• The decision by the Organisation of Petroleum Exporting Countries (OPEC) and some of the world's largest producers on March 3, 2024, to cut oil output to increase crude prices is encouraging news for Trinidad and Tobago and Finance Minister Colm Imbert.
• Notably, OPEC announced that the 2.2 million barrels per day of voluntary output cuts that were planned for the first quarter of 2024 will continue into the next quarter. The impact of this could likely be an increase in oil prices, though some analysts believe that the low production had already been priced in.
• High oil prices will help Imbert increase his revenue from taxes on petroleum producers and could result in a better performance from State-owned Heritage Petroleum, potentially leading to dividends for corporation sole.
• However, even the decision to cut output and, by extension, raise prices is unlikely to help the Finance Minister reach his budget target of $16Bn in revenue from the energy sector in the Financial Year 2024.
• In the 2024 budget Imbert said, 'For that reason, our oil price assumption for 2024 will be US$85 per barrel (bbl) compared with US$92.50 per barrel in 2023, and our natural gas price assumption will be US$5 per MMBtu (Metric Million British Thermal Unit), compared with US$6 per MMBtu in 2023.” The price of US$85 a barrel has only been achieved in the first month of the 2024 financial year.
• Global financial firm Tudor Pickering & Holt (TPH) on Monday told its clients while it is positive to see OPEC+ members continuing to manage the market, it ultimately viewed this news as neutral given that the market continues to balance off OPEC+ taking barrels offline.
• 'Overall, we continue to see US$80/bbl Brent as a good clearing price for crude fundamentally with the market needing cut to stay in balance, and we would likely need to see a material reversal of voluntary curtailment met by growing demand before becoming more constructive on the commodity backdrop,' TPH said.

(Source: Trinidad Express Newspaper)

• After experiencing a recession in 2023 (real GDP growth: -0.6%), Fitch expects Peru’s 2024 growth to only come in at 1.9%. This 2024 forecast is below the Bloomberg consensus of 2.2%, though it has been noted that consensus has moved towards Fitch forecasts in the last few weeks. 
• Weakness in growth was broad-based in 2023, linked to the impact of El Niño along with weaknesses in the fishing and manufacturing sectors and overall consumption.
• While mining exports are expected to hold up, and a recovery in both government and private consumption is anticipated, investment is likely to continue to disappoint due to widespread mistrust in Peru’s political institutions.
• Risks to Fitch’s view are tilted towards slower growth, as future protests may cause more disruptions. The outlook for the important fishing industry also remains highly uncertain, with weather-related risks persisting.  

 (Source: Fitch Solutions)

• The Republican-controlled U.S. House of Representatives on Wednesday will try to pass legislation funding a broad swath of the federal government through the fiscal year that began in October, as yet another threat of a partial shutdown looms.
• Failure by the House and Democratic-majority Senate to pass and send to President Joe Biden this package of six spending bills would trigger federal worker furloughs and suspend some agency operations beginning on Saturday when stop-gap funding expires.
• A 1,050-page cluster of bills is proposed to fund various federal agencies, including Agriculture, Justice, Transportation, Housing and Urban Development, military base construction projects, and veteran care. House Speaker Mike Johnson, with a slim 219-213 majority in the Republican-controlled chamber, may rely on Democratic votes for passage, intending to send the legislation to the Senate for action on Thursday or Friday.
• The far-right House Freedom Caucus opposes the bill, citing concerns about exceeding spending caps and neglecting Republican policy priorities. Members of this group often vote against spending bills and advocate for deeper spending cuts despite challenges in Senate approval and obtaining Biden's signature.
• Congress is more than five months late in passing full-year government funding measures, with a March 22 deadline for completing the remaining six bills after the proposed six bills are passed. The second package of bills includes major government agencies like the Defense Department, Homeland Security, State Department, and Health and Human Services. The combined spending for the two batches of bills is $1.66 trillion for fiscal 2024, slightly lower than the previous year's $1.7 trillion in discretionary spending.
• Agencies such as the FBI, Environmental Protection Agency, and Bureau of Alcohol, Tobacco, and Firearms face potential spending cuts.

(Source: Reuters)

• The Bank of Canada decided to keep its key overnight rate unchanged at 5%, diverging from earlier market expectations of a rate cut. This decision signals the central bank's cautious approach in assessing economic conditions.
• The announcement led to a notable market response, with the Canadian dollar strengthening by 0.4% against the U.S. dollar, reaching a rate of 1.3540. This highlights the influence of central bank decisions on currency valuation and investor sentiment.
• Governor Tiff Macklem asserted that it was too early to contemplate a rate cut, emphasizing the persistence of underlying inflationary pressures. This stance indicates the BoC's commitment to monitor economic indicators before considering any adjustments to the interest rate.
• The BoC had previously implemented a series of rate hikes totaling 475 basis points between March 2022 and July 2023. This tightening of monetary policy was aimed at curbing inflationary trends within the economy and maintaining economic stability.
• Governor Macklem highlighted the gradual and uneven trajectory expected in achieving the central bank's 2% inflation target. Despite some easing of inflation, core inflation remained in the 3-3.5% range. The Governing Council expressed ongoing concern about the persistence of underlying inflation, shifting focus from the adequacy of current rates to the necessary duration for achieving their goals. This indicates a nuanced approach in their monetary policy discussions.

