• As US President Donald Trump kicks off the second year of his second term in office, the geopolitical- and tariff-related volatility that characterised his return to power has resurfaced to shake markets. Investors who have been conditioned to asset prices swiftly rebounding are worried that this time there could be more lasting damage.
• Volatility measures across asset classes rose while stocks, U.S. long-dated ‌Treasuries, and the ‌U.S. dollar sold off on Tuesday, January 20, 2026, a day after Trump threatened to rekindle a trade war with Europe over the U.S. administration's aim to take over Greenland, threatening to blow apart the political and military alliance that has underpinned Western security for decades.
• The threats have revived talk of the Sell America trade that emerged following last year's "Liberation Day" tariff announcement in April 2025, with investors shying away from U.S. assets. For Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, the market action was reminiscent of last year where the market peaked in late January 2025, early February 2025, then, as the tariff news hit the headlines, the market had a pretty good correction.
• While Trump has shown flexibility on tariffs when markets come under severe pressure, investors worry it might take significantly more volatility before the situation over Greenland is resolved. Indeed, the selloff concerned investors because it ‍was spread across multiple assets.

(Source: Reuters)

• The U.S. Federal Reserve is expected to hold its key interest rate through this quarter, and possibly until Chair Jerome Powell's tenure ends in May 2026, according to a majority of economists polled by Reuters, a shift from last month when most expected at least one cut by March 2026.
• Expectations that the U.S. economy will continue growing strongly argue against near-term cuts as inflation remains above the Fed's 2% target. However, most economists still expect at least two reductions later this year.
• Moreover, the Fed is expected to keep rates at 3.50%-3.75% at its January 27-28 meeting, with 58% of the polled economists forecasting no change this quarter compared with at least one reduction in last month's poll. While there was no clear consensus on rates beyond this quarter, a slight majority of respondents expect rate cuts to resume as soon as Powell's tenure as the Fed chair ends in May 2026.
• Additionally, the U.S. economy, which grew at a robust pace of 4.3% in the third quarter, is expected to expand 2.3% this year, up from 2.2% last year, poll medians showed. That was upgraded from 2% predicted last month and above the Fed's estimated non-inflationary rate of 1.8%.
• Growth is forecast to average 2% through 2028 while the unemployment rate is expected to remain steady, averaging 4.5% this year. According to the lead U.S. economist at Oxford Economics, a very strong U.S. GDP growth is expected in 2026, driven by further investments in AI, as well as the tax cuts under the fiscal bill.
• The change in the Personal Consumption Expenditures index, the Fed's preferred inflation measure, is expected to stay above the 2% target for the remainder of this year and average above it in each calendar year through 2028.

(Source: Reuters)

• The U.S. Department of State revised its travel advisory for Jamaica. Previously, the country was under a Level 3^[1] travel advisory due to extensive damage in western parishes from the Category 5 weather system, the second highest warning advisory issued.
• Issued January 17, 2026, the revised advisory follows two months after Hurricane Melissa struck western parishes. Washington previously designated the country Level 3, urging citizens to reconsider travel due to crime, health, and natural disaster risks.
• While a Level 2 advisory still urges vigilance regarding crime, health, and natural disasters, it acknowledges improved safety conditions. Notably, all major airports have resumed commercial flights, though travelers are still encouraged to confirm the availability of local services before departure.
• The updated advisory maintains that although violent crime is a risk throughout the island, tourist-heavy districts typically experience lower incident rates than other areas.
• Of note, Jamaica’s ambitious plan to welcome five million visitors, generate US$5 billion in tourism earnings, and add some 5,000 new hotel rooms in 2025 was thrown off track as a series of disruptive events left the sector short on projected targets, even as its investment momentum remains strong.
• As such, the downgrade to Level 2 will likely support Jamaica's tourism recovery as it signals renewed confidence in Jamaica as a destination and provides much-needed support for an industry that has been working to rebuild after significant disruption.

^[1] A Level 3 travel advisory warns people to reconsider travel "due to serious risks to safety and security.”

