Gapen, chief U.S. economist at Bank of America, who expects just one cut this year, in December. "Our baseline is the economy remains resilient but growth is softening on the margin. The labour market is cooling on the margin. So, the next move is a cut. But I think the primary risk to our baseline is the Fed just doesn't cut...and the labour market doesn't look all that weak to me right now," Gapen added.
• Still, nearly two-thirds of economists, 74 of 116, in the May 31-June 5 Reuters poll predicted the first cut in the fed funds rate to a 5.00%-5.25% range would come in September. Around 60.0% of participants in the latest poll, 68 of 116, predicted two quarter-point cuts this year, broadly unchanged from last month's survey. A sizeable 28.0% minority of economists, 33 of 116, saw only one rate cut this year or none.

(Source: Reuters)

• On Wednesday, the Bank of Canada (BoC) trimmed its key policy rate by 25 basis points to 4.75%, the first G7 country to do so, in a widely expected move that marked its first cut in four years. The Bank also said more easing was likely if inflation continued to ease.
• The bank had increased interest rates by 475 basis points in the space of 16 months until July 2023 and since then had kept it steady at 5%. However, after keeping interest rates at a more than two-decade high of 5% for almost a year, the BoC said the indicators for underlying inflation looked increasingly positive.
• Inflation in Canada has slowed this year to hit a three-year low of 2.7% in April. However, while inflation has stayed below 3% for four months in a row, it is still higher than the Bank's 2% target. Consequently, Governor Tiff Macklem stressed that the timing of the next cut would depend on whether inflation continued its downward trajectory and the economy evolved in line with the bank's expectations.
• "If inflation continues to ease, and our confidence that inflation is headed sustainably to the 2% target continues to increase, it is reasonable to expect further cuts to our policy interest rate," Macklem said in an indication of what future reductions could look like.
• Economists have questioned whether the BoC is running the risk of diverging too much from the Fed. To this Macklem said, “There are limits to how far we can diverge from the United States, but we're not close to those limits."
• On the other hand, some economists predicted the BoC would cut again in July even though financial markets had priced in a 39% chance of a cut to 4.50% next month. The next rate announcement is due on July 24, when the bank will also release its latest quarterly forecasts.

 (Source: Reuters)

• The Jamaica Stock Exchange (JSE) has suspended the trading of shares of two (2) companies for not filing their Audited Financial Statements for 2023.
• Effective at the end of trading on Tuesday, June 4, 2024, trading in the shares of Equityline Mortgage Investments Corporation Limited’s Preference Shares, a Main Market company, and EduFocal Limited’s Ordinary Shares, a Junior Market company, was suspended by the Jamaica Stock Exchange.
• The decision to immediately suspend trading in the shares of Equityline Mortgage Investments Corporation, pending the submission of its 2023 audited statement, is in keeping with JSE’s Main Market Rule 408 (iii) – Audited Annual Financial Statement, which states that “Companies with audited annual financial statements which are ninety (90) days overdue, shall have trading in their shares suspended until the reports are submitted to the Exchange.”
• Additionally, Edufocal Limited was in breach of JSE’s  Junior Market Rule Appendix 2, part 4 (2), which states that Junior Market Companies who do not submit audited financial statements as required by Part 4(2) of Appendix 2 within 90 days of the date on which they are due for submission to the JSE may be suspended from the Junior Market until they can submit the same.
• Mortgage Investments Corporation Limited and Edufocal Limited join iCreate on the list of companies suspended from trading since the start of the year.

 (Source: JSE)

• China's Ambassador to Jamaica, Chen Daojiang, recently reinforced the strong friendship between Kingston and Beijing, highlighting a range of initiatives aimed at strengthening their bilateral ties.
• This year, China has hosted training sessions for 42 Jamaicans, showcasing the continued educational cooperation. To further strengthen community bonds, the embassy will acknowledge local organisations that have cultivated a friendly relationship with China.
• Moreover, to facilitate international exchanges, China has implemented various visa policy reforms. Eligible visa applicants are now exempt from fingerprint requirements, will receive a 25% discount on visa fees, and can take advantage of an appointment-free visa application procedure. These changes are expected to facilitate smoother travel and interaction between the citizens of both countries.
• The trade relationship between Jamaica and China have been flourishing,. In 2023, China was Jamaica's second-largest trade partner, accounting for 8.0% of the country’s total imports, with the US being ranked as the main trade partner at 40.6%..
• Consequently, Ambassador Chen looks forward with optimism, highlighting opportunities for expanded collaboration in sectors such as trade and investment, renewable energy, agriculture and fisheries, the digital economy, and the blue economy. These sectors present ample opportunities for mutual growth and development in the coming years.

