• Minister of Tourism, Hon. Edmund Bartlett says the tourism sector has grown by 36% over the past 30 years, against a total economic growth of 10%. He noted that the sector is the single largest contributor to Jamaica’s gross domestic product (GDP), as well as a main source of foreign revenues.
• Tourism is multidimensional and multifaceted, interfacing with nearly every economic sector, including agriculture, manufacturing, transportation, finance, the creative and cultural industries, construction, and many other services. The tourism sector drives 15% of construction, 10% of banking and finance, 20% of manufacturing, and 21% of utilities, agriculture, and fisheries.
• Speaking at a Destination Assurance Framework and Strategy (DAFS) consultation meeting at the Negril Community Centre, Norman Manley Boulevard, Westmoreland on March 23, Mr. Bartlett also pointed to the quick recovery of the tourism sector, following the impact of the COVID-19 pandemic, noting that 2022, was a record year.
• Closing 2022 with some 3.3Mn visitors and earnings of US$3.6Bn, 2023 is shaping up to be another record year with stopover arrivals for the first ten weeks at 558,119, a 55.6% increase over the same period last year. The Minister stressed the importance of keeping the sector on a growth trajectory, noting that as it grows, more Jamaicans will benefit from “this larger tourism pie”.
• Given linkages to other sectors, tourism growth will have a magnified effect on the wider economy. As tourism continues to grow, other sectors will benefit directly or indirectly, thus resulting in stronger economic growth in years to come.

(Source: JIS News)

• The Jamaica Special Economic Zone Authority (JSEZA) continues to secure employment for citizens and investment opportunities for companies to operate in the special economic zones (SEZs). Details of this were shared during a meeting hosted by the Authority at its offices located at 13 Waterloo Road in Kingston, on Monday, March 27.
• JSEZA’s Interim Chief Executive Officer, Kelli-Dawn Hamilton, pointed out that “we would have recorded over US$750Mn investment in the economy through our SEZs as well as within the SEZ space, with over 60,000 jobs being created.
• The objective is to work across government and create partnerships which will ultimately result in growth for the economy through greater employment. As a member of the World Free Zone Organization, JSEZ has initiated 13 very strong projects that will change the landscape in Jamaica.
• In addition to these partnerships, JSEZA is keen on attracting different sectors including, energy manufacturing, tourism, and the global digital services sector.
• The JSEZA is an agency of the Ministry of Industry, Investment, and Commerce, responsible for facilitating the development of and promoting investments in SEZs in Jamaica. The initiatives and projects undertaken by the agency are expected to provide employment and boost economic growth.

(Source: JIS News)

• The Biden administration plans to send Mexico an "act now or else" message in the coming weeks in an attempt to break a stalemate in an energy trade dispute as bipartisan calls grow for the U.S. to get tougher with its southern neighbour, according to people familiar with the discussions.
• The move would represent a significant escalation in already-strained tensions between U.S. President Joe Biden and his Mexican counterpart, Andres Manuel Lopez Obrador. Obrador's decision to roll back reforms aimed at opening Mexico's power and oil markets to outside competitors sparked the trade dispute.
• S. oil companies, such as Chevron and Marathon Petroleum, along with solar and wind power companies, have struggled to get permits to operate in Mexico in recent years. However, Mexican officials maintained that the companies were not being given discriminatory treatment, but rather that difficulties of a technical nature persist, and investments would be made to address them.
• The Office of the United States Trade Representative (USTR) is expected to make what was described as a "final offer" to Mexico negotiators to open its markets and agree to some increased oversight. If not, the U.S. will request an independent dispute settlement panel under the United States, Mexico, and Canada Agreement (USMCA).
• Under USMCA rules, after 75 days without a resolution the party is free to request a dispute settlement panel; a third party that rules on the case. The United States and Canada demanded dispute settlement talks with Mexico in July, 250 days ago.
• If the panel rules against Mexico and fails to take corrective action, Washington and Ottawa could ultimately impose billions of dollars in retaliatory tariffs on Mexican goods.
• This appeal could escalate trade tensions with Mexico and set back the US’ assistance on immigration and drug trafficking deals. In addition to this, Mexico’s 2023 economic growth is greatly hinged on the nation maintaining good relations with the United States.