(Source: Reuters)

• Tourism Minister Hon. Edmund Bartlett stated that Jamaica is expected to welcome 4.2Mn visitors and earn US$4.1Bn by the end of the 2023/24 fiscal year.
• He noted that for 2024/25, arrivals and earnings are expected to increase to 4.529Mn visitors and US$4.8Bn, respectively, which is just about US$200Mn shy of the US$5Bn projected for the 2025/26 fiscal year.
• He refers to this as the 5x5x5 growth strategy of five million visitors and earnings of US$5Bn by 2025. For cruise tourism, Mr. Bartlett highlighted that the sector has rebounded and is back to 2019 levels in terms of projection for 2024/25 at 1.3Mn visitors.
• While there is an external factor in terms of items that are not produced in Jamaica and are imported, there is a growing energy on the supply side. Mr Bartlett noted that the budget, in its detail will speak to programmes and strategies that will be employed to strengthen the supply side.
• Part of that policy arrangement is to establish a supply logistics centre in the special economic zone, which is already in train. He further indicated that a team led by Wilfred Baghaloo, has been established and includes several of the top suppliers of tourism goods and services in Jamaica. UN Tourism is also partnering with Jamaica to establish a regional tourism academy.
• Overall, as the tourism industry continues to recover gallantly to above pre-pandemic levels, the country is expected to continue benefiting from economic revitalisation, job creation, and increased growth, signaling continued positivity for the industry.

(Source: JIS)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government will be implementing measures to ensure greater Capital Expenditure (CapEx) in the upcoming fiscal year.
• Clarke, addressing the Standing Finance Committee of the House of Representatives on Tuesday (March 5), said that the projects that fell behind in the fiscal year 2023/24 were primarily due to private-sector entities that were selected through the procurement process not being able to fulfil their obligations.
• He noted that in a couple of cases, entities were not able to post the bonds required, which means that we have to do the procurement all over. In other cases, there were failures in terms of response to the procurement; that is, the responses didn’t meet the criteria and the procurement and had to be redone.
• The Minister further noted that in addition to making some changes to the procurement processes, the primary measure that the Government will take is to be in a position where there are more projects available than budgeted capacity, which will allow more flexibility when one is falling behind.
• This is particularly important as the country runs the risk of falling behind if it cannot grow and execute its CapEx at a required rate.

 (Source: JIS)

• The Dominican Association of Investment Fund Management Companies (Asociación Dominicana de Sociedades Administradoras de Fondos de Inversión - ADOSAFI) has reported a substantial impact on the tourism sector, generating 1,274 permanent direct jobs and over 3,000 indirect jobs through investments made last year.
• As at June 30, 2023, the funds invested in the tourism sector surpassed 30,000Mn pesos, focusing on six provinces - namely National District, El Seibo, La Altagracia, Pedernales, Samaná, and Santo Domingo.
• “Investors have directed significant resources into crucial tourism projects across the Dominican Republic,” highlighted the association. These investments, ranging from the construction of new luxury resorts to the enhancement of existing tourism infrastructure, have played a pivotal role in diversifying offerings and elevating the quality of the tourist experience, as stated by Santiago Sicard, the executive president of ADASAFI.
• These funds have been instrumental in the growth and expansion of the country’s tourism sector, reinforcing its status as a leading destination in the Caribbean.
• The association recognises that investing in tourism has created a myriad of economic opportunities for Dominicans, from job creation in the hotel industry to supporting local businesses offering tourist services and supplies for the hospitality sector. This economic injection has resulted in job growth and increased incomes in the regions targeted by these investments.
• Furthermore, these investments have enabled the Dominican Republic to enhance its standards of service, infrastructure, and overall visitor experiences, solidifying its position as a premier quality tourism destination.

(Source: Dominican Today)

• Mexico's inflation rate likely eased in February, a Reuters poll showed on Monday, March 4, reinforcing bets that the country's central bank could lower its key benchmark interest rate as soon as this month.
• The closely watched core inflation index, which strips out volatile energy and food prices, is seen dropping to 4.62% in the month, its lowest level since June 2021. Rates, however, are still above the central bank's target range of 3%, plus or minus one percentage point.
• Last month, the monetary authority, also known as Banxico, again held the benchmark interest rate at a historic high of 11.25% but hinted that a rate cut could be on the table in upcoming meetings.
• A recent poll of economists by financial group Citibanamex showed that most estimate an initial rate cut to happen when Banxico's board meets on March 21.

 (Source: Reuters)

• US services industry growth slowed a bit in February amid a decline in employment, but a measure of new orders increased to a six-month high, pointing to underlying strength in the sector.
• Despite the weakness in employment, comments from services businesses in the Institute for Supply Management (ISM) survey on Tuesday were generally upbeat and suggested labour shortages remained a constraint for some. There were also no signs that inflation was picking up after a jump in prices at the start of the year, which is considered to be pleasing news for Federal Reserve officials.
• Though financial markets expect the U.S. central bank to start cutting interest rates this year, the timing is uncertain because inflation remains high, with most of the price pressures coming from services such as housing and utilities as well as finance, healthcare, and recreation.
• "While the easing of price pressure and moderation in hiring tilt this report in a dovish direction, the Fed will ultimately want to see these developments translate to the hard data on inflation and job growth," said Tim Quinlan, senior economist at Wells Fargo in Charlotte, North Carolina.
• The ISM said its non-manufacturing PMI slipped to 52.6 last month from 53.4 in January. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy. Economists polled by Reuters had forecast the index little changed at 53.0.
• The PMI was consistent with continued economic expansion despite 525 basis points worth of interest rate hikes from the Fed since March 2022. Fourteen services industries reported growth last month, including construction, retail trade, and public administration, as well as utilities and wholesale trade.
• Arts, entertainment and recreation, mining and real estate, rental and leasing reported contraction. The measure of new orders received by services businesses increased to 56.1 last month, the highest level since last August, from 55.0 in January. Export orders, however, slowed after surging in January.

(Source: Reuters)

• 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)