(Sources: Caribbean National Weekly & NCBCM Research)

• Brazil's economy rebounded in the first quarter from a sluggish second half of 2023 on stronger private investments and household demand amid a robust labour market, official figures showed on Tuesday, June 4.
• While the data supports a more optimistic outlook for Latin America's largest economy than earlier this year, concerns remain about the impact of historic flooding in southern Brazil, which has left a trail of destruction and pushed up food prices.
• Brazil's gross domestic product (GDP) expanded by 0.8% in the three months through March, gaining momentum from a revised 0.1% contraction in the prior quarter, according to the government statistics agency Brazilian Institute of Geography and Statistics (IBGE).
• Economic growth from the prior quarter was in line with the 0.8% median forecast in a Reuters poll of economists, while the 2.5% year-on-year rise exceeded the expected 2.2% growth.
• The stronger momentum has been fueled by a strong labour market, which spurred household consumption 1.5% higher from the previous quarter, while government spending remained flat.
• The Finance Ministry's economic policy secretariat (SPE) acknowledged that growth is expected to slow in the second quarter, reflecting the calamity in Rio Grande do Sul (severe climate events that claimed lives and will likely reduce economic activity). "Even with the positive result similar to that projected by SPE in the first quarter, uncertainties remain regarding the growth estimate for 2024," it said.

(Source: Reuters)

• Economic Intelligence Inc., a consulting firm based in San Juan, Puerto Rico, along with its subsidiary in Santo Domingo, organized a forum titled “Trade and Investment Opportunities” between Puerto Rico and the Dominican Republic.
• The event aimed to convene a gathering of business leaders and government officials to foster increased investment and trade between the two largest economies in the Caribbean. Both countries boast a gross domestic product (GDP) of approximately RD$113Bn and PR$116Bn, respectively. Bilateral trade between the two islands stands at around $1,200Mn annually, with the current trade balance favouring the Dominican Republic at $400Mn.
• An analysis conducted by economists Ellen Pérez-Ducy, the manager of the Economic Intelligence subsidiary in Santo Domingo, and Gustavo Vélez, CEO of the San Juan-based firm, underscored the vast potential for expanding this exchange. They emphasised that significant growth could be achieved with the right strategies, led by the private sectors of both countries with support from their respective governments.
• Former Governor Luis Fortuño inaugurated the forum, highlighting the opportunities for both neighbouring islands to attract manufacturing and investments from the United States and Asia. This is driven by the need for “nearshoring” and the revival of the concept of twin plants.
• The forum highlighted the need for skilled personnel in Puerto Rico to supply the Dominican Republic and explored potential collaborations in waste management and construction projects. The consensus among businessmen from both countries was that there are ample opportunities for collaboration in the technology industry and leveraging tourism marketing to attract new markets.
• They emphasised that both islands are natural partners for cultural and economic reasons and emphasized that collaboration between businessmen and governments could unlock significant potential for increasing bilateral trade.

(Source: Dominican Today)

• The U.S. job market in April cleared a key hurdle in its slow return from the COVID-19 pandemic when a wonky economic chart known as the "Beveridge Curve" finished its own journey from where it had shifted during the health crisis back to where it was in 2018 to 2019.
• The Beveridge Curve plots the relationship between job openings and the unemployment rate, and data released on Tuesday further validates an idea floated by Federal Reserve Governor Christopher Waller in mid-2022 that, counter to the idea that inflation could only fall with a large rise in the unemployment rate, the pandemic's elevated level of job openings pointed to an alternate path.
• A drop in job openings could create the economic "slack" needed for inflation to fall without much change in actual joblessness - returning the Beveridge Curve to where it was. As of April, that appears to be what has happened.
• The story isn't completely written: Inflation, which was running at 2.7% in April based on the Fed's preferred measure, is not back to the U.S. central bank's 2% target, and recent progress has been sluggish. However, measures of what's happening in the labor market are looking increasingly like they did before the pandemic.
• The Beveridge Curve is not one of the marquee economic concepts beyond the community of labor experts, but it has had a moment during the pandemic, with a large shift at the start of the health crisis and now a round trip back. Still unresolved is whether further progress on inflation - the so-called "last mile" - will require a move along the normal part of the curve, with further declines in job openings associated with rising unemployment.
• By the spring of 2022, the Bureau of Labour Statistics estimated that there were more than two open jobs for each unemployed person. The number before the pandemic never went much beyond 1.24. In April, it had returned to 1.24, a steady realignment between the demand for workers and those available to fill jobs.

(Source: Reuters)

• Growth in non-oil business activity in Saudi Arabia eased in May as new orders rose at the slowest pace in 25 months, a survey showed on Tuesday. The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index fell to 56.4 in May, from 57.0 the previous month, and was the second lowest reading in 22 months. A reading above 50 marks growth in activity.
• The output sub index slipped to 60.1, its lowest level since January, and down from 61.9 in April, although it remained firmly in expansion mode, with growth supported by demand and the completion of pending orders.
• The sub index for new orders hit its lowest level in just over two years at 59.5, down from 61.0 in April, with slowing market conditions and increased competition cited as reasons for the deceleration. Overall numbers, though, continue to indicate strong demand for non-oil sectors, which are a top priority as the kingdom weans itself off an oil dependency and has accelerated policies to drive investment into tourism and construction and expand the private sector.
• "However, the surge in demand has also led to price pressures impacting input prices and staff costs, although the increase in output prices has been observed at a slower pace," said Naif Al-Ghaith, Riyad Bank's chief economist.
• "This balancing act reflects the challenges faced by businesses in managing costs while trying to capitalize on the expanding market," he added. Confidence among businesses about the 12-month business outlook dropped in May to the weakest level since January.

(Source: Reuters)