• After seeing above-trend gross domestic product (GDP) growth in 2024, Trinidad and Tobago (T&T) saw volatile GDP prints at the start of 2025. Real GDP contracted 2.1% year over year (YoY) in the first quarter of 2025 (Q1 2025), its weakest since Q1 2021, amid declines in both energy (4.8% YoY) and non‑energy (‑0% YoY) sectors against a soft external backdrop.
• However, the economy rebounded in Q2, expanding 2.6% YoY, driven by increases in both natural gas (11.7% YoY) and LNG (27.8% YoY) output, alongside gains in petrochemicals. Mining, agriculture, construction and manufacturing were also points of strength.
• Trade and repairs, the largest component of the national accounts, posted a second consecutive contraction, though the pace of this contraction eased versus Q1, a positive sign for H2 2025. Momentum is seen extending into the second half of 2025 (H2 2025), with Liquefied Natural Gas (LNG) output up 24.6% YoY in Q3, growth in wholesale and retail transactions and a stabilising job market. BMI analysts expect the economy to continue expanding at a steady, albeit muted, pace through end‑2025, currently estimated at 0.9% annually.
• Looking ahead to 2026 and 2027, the real economy is forecasted to grow 1.4% in 2026 and 2.6% in 2027. Growth will be driven by expanded production and export of hydrocarbons, with natural gas and LNG output rising alongside steady household demand supported by low inflation, a recent public‑sector minimum wage increase, and a stabilising labour market. Of note, the unemployment rate fell to 3.8% in Q2 alongside an increase in the labour force, supporting the non‑energy economy.
• BMI’s Oil & Gas team is optimistic on natural gas production and export, projecting production growth of 3.0% in 2026 and 10.0% in 2027. This outlook reflects several new gas projects slated to come online, though updated timelines have pushed some start dates back by a year. As a result, BMI revised 2026 GDP growth down to 1.4% from 2.7% while nudging 2027 up to 2.6% from 2.4%.
• Furthermore, consistent declines in local cement and commercial vehicle sales in 2025 point to continued investment weakness in 2026, alongside a slowdown in business credit growth and notable contractions in the import of capital goods in Q1 (-32.9% YoY) and Q2 (-4.0% YoY), respectively. These trends are expected to continue in 2026, given the view of increased interest rates and continued uncertainty from crime and regional tensions.

(Source: BMI, A Fitch Solutions Company)

• Costa Rica’s tourism sector closed 2025 with only marginal growth, underscoring mounting concerns about the country’s competitiveness in an increasingly crowded regional market. According to the National Chamber of Tourism (CANATUR), international tourist arrivals rose just 1% last year, well below global and regional trends.
• Costa Rica welcomed 2.69Mn visitors by air in 2025, up slightly from 2.6Mn in 2024. While the result spared the industry from an outright contraction, tourism leaders said the performance fell short of expectations for one of Central America’s flagship destinations. The weak expansion contrasted sharply with stronger results elsewhere in the region. Colombia reported growth of about 4%, the Dominican Republic 5%, Mexico 6%, and Guatemala surged ahead with a 10% increase in arrivals, according to CANATUR. The gap, Shirley Calvo, executive director of CANATUR, highlights Costa Rica’s untapped potential and the urgency of corrective measures.
• North America remained Costa Rica’s dominant source market in 2025, accounting for nearly two million visitors. However, arrivals from the United States grew by just 0.5%, signalling stagnation in a market that has traditionally powered the country’s tourism engine. Europe performed worse, posting a 2.1% decline amid economic uncertainty and shifting travel patterns. South America provided the brightest spot, with arrivals jumping 14.5%, helping to cushion losses earlier in the year.
• CANATUR attributed Costa Rica’s under-performance to a combination of structural and external factors. A strong exchange rate has made the destination more expensive relative to its peers, eroding competitiveness. Infrastructure constraints, concerns about public safety, and the rapid expansion of informal accommodations and unregulated tour operators have also strained the formal tourism economy and affected employment.
• Against this backdrop, Costa Rica’s tourism sector has unveiled a sweeping National Tourism Strategy designed to reverse the trend. The plan targets more than 5.2 million annual visitors by 2035, with projected revenues exceeding $11Bn and the creation of nearly 300,000 jobs.
• Martí Jiménez, president of CANATUR, said the strategy reflects a hard reassessment of the country’s value proposition. “We’ve hit the brakes because our price-product relationship has lost competitiveness. The assumption that demand for Costa Rica is price-inelastic no longer holds,” he stressed. The strategy also emphasises the need for a stronger legal and regulatory foundation to attract long-term investment. Larry Hans Arroyo Vargas, an attorney at Bufete de Costa Rica, said a successful tourism plan must extend beyond promotion. “Clear regulations, streamlined permitting, and legal certainty for investors are fundamental,” he said. “That stability is what allows sustainable projects to take root.”
• Regional competition is also eroding Costa Rica’s once-dominant position in eco-tourism. To counter these pressures, the plan proposes upgrading infrastructure at national parks, creating a government-level “tourism cabinet” to coordinate policy, and elevating gastronomy and local beverages as core elements of the visitor experience. It also aims to channel growth toward rural, coastal, and border communities, using tourism as a driver of social and economic inclusion.

