• The government of Barbados may have to allocate millions of dollars to continue bailing out some cash-strapped state-owned enterprises (SOEs).
• A new Fiscal Risk Statement from the Ministry of Finance says there is evidence that several SOEs, including the Barbados Agricultural Development Marketing Inc. (BADMC), the Caribbean Broadcasting Corporation (CBC), and the Transport Board are likely to be short of cash and other liquid resources needed to pay their debts this year.
• The authorities say this means that “given the traditional reliance on Government to settle arrears of the SOEs in times where they have been cash-strapped, there is a high risk that these entities may require unbudgeted subventions during the fiscal year 2024/25”.
• In the 2024 Fiscal Risk Statement, which is a requirement of the Public Finance Management Act of 2019, the Ministry of Finance said “weak revenue growth for most commercial enterprises and a high reliance on Government subventions to meet operating expenses have meant consolidated net losses of commercial, public enterprises before subventions”.
• “A number of SOEs have been deemed insolvent as current assets are unable to cover liabilities. Additionally, some commercial entities’ revenues have not fully rebounded post-peak pandemic,” it reported.
• The bailing out of these SOEs would have the impact of increasing the amount of government expenditure and could impact the fiscal progress made by the sovereign through its BERT (Barbados Economic Recovery and Transformation) Program.
• Notably, for the nine months (April - December) of FY2023/24, the government recorded an overall deficit of $9.1Mn (-0.1% of GDP) due to higher global interest rates pushing up interest expenses on the country’s variable rate external debt along with increases in wages & salaries, as well as grants to public institutions. However, higher transaction-based tax receipts coupled with prudent non-interest spending allowed the authorities to meet its primary surplus target with a primary surplus of $434.3Mn (3.7% of GDP).

(Source: Nation New & NCBCM Research)

• Futures traders have significantly reduced their bets on the extent of rate cuts by the Federal Reserve this year, marking the lowest level since October, according to LSEG data. This shift suggests a more optimistic outlook on the economy's resilience and potential growth trajectory, prompting traders to adjust their expectations for monetary policy easing.
• The reduction in expectations for rate cuts by the Federal Reserve has led to an upward movement in Treasury yields, which are influenced by interest rate expectations. As investors anticipate less aggressive monetary policy accommodation, they demand higher yields on Treasury securities, leading to an increase in bond yields across various maturities.
• Federal Reserve policymakers have been cautious in their approach to rate cuts, particularly amidst concerns about sparking an inflationary rebound in an already strong economy. Despite calls for rate cuts, top officials, including Chair Jerome Powell, have emphasized the need for patience in deciding when to adjust interest rates, balancing the objectives of supporting economic growth and maintaining price stability.
• Market dynamics surrounding expectations of Federal Reserve rate cuts have undergone rapid shifts in recent months, reflecting evolving perceptions of economic conditions and policy responses. Traders are adjusting their positions in response to changing economic data and statements from Fed officials, contributing to increased volatility in financial markets as investors navigate uncertainties regarding the timing and extent of future monetary policy actions.

(Source: Reuters)

• Britain's construction sector experienced its first growth since August, with the S&P Global UK Construction Purchasing Managers' Index (PMI) rising to 50.2 in March, surpassing the growth threshold for the first time in seven months. This signals optimism for further growth ahead, supported by improving order books and expectations of easing borrowing costs.
• Despite a slight increase in costs, British construction companies saw the slowest pace of cost inflation in three months in March. However, employment contracted for the third consecutive month, reflecting ongoing concerns about margin pressures and client risk aversion.
• The all-sector PMI, encompassing services, manufacturing, and construction, inched down slightly to 52.6 in March. This suggests a modest slowdown in overall economic activity but still reflects ongoing weak growth following the recession in the second half of 2023.
• The expansion in the construction sector contributes to signs of improvement in the UK economy. Despite challenges, including employment contraction and modest economic growth, cautious optimism prevails regarding the trajectory of the economy, with sectors like construction playing a pivotal role in broader recovery efforts.

