• According to the Purchasing Managers' Index (PMI) survey, Business activity in the eurozone showed signs of recovery last month as the bloc's dominant services industry expanded for the first time since July, offsetting a deeper contraction in manufacturing.
• Hamburg Composite Bank’s (HCOB’s) composite PMI for the bloc, compiled by S&P Global, jumped to 49.2 in February from January's 47.9, ahead of a preliminary 48.9 estimate. This was its best reading since June, but remained below the 50-mark separating growth from contraction.
• The services’ PMI rose to 50.2 from 48.4, beating the 50.0 flash reading. "The service sector may be off to a better start in 2024 than anticipated. While the growth rate is fractional, it is complemented by positive developments in other PMI sub-indicators," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
• The index covering new business was a whisker shy of reaching breakeven, optimism about the year ahead was at its highest in over a year and firms took on more workers. The services employment PMI rose to an eight-month high of 52.7 from 51.2.
• "While employment is traditionally considered a lagging indicator, this trend hints at a growing sense of optimism and points towards continued sectoral recovery," de la Rubia said. However, there were signs of inflationary pressures building with both the composite input and output price indexes rising. The output prices index was at a nine-month high of 54.4, up from January's 54.2.
• The European Central Bank is expected to keep interest rates at record highs on Thursday as it continues its battle to bring inflation back to target. It will be June before it starts cutting, a Reuters poll found.

(Source: Reuters)

• At the Global Tourism Resilience Conference, Tourism Enhancement Fund (TEF) Executive Director Dr. Cary Wallace disclosed that the Agri-Linkages Exchange (ALEX) platform continues to grow, generating almost $500Mn in sales for small farmers since December 2023.
• The ALEX platform, a collaboration between the TEF and the Rural Agricultural Development Authority (RADA), enables small farmers, usually those with plots ranging from three to five acres, to communicate directly with purchasing managers at hotels. The platform was key in ensuring food security in the tourism sector during the COVID-19 pandemic.
• “In about three years, we achieved a billion dollars in sales on that platform. Between December last year and today, we’ve gone almost half a billion in sales…,” Mr. Wallace said.
• Minister without Portfolio in the Office of the Prime Minister with oversight for Skills and Digital Transformation, Senator Dr. the Hon. Dana Morris Dixon, in her remarks, noted that the use of innovation such as the ALEX platform plays a key role in building the resilience of the tourism sector. She further noted that through technological solutions, the sector has demonstrated remarkable flexibility, enabling it to navigate through the difficulties brought forth by the pandemic.

(Sources: JIS)

• VM Wealth Management Limited, a subsidiary of the Jamaica Stock Exchange listed VM Investments Limited (VMIL), has opened its first overseas office in Barbados. The Barbados location was officially opened on January 22, 2024, after VMIL acquired Republic Funds (Barbados) Incorporated mutual funds.
• VM Wealth Barbados Office manages the now rebranded mutual funds and is making a purposeful push to drive financial education and investment know-how among Bajans and people of the wider Caribbean region.
• The move into Barbados delivers on the business strategy and purpose, according to Brian Frazer, Deputy Chief Executive Officer of VM Investments Limited and VM Wealth Management Limited.

 (Source: JSE)

• An International Monetary Fund (IMF) team visited Barbados between February 26-29, 2024, to review recent economic developments and reform efforts and prepare the ground for the third review of the Extended Fund Facility (EFF)/Resilience and Sustainability Facility (RSF) programs.
• The IMF noted that economic activity in Barbados continued to recover strongly in 2023, driven by tourism and related sectors. Real GDP expanded by an estimated 4.4%, reaching its pre-pandemic level.
• Annual inflation also remained broadly stable despite adverse weather conditions reducing the supply of certain crops and higher prices of dining and other goods and services on account of easing international food prices.
• In terms of fiscal reform, the IMF noted that the Barbadian authorities continue making strong progress in implementing their ambitious economic reform program. Strong fiscal performance through the first three-quarters of FY2023/24 bodes well for meeting the 3.4% of GDP primary balance target for the full fiscal year, and preparation of a budget for FY2024/25 is well underway.
• Furthermore, important steps are being taken to advance the structural reform agenda. Work is currently underway on reforms to strengthen tax administration, public financial management, and the business environment while also building resilience to climate change under the RSF. Meanwhile, the significant progress made in strengthening the AML/CFT framework has enabled Barbados to exit the Financial Action Task Force grey list.