(Source: Travel Mode)

• Escalating transatlantic trade tensions are not expected to have a significant impact on the inflation outlook, according to the European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau.
• On January 17, 2026, US President Donald Trump announced that he would implement a 10% tariff on eight European countries that oppose his desire to purchase Greenland, with the tariff rate set to rise to 25% in June 2026. Trump’s tariff threats over Greenland, and European pledges to retaliate, are set to rekindle the debate over risks to the eurozone’s 21-nation economy.
• Tariffs already in place have so far not resulted in major consequences for prices in Europe, according to Villeroy, the Bank of France chief, who also noted that any new levies would likely only have a “muted” influence. Last ‌year's ‌tariffs did not have an impact on eurozone inflation as ⁠they ⁠were ​mostly paid by U.S. consumers, and a similarly muted price ‍outcome is expected.
• Notwithstanding, if there are additional tariffs, all the effects should be assessed. While there could be limited direct inflationary effect, there could also be an appreciation of the euro, which plays in the opposite direction.
• Judging dangers to inflation and growth to be broadly balanced, ECB policymakers have kept interest rates on hold since June 2025, indicating there is little chance of a change anytime soon. The ECB policymakers have been reassured by inflation that is only a touch short of their 2.0% target, while economic expansion has picked up pace, despite the initial trade storm in 2025.
• Notwithstanding, the ECB must remain nimble in an environment of heightened global uncertainty. There are downside risks on inflation that remain at least as significant as upside risks.

(Sources: Bloomberg & Reuters)

• Britain's jobs market weakened in the run-up to the November 2025 budget announcement by Finance Minister Rachel Reeves, according to official data published on Tuesday, January 20, 2026, which showed a drop in employment and a cooling of wage growth.
• A fall of 38,000 first reported for November 2025 was revised to show a decline of 33,000 people in payrolled employment. In addition, annual pay growth in the private sector excluding bonuses, which is being closely watched by the Bank of England (BoE), slowed to 3.6% in the three months to November 2025, its slowest rise since November 2020, from 3.9% in the three months to October 2025.
• Overall core pay growth slowed to 4.5% in the September-to-November 2025 period, compared with a year earlier, slightly below the 4.6% growth in the three months to October and in line with economists' expectations in a Reuters poll.
• The jobless rate held at 5.1%, as expected. The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity.
• The Bank of England is watching pay as a gauge of how long Britain's still high rate of inflation is likely to last. Financial markets on Monday showed that at least one 0.25 percentage-point interest rate cut was fully priced in for 2026, with a roughly two-thirds chance of two cuts.

(Source: Reuters)

• Data released by the Statistical Institute of Jamaica (STATIN) showed that unemployment continued to improve in October 2025 compared with October 2024, edging down from 3.5% to 3.3%. The reduction reflects a reduction in the labour force, which offset a softening in the total number of persons employed. Total employment stood at 1,413,200 persons, a decrease of 3,800 individuals year on year.
• The population outside the labour force^[1] rose by 6,300 to 693,800 individuals, implying a contraction in the labour force, which fell to 1,462,000 compared with the same period in 2024. As a result, the overall labour force participation rate eased to 67.8%, down from 68.1% in October 2024.
• The number of unemployed persons fell from 51,300 to an estimated 48,800. This decline was driven by a sharp reduction in the male labour force, which fell by 11,900 to 777,200, partially offset by an increase of 5,600 in the female labour force to 684,800.
• There were 126,700 persons employed in the occupation group ‘Clerical Support Workers’ in October 2025, reflecting the largest decrease in employment of 11.2 per cent compared to October 2024. Among ‘Craft and Related Trades Workers’, employment stood at 160,000 persons, representing a decrease of 11,700, of which 8,900 were males. Despite the overall decline, notable gains were recorded among ‘Managers’, where employment increased by 19.3 per cent to 101,400 persons. More persons were also employed as ‘Technicians and Associate Professionals’, resulting in a total of 94,300 in October 2025
• The occupation group with the highest number of employees was ‘Services and Sales Workers’, employing 328,600 individuals. The second largest was ‘Elementary Occupations’, employing 197,900 individuals, then ‘Skilled Agricultural, Forestry and Fishery Workers’ which employed 188,200 persons. Regarding industry groups, ‘Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles’ was the largest employer, engaging 266,500 individuals (19.0%)
• That said, the passage of Hurricane Melissa is expected to disrupt this positive trend. Melissa’s severe impact on key sectors, particularly agriculture, tourism and small business operations, is likely to result in temporary job losses and reduced income opportunities, especially in rural and coastal communities in Western Jamaica. The short-term displacement and sectoral damage are expected to cause a significant spike in unemployment. However, we expect that the unemployment rate will begin to stabilise within a year after the hurricane, gradually declining as key sectors rebound, reconstruction activities accelerate, and external support, both public and private, stimulates job creation. However, the recovery rate will be highly dependent on the speed of reconstruction efforts and how quickly the economy absorbs displaced workers.
• Data for the October Labour Force Survey (LFS) was collected during the reference week of October 5–11 and provides a crucial snapshot of Jamaica’s labour market conditions just before the impact of Hurricane Melissa on October 28, 2025. Despite this, STATIN noted that the October survey was impacted by Hurricane Melissa, resulting in an abridged version of the standard LFS questionnaire. This meant that certain secondary indicators could not be estimated for the quarter.