(Source: Reuters)

• Jamaica is being hailed as “exceptional” for achieving a sustained reduction in the public-debt-to-gross-domestic-product ratio (GDP), despite global financial crises, pandemics, and other emergencies.
• In a paper titled ‘Sustained Debt Reduction: The Jamaica Exception’, authors Serkan Arslanalp, Barry Eichengreen and Professor Peter Blair Henry, noted that the sharp, sustained reductions in public debt are outstanding “because public-debt-to-GDP ratios have been trending up in advanced countries, emerging markets, and developing countries alike”
• The paper was presented at the Brookings Institute in Washington on Thursday (March 28). It pointed out that governments have borrowed in response to financial crises, pandemics, wars and other emergencies, resulting in higher debt ratios. However, only in rare instances have they succeeded in bringing those higher debt ratios back down once the emergency passed.
• In the case of Jamaica, the Government was able to cut its debt ratio in half from 144% of GDP at the end of 2012 to 72% in 2023.
• The economists noted that the achievement was despite vulnerability to hurricanes, floods, droughts, earthquakes, storm surges and landslides, noting that Jamaica is ranked as the third most disaster-prone country in the world according to the Global Facility for Disaster Reduction and Recovery.
• The paper also highlighted the fact that the Fiscal Responsibility Framework, introduced in 2010, required the Minister of Finance to take measures to reduce, by the end of fiscal year 2016, the fiscal balance to nil, the debt-GDP ratio to 100%, and public-sector wages as a share of GDP to 9%.

(Source: JSE)

• The Ministry of Agriculture, Fisheries and Mining is collaborating with Jamaica Customs to complete the export component of the Jamaica Single Window for Trade (JWIFT) for implementation in the upcoming fiscal year.
• Minister of State, Hon. Franklin Witter, in a speech read by Chief Technical Director in the Ministry, Orville Palmer, said that the export platform is almost complete.
• “The export Single Window platform has been developed and is now at 90 per cent ready for implementation. However, before we make the system live, we will conduct a series of trials to ensure its effectiveness. The Ministry is collaborating with the Jamaica Customs Single Window entry team to have this platform up and running in 2024/25,” he said.
• He was addressing the Fresh Produce Exporters Forum on Monday (March 25) at the Medallion Hall Hotel in St. Andrew.
• JSWIFT provides a web-based portal that supports cross-border trade in Jamaica. It is designed to facilitate the Plant Quarantine Produce Inspection (PQPI) branch’s import and export business processes by providing a paperless service within a single trade mechanism, resulting in improved cost savings.
• It will also enable clients to submit applications before visiting export complexes and the production of phytosanitary and fumigation certificates, which will allow all exporters to download and print their documents from the comfort of their offices or homes.
• Witter noted that this will reduce processing time and improve communication with international trading partners by providing advanced notification of shipments.

(Source: JSE)

• Guyana is well on its way to achieving 2,000 hotel rooms by 2025 to accommodate the vast influx of visitors the nation has been witnessing in recent days. Minister of Tourism, Industry and Commerce, Oneidge Walrond recently inspected ongoing works of the new Aiden Hotel located at Robb and Oronoque streets in the capital city.
• The boutique-style edifice is among other branded hotels that will open in Guyana to supplement the growing hospitality sector. “The contractors have assured us that by May, this project will be completed. As you know, in June, we have the international cricket finals then we have CPL right after. We are optimistic that we will have rooms for our visitors as they come for these events,” she said.
• The country recorded the highest levels of arrivals last year (2023), with a record-breaking 319,056 visitors. This is a clear testimony to the growth of the tourism and hospitality sectors.
• Minister Walrond highlighted that the government had anticipated an exponential rise in visitors to Guyana, following its resumption of office in 2020.
• “We have seen the realisation of that and that is why we sent out an expression of interest in 2020. These projects take a long time to add additional rooms and we are well on our way for those rooms to be realised for our guests to have internationally branded standard hotels that they are accustomed to,” the tourism minister pointed out.