(Source: International Monetary Fund)

• Panama's economy is expected to see growth slow in 2024, according to the latest staff concluding statement done on the country by the International Monetary Fund (IMF).
• Panama was hit hard by the pandemic, but the economic recovery has been strong. In 2023, GDP grew by 7.5%, exceeding expectations for the third year in a row. Drought has led to a reduction in the daily number of ships going through the Panama Canal, but the impact on revenues of the Panama Canal Authority (ACP) has been limited so far.
• In late 2023, after Panama’s Supreme Court ruled that the new mining contract with copper mine operator Minera was unconstitutional, the government announced its intention to close the mine. The ruling followed months of widespread social protests, which had a significant impact on economic activity in the fourth quarter of last year. 
• As a result of the closing of the mine, GDP growth is projected to decline to 2.5% in 2024 before gradually improving over the medium term. The slowdown is not expected to be broad-based but reflects the closing of Minera, which contributed, directly and indirectly, about 5% of Panama’s GDP.
• The closing of the mine also entails the permanent loss of about 0.6% of GDP in fiscal revenues and 7.5% of exports of goods and services. Over the medium term, GDP is expected to grow by 4%, while the current account deficit is projected to range around 2% of GDP.
• The near-term economic outlook is subject to a large degree of uncertainty, and the balance of risks is tilted to the downside. Downside risks include the loss of investment grade status (due to concerns over Panama’s fiscal situation), which would raise Panama’s external borrowing costs and increase refinancing risks. There is also the risk of renewed social unrest and further fallout from the closing of Minera.
• Furthermore, a longer-than-expected drought could reduce the ACP’s revenues and its contributions to the government. Over the medium term, claims from the mine arbitration pose a significant risk to the public finances.

(Source: International Monetary Fund)

• The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic said in remarks that highlighted the risk inflation may get stuck above the central bank's 2% target or be sent even higher by "pent-up exuberance."
• Bostic said he still thinks it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year. However, he also said the Fed was walking a "fine line" to be sure that current economic strength does not evolve into "froth" and a new round of inflation.
• Given that there was no sign yet of "degradation" to the job market, Bostic said he and his colleagues in debating the path of interest rates, "have some time to make sure that we get to 2%" inflation. He further stated that he does not envision them being "back to back," with the pace depending on "how participants in the markets, business leaders, and families respond."
• The Fed, at its upcoming March 19-20 meeting, is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range, where it has been since July, and will also issue updated projections for how far rates may fall this year, given recent declines in inflation.
• Investors currently expect an initial rate cut in June, but that could slip if inflation stalls or the job market and wages continue to beat expectations.

(Source: Reuters)

• China is set to announce its 2024 growth target and outline its strategy for supporting the slowing economy at the nation’s most high-profile annual political gathering this week.
• Premier Li Qiang will deliver the government work report for the first time at the National People’s Congress (NPC) on Tuesday (Mar 5). Officials are looking to chart a recovery after a turbulent year that saw the economy grapple with deflation, an ongoing property crisis, mounting debt burden, and foreign capital exodus.
• Investors will closely scrutinise policy priorities and stimulus signals as Beijing is expected to announce an annual growth target of around 5.0% – the same as last year but one that will be harder to achieve because of a higher base of comparison. Areas of focus will include the strength of fiscal stimulus, new economic drivers as President Xi Jinping steers China away from a property-driven growth model, and the government’s plan for boosting consumption.
• Beijing’s policy stance will likely stay growth-friendly but won’t be a “bazooka-type stimulus”, JPMorgan Chase & Co economists said in a note previewing the NPC. “The policy tone has been pre-determined at the Central Economic Work Conference last December, and we see little chance of a major deviation.”
• “It will be a positive surprise” if the work report shows that policymakers share market concerns about the economic challenges, including deflation risks, unemployment, and fallout from the property downturn, the economists added.