(Source: Reuters)

• Fitch Solutions expects that rising interest rates will challenge regional borrowers, even as private sector debt has stabilized after the pandemic in Latin America. Although the company noted the expectation of rate cuts in H2 2023, interest rates will remain well above historical norms through to at least the end of the year.
• While aggregate private sector borrowing in Latin America’s largest markets spiked relative to GDP during the COVID-19 pandemic, this was largely due to a sharp decline in nominal GDP.
• In US dollar terms, debt generally fell in 2020 before rebounding in the following years. As of Q3 2022 (the latest available from the Bank of International Settlements), total private debt rose to US$2.82Tn, up 6.3% from US$2.65Tn in Q419. Relative to GDP, private debt has risen marginally, from 65.0% to 66.8%.
• Among major markets in Latin America, Brazil has seen the largest growth in its private sector debt load in recent years, with Colombia the only other market to see an increase.
• Higher interest rates and concerns about the trajectory of public finances have led to significantly higher bond yields across the region, contributing to the theme for the year that Latin America’s leftist leaders will face policy constraints.
• Market pressure will limit the implementation of transformative spending plans, potentially increasing public frustration with incumbent governments. Interest payments will also eat up a larger portion of government budgets moving forward, leaving less for social spending and investment.

(Source: Fitch Solutions)

• Residents of China are increasingly on the move after the country's sudden reversal last month of heavy COVID-19 curbs, despite a surge in infections, pointing to a gradual recovery in consumption and economic activity this year.
• Mobility and spending data -- from subway passenger traffic in three of China's biggest cities to flight volumes to box office collections -- show upticks since late December after Beijing abruptly ended three years of "zero-COVID" policy earlier in the month.
• Subway ridership has begun to pick up as the population is undergoing a psychological shift. They are beginning to move closer to living with COVID-19 as there is currently a surge of infections due to the sudden ceasing of virus curbs.
• The number of passenger flights over China has also increased after the restrictions were abandoned. Still, some indicators show activity has not fully recovered to levels of just a few months ago, and many economists remain cautious about the pace of revival following the faster-than-expected reopening.
• Economists expect the world's second-largest economy to pick up from the second quarter, underpinned by stronger consumption and increased state outlays on infrastructure projects. However, a recovery in the country's embattled property market could take much longer.

(Source: Reuters)

• European Union countries gave final approval on Tuesday to a landmark law to end sales of new CO2-emitting cars in 2035, after Germany won an exemption for cars running on e-fuels. The approval from EU countries' energy ministers means Europe's main climate policy for cars can now enter into force - after weeks of delay caused by last-minute opposition from Germany.
• The EU law will require all new cars sold to have zero CO2 emissions from 2035, and 55% lower CO2 emissions from 2030, versus 2021 levels. The targets are designed to drive the rapid decarbonization of new car fleets in Europe.
• The European Commission has pledged, however, to create a legal route for sales of new cars that only run on e-fuels to continue after 2035, after Germany demanded this exemption.
• The EU policy had been expected to make it impossible to sell combustion engine cars in the EU from 2035. However, the exemption won by Germany offers a potential lifeline to traditional vehicles - although e-fuels are not yet produced at scale. E-fuels are considered carbon neutral because they are made using captured CO2 emissions - which proponents say balances out the CO2 released when the fuel is combusted in an engine.
• Germany's late intervention, after EU countries and lawmakers had already agreed to the 2035 phaseout last year, irked some EU diplomats, and stoked concerns that governments may try to block other carefully-negotiated deals on climate policies.

(Source: Reuters)

• Jamaica Manufacturers and Exporters Association (JMEA) President, John Mahfood, says the country is on the “right track” towards achieving higher levels of sustainable economic growth and development.
• Mr Mahfood highlighted that the Government’s record trillion-dollar fiscal year 2023/24 budget represents the culmination of significant economic reforms undertaken over the past eight years. He also noted that the reforms have resulted in a gradual reduction in the country’s debt and balance of payments and a corresponding increase in economic growth.
• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, indicated in his 2023/24 Budget Debate presentation on March 7 that the economy is estimated to have expanded by 3.4% in the fourth quarter of 2022, continuing positive growth witnessed in previous quarters and “signalling the country’s recovery from the COVID-19 pandemic”.
• The JMEA president highlighted several programmed provisions outlined in the Budget, which he describes as key standouts. These include investments earmarked to further build out road and water infrastructure, which he expects will make Jamaica more competitive over the ensuing years. Infrastructure spending is anticipated to not only make Jamaica competitive but will also serve as an avenue to boost economic growth and development for years to come.
• Other standouts include: the announced waiving of HEART/NSTA Trust fees for programmes up to Level IV (Associate Degree), as well as the 44% minimum wage increase. The waiver will allow persons to access vocational training regardless of economic status and is in keeping with the Government’s mandate to increase the provision of trained labour for the economy. Further, with the cost of living rising rapidly and purchasing power falling due to high inflation, the increase in the minimum wage is welcomed by low-income households. However, the risks of the higher minimum wage could be higher inflation and increased unemployment as employers cut staff to keep up with wage costs. As a result, the next few months will be critical in uncovering the effects of this move.