 (Source: Guyana Chronicle)

• As with most other Central American markets, the improved outlook for US growth in 2024 will have positive effects on the Costa Rican economy - particularly on exports. Furthermore, economic risks have moderated somewhat in Costa Rica in recent months.
• Inflation has been falling persistently (partly due to a strong rally in the Costa Rican Colón), which bodes well for private consumption, while an ongoing interest rate cutting cycle will reduce borrowing costs, support business sentiment and help to lift fixed investment.
• That said, Fitch has raised its 2024 real GDP growth forecast for Costa Rica from 2.5% to 3.1%, with H1 2024 likely to be particularly strong, before a slowdown in H2 2024 as the US economy loses steam and public spending in Costa Rica stagnates.
• Notwithstanding, while Costa Rica faces less substantial political risks than many of its peers in Central America, those risks have been rising in recent months.
• The country has seen a series of protests due to frustration with public services and President Rodrigo Chaves' fiscal consolidation agenda, which will remain in place as the country seeks to comply with an IMF-backed reform programme. The country also faces notable security challenges, with rising gang activity and homicide rates, as well as a state of emergency due to a sharp increase in migration.
• However, falling inflation and strong growth should help cap the level of social discontent, aided by the stability of the country's democratic institutions.

(Source: BMI)

• Despite an increase in the number of Americans filing new claims for unemployment benefits, the labour market remains tight. Although layoffs rose to a 14-month high in March, job cuts were relatively unchanged compared to the same period last year. Worker shortages persist in industries like construction.
• The strength of the economy, coupled with persistently high inflation, may prompt the Federal Reserve to delay anticipated interest rate cuts this year. Fed Chair Jerome Powell has emphasized that the central bank has time to deliberate over its first rate cut.
• The trade deficit widened in February, reaching $68.9 billion, with imports rising to their highest level since October 2022. While exports increased, particularly in industrial supplies, materials, and food, imports surged across various sectors. The trade gap is expected to hinder GDP growth in the first quarter, potentially subtracting as much as 0.75 percentage points.
• The Atlanta Fed lowered its first-quarter GDP growth estimate to a 2.5% rate, down from a previously estimated 2.8% pace. Trade dynamics, particularly the strength in imports reflecting firm domestic demand, are anticipated to contribute to a larger drag on first-quarter GDP growth than initially anticipated.

(Source: Reuters)

• Canada's trade surplus of C$1.39 billion in February exceeded analysts' expectations by a considerable margin, reflecting the resilience and strength of the Canadian economy in global trade. A surge in exports, particularly in unwrought gold, which reached a record level contributed significantly to the overall surplus.
• Total exports saw a remarkable increase of 5.8% in February, marking the fastest growth since August. This growth was primarily fueled by a sharp rise in gold exports, reflecting robust global demand for the precious metal. Import growth, although moderate at 4.6%, also contributed to the trade dynamics. Electronic equipment and consumer goods led the increase in imports, indicating sustained domestic demand and economic activity.
• The trade data reflects a broader economic resurgence in Canada, following a period of slower growth in the second half of the previous year. Recent indicators, including the strong trade surplus and GDP growth, suggest a rebound in economic activity.
• The positive trade surplus and other economic indicators alleviate pressure on the Bank of Canada for immediate interest rate cuts. The central bank has maintained its key interest rate at a two-decade high of 5% to curb inflation.

(Source: Reuters)

• Productive Business Solutions Limited (“PBS”) announced that it has reached an agreement with Xerox Holdings Corporation (“Xerox”), which is listed on the NASDAQ stock exchange, to acquire its businesses in Peru and Ecuador.
• Following the acquisition, PBS will become the exclusive distribution partner for Xerox in Peru and Ecuador, where both companies will continue to operate as subsidiaries of PBS.
• PBS has partnered with Xerox for over two decades. During this period, the company has consistently delivered a comprehensive suite of products and professional services to its clients across Central America, the Caribbean, and South America.
• This strategic expansion in Peru and Ecuador further solidifies the company’s presence in Latin America, extends its footprint to a total of 24 countries and bolsters its workforce to over 3,000 IT professionals.

(Source: JSE)