(Source: The Business Times)

• According to data on the Producer Price Index (PPI) released by the Statistical Institute of Jamaica (STATIN), the Mining & Quarrying Index decreased by 0.4% in January, while the index for the Manufacturing industry fell by 0.1%.
• The 'Bauxite Mining & Alumina Processing' category was the main driver for the 0.4% decline in the index for the Mining & Quarrying industry.
• A 1.2% dip in the index for the major group ‘Refined Petroleum Products was the primary contributor to the decline in the index for the Manufacturing industry. However, the overall movement in the industry was tempered by a 0.2% rise in the index for the heaviest weighted major group ‘Food, Beverages & Tobacco’.
• For January 2023 – January 2024, the index for the Mining & Quarrying industry declined by 7.2%. This was a result of a 7.7% decrease in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The point-to-point index for the Manufacturing industry moved up by 2.0%, reflecting a 1.7% upward movement in the index for the major group ‘Food, Beverages & Tobacco’ and a 4.2% increase in the index for the ‘Refined Petroleum Products’ major group.
• Despite softening in producer prices last year, geopolitical tensions in Europe and the Middle East pose risks that could disrupt oil supply and reignite supply chain issues and result in higher costs for producers.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time.

(Sources: STATIN & NCBCM Research)

• Buoyed by robust revenue grow (+16.7% or $128.58Mn), Caribbean Flavours and Fragrance Limited (CFF) reported a 115.3% year over year rise in net profit to $132.82Mn (EPS: $0.15) for FY 2023.

• The improved revenues outturn was driven by the company's continued efforts to refine its sales approach strategy, as it focused on closing new business deals, introducing new products to its various partners, and deepening its sales strategies in the markets that it serves.

• Notably, the rise in revenues outweighed the 6.0% expansion in cost of sales, resulting in a 41.8% (or $95.78Mn) increase in gross profit. This growth in gross profit translated to a 6.40 percentage points increase to 36.1% on the back of better management of its inventories, efficiency gains from the manufacturing processes, and the change in its product mix. CFF successfully launched its new ingredients portfolio which provides new emulsifiers and enzymes poised to revolutionise the quality, texture, shape, and visual appeal of baked products while extending their shelf life in the market.

• However, the company’s operating and administrative costs increased by 16.69% (or $25.64Mn) as the cost of attracting new talent, and other professional fees relating to product development rose.

• CFF aims to continue offering new solutions to the market while refining its current product offerings and solutions through research and development. It anticipates that through these initiatives it will gain greater acceptance in local and overseas markets.

• CFF’s stock price has appreciated by 1.2% since the start of the year and closed Thursday’s trading session at a price of $1.69 per share. At this price, the stock trades at a P/E ratio of 16.9x earnings, which is below the Junior Market Manufacturing Sector average of 25.4x.

(Sources: Company Financials & NCBCM Research)

• During the closing news conference of the four-day CARICOM summit in Georgetown, Guyana, which ended on February 28, 2024, Barbados Prime Minister, Mia Mottley, announced that nationals from the Caribbean Community (CARICOM) will have the ability to travel throughout the region by the end of March.
• PM Mottley noted that leaders will meet again on March 15th, before then, the remaining policy issues are expected to be settled. “There was just two policy issues referred to heads for us to settle and they will meet on the seventh of March, the legal affairs committee will sign off on the draft on the eighth of March; and the heads of government will meet on the 15th of March with the hope that we can sign off in time for the deadline given in Trinidad of the 31st of March for the free movement of people,” PM Mottley said.
• CARICOM nationals have the privilege to freely travel within participating nations to engage in lucrative commercial endeavours under the CARICOM Single Market and Economy (CSME), which is governed by the Revised Treaty of Chaguaramas. However, currently, nationals only enjoy the freedom to relocate within the region for six months without any interrogation. As such, the objective of the CARICOM leaders is to facilitate the unrestricted movement of nationals throughout the region beyond the current six-month restriction.
• Beyond the facilitation of people’s mobility, regional leaders are also dedicating efforts to tackle the issue of company formation within the region. At present, when a CARICOM national intends to establish a company in another member state upon relocation, they are obligated to make a payment. This is one of the next initiatives that the CARICOM members hope to rectify.
• This was first discussed last July at the 45th Conference of the Heads of Government in Trinidad where a deadline was established to conclude the process of enabling the free movement of CARICOM nationals.

(Source: Guyana Chronicle)