(Sources: STATIN, NCBCM Research)

^[1] Labour refers to persons aged 15 and over who are working for pay/profit or are actively seeking and available for work, with updated definitions now focusing on 'work' as activities for pay/profit (excluding own-use production) and introducing metrics like Labour Underutilisation (LU1-LU4) for a clearer picture of the job market.

• The Executive Board of the International Monetary Fund (IMF) approved a disbursement in the amount of 306.32Mn in Special Drawing Rights (SDR; equivalent to about US$415Mn, 80% of quota) for Jamaica under the Rapid Financing Instrument’s (RFI) large natural disaster window.
• These resources will help meet the urgent balance of payment needs stemming from the devastation caused by Hurricane Melissa, complementing the resources currently available under Jamaica’s disaster risk financing framework.
• Jamaica’s established track record of economic reforms has created buffers that are helping to address the economic fallout and reconstruction needs after Hurricane Melissa. Nevertheless, the widespread damage caused by the hurricane, together with the resulting fiscal pressures and sharp decline in tourism receipts have generated a sizable balance-of-payments need in the short term.
• The IMF also noted that the Government of Jamaica is committed to supporting the most vulnerable segments of the population in hurricane-hit areas and rebuilding damaged infrastructure. While recognising that the hurricane shock justifies a temporary easing of the fiscal stance, the authorities remain committed to fiscal responsibility and debt reduction once the hurricane shock has receded.
• The authorities also continue to prioritise achieving their inflation target and ensuring financial stability. Deputy IMF Managing Director and Chair, Bo Li, says the emergency assistance under the Rapid Financing Facility will help to support relief efforts, particularly for the most vulnerable, and accelerate the recovery. He also noted that with severe damage to agriculture, the hurricane has caused a significant negative supply shock, which is creating inflationary pressures; however, the Bank of Jamaica’s commitment to its inflation target remains essential to anchor inflation expectations and contain second-round effects.

(Source: IMF)

• The Dominican Republic reached the highest value of mining exports in 2025, closing with an accumulated value exceeding US$2,590Mn, making 2025 the year with the highest exports from this sector of the economy. This value represents a growth of 52% relative to 2024, when mining exports totalled US$1,712.7Mn and a 20% increase relative to 2021, according to data from the Central Bank of the Dominican Republic.
• The information was provided by the Minister of Energy and Mines, Joel Santos, who noted that for the growth of 2025, the last quarter of the year stands out, recording US$825.9Mn, 67% higher than the same period in 2024. Santos specified that mining maintains a significant share of national exports, accounting for more than 40% of total exports, with gold as the main export.
• Notably, the figures for the last quarter of 2025 represent an increase of nearly 14.0% compared to July-September of that year, reaching more than US$720Mn, driven mainly by exports of gold and silver. Santos stated that these results are the result of a management aimed at strengthening investments and institutional strengthening. He also pointed out that the progress made in the mining sector translates into a boost to the national economy.
• Dominican mining sector consolidated its attractiveness as a destination for foreign capital in 2025. Official data indicates that mining captured more than US$556.3Mn in Foreign Direct Investment (FDI) between January and September, representing approximately 14% of the total FDI received by the country in that period, according to Central Bank figures.
• “This leadership responds to the sustained performance of products such as gold, silver and copper, which concentrate a significant part of the exported value and contribute decisively to the generation of foreign exchange, employment and investment,” Santos said. As a whole, the energy and mining sector accounted for around 40% of all FDI captured by the Dominican Republic in 2025, according to the Minister, consolidating itself as one of the principal axes of attraction of foreign capital within the national economy.

(Source: Dominican Today)