(Source: JIS News and NCBCM Research)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government is making the largest capital investment ever made in agriculture, with more than $12 billion programmed across fiscal years 2022/23 and 2023/24. He indicated that the provision is earmarked to build out irrigation, pumps, piping, storage and farm road infrastructure in St. Catherine, Clarendon, and St. Elizabeth.
• The Minister further informed that this is being done through the Essex Valley and Southern Plains Agricultural Development Projects. This will help to deliver high or value-added agriculture opportunities.
• Meanwhile, Dr. Clarke highlighted that the Ministry of Tourism is working assiduously to diversify the tourism product. “We are working to introduce higher-end integrated resorts, which require higher value-added, higher paying jobs,” he stated, adding that the Government is about to issue the first licence for integrated resort development.
• An integrated resort development must have a minimum of 1,000 hotel rooms, of which 500 must be luxury rooms. Additionally, the development must have a minimum capital investment of US$500 million.
• The concept was introduced by the Government in consideration of further expanding the tourism product. These luxury resort developments include but are not limited to, hotels, villas, sporting and recreational facilities, shopping centres and casino gaming.
• As travellers become more demanding and change their expectations of destinations, the diversification of tourism offerings is necessary. This will boost Jamaica’s global competitiveness and allow the industry stakeholders to successfully tap into new markets.

(Source: JIS News)

• Fitch Solutions expects the popularity of the ruling Movimiento Electoral di Pueblo (MEP) government to face pressure from elevated inflation in 2023. Fitch gave Aruba a score of 72.1 (out of 100) on the Short-Term Political Risk Index (STPRI), down from 75.2 previously which places Aruba in 14th position out of the 18 markets covered in the Caribbean region.  This is down several places from Fitch’s last update in 2022.
• The main reason for the downward STPRI revision is the expected impact of elevated inflation on social stability and the pressure it will put on the minority MEP government in 2023.
• Higher inflation will erode real household disposable incomes and weigh on living conditions in Aruba. Consumer price inflation was 6.6% y-o-y in January due to elevated global oil and food prices.  Fitch forecasts inflation will remain elevated in 2023, averaging 5.0%, well above an average of 2.3% registered in 2000 to 2022. This trend will be exacerbated by wage subsidy programmes implemented during the COVID-19 pandemic coming to an end.
• To combat some of the impacts of elevated inflation on household incomes, the MEP rolled back a 5.0% cut to public sector wages implemented during the pandemic in July 2022. It also increased the minimum wage by 4.3% to USD1,051.88 on 1 January 2023. However, elevated inflation means some public sector workers and those on low incomes will still face real-terms declines in their incomes.
• Declining real wages and stagnating living standards are likely to weigh on support for the MEP. Given that protests are relatively rare in Aruba and small-scale in nature when they do occur, a more likely outcome is that small-scale, targeted protests or strikes could take place in 2023. Reflecting this, public sector employees and labour unions held a walkout on 17 March 2023, to protest a new local government performance management system for civil servants. As a result, Fitch gave Aruba a score of 60.0 in the ‘social stability’ subcomponent of its STPRI, the lowest of its STPRI subcomponents.
• Challenging conditions for households are likely to dent popular support for the MEP. While opinion polling data is largely not available for Aruba, the MEP’s position in parliament is already fairly weak.

 (Source: Fitch Solutions)

• Fitch Solutions has revised its forecast for Mexican real GDP growth in 2023, higher from 1.1% to 1.8%, which will come in the wake of a 3.1% expansion in 2022. The updated projections follow a string of stronger-than-expected data points in recent months, with the economy having ended 2022 on a better footing than anticipated.
• The economy grew by a solid 0.5% q-o-q in Q422, driven by a surge in fixed investment linked to the ‘near-shoring’ effect, given Mexico’s proximity to the USA and a pick-up in public sector capital expenditure.
• It is suspected that this strength will persist through much of H123 before activity eases sharply below trend in the second half of 2023 into 2024 as the US is expected to fall into recession.
• Notably, growth was underpinned by the ongoing boost from the US economy as Mexico has remained a key beneficiary of the US’ attempts to reduce its reliance on imports from Mainland China.
• Additionally, with the government racing to finish several flagship infrastructure projects ahead of the presidential elections planned for June 2024; the Mexican economy ended last year on a solid footing.
• Risks to Fitch’s forecasts are broadly balanced and largely hinge on the trajectory of US economic growth. In the event that the US avoids a recession, it is quite likely that the slowdown pencilled in for Mexico will fail to materialize as external demand and remittance flows remain robust.

(Source: Fitch Solutions)