• Barbados’ debt position is back where it was prior to the painful debt structuring in 2018 but there is a glimmer of hope since the Government is in a better position to service its debt this time around. This assessment from Barbadian economist Carlos Forte indicated that while the current debt is manageable, the position in which Government now finds itself means that no further borrowing can take place, or it will put future generations in peril. 
• Forte’s remarks came on the heels of concerns raised by other economists about Barbados’ ability to honour its close to $1Bn debt to the IMF over the next five years, now that the programme has come to an end. Over the course of the four-year IMF-backed Barbados Economic Recovery and Transformation (BERT) programme, the Government borrowed some $870Mn, which must be paid back with interest by 2029. 
• Further, since 2020 Barbados has borrowed more than US$1.25Bn from multilateral lending institutions such as the IMF, World Bank, Caribbean Development Bank, and Inter-American Development Bank. That’s the equivalent of BD$2.5Bn. 
• Though the Prime Minister asserted that the debt was manageable, Forte reasoned that BD$2.5Bn dollars of borrowed money in three years is a staggering sum for a small economy like Barbados. The implication is that Barbados is in the early stages of yet another debt trap, one that is more dangerous given the huge foreign debt component.

(Source: Barbados Today)

• Japan's services sector activity expanded at the fastest pace in over eight years in June as the easing of coronavirus curbs boosted sentiment among businesses such as those in tourism. 
• The pick-up in activity is welcome news for a government betting on domestic demand to put the world's third-largest economy firmly on a recovery track and help overcome production pressures on the country's manufacturing industry. 
• The final au Jibun Bank Japan Services purchasing managers' index (PMI) rose to a seasonally adjusted 54.0, marking the fastest pace of expansion since October 2013. That was stronger than May's final 52.6 growth, though it remained below a 54.2 flash reading for June released last month. 
• Greater demand for services and rising fuel and raw material prices, however, caused firms' average input prices to increase at a record pace. This pushed firms to raise prices charged for services at the quickest rate since October 2019," said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey. 
• A resurgence in COVID-19 cases overseas, especially in Japan's major trading partner China, hindered international sales, according to the survey.

(Source: Reuters)

• Consumer inflation expectations surged in Canada, hitting fresh highs in the short-term and up "significantly" over the long-term, according to a survey conducted by the Bank of Canada, bolstering calls for a very rare 75-basis point rate increase. 
• In a separate survey, the bank found businesses expect high inflation for longer, with firms eyeing survey-record wage increases over the next 12 months and many planning to pass rising costs onto customers. The surveys both reinforce calls for a 75-bps rate increase at the Bank of Canada's next decision on July 13. This would be the largest hike since August 1998, when the bank lifted rates by 100 bps to defend the currency. 
• Canada's inflation rate hit a near 40-year high at 7.7% in May and prices are set to go higher before easing later this year. The bank has signaled it is willing to act aggressively to keep price increases from becoming entrenched. What central banks dread is a situation in which price increases become self-fulfilling -- expectations for higher prices cause people to raise wage demands and accelerate purchases, driving further price increases. 
• In its Business Outlook Survey, the bank found firms see inflation above 3% on average over the next two years, with nearly a quarter expecting price increases "well above" the 2% target for three years or more. Firms also plan to raise wages to attract and retain workers, the bank said, with businesses now expecting wage increases of 5.8% on average over the next 12 months, up from 5.2% in the previous survey.

(Source: Reuters)

• The Jamaican economy grew by 6.4% during the first quarter of 2022 when compared to the first quarter of 2021. A respective 8.9% and 0.4% growth in the Services and Goods Producing Industries were the primary drivers of this performance. 
• The easing of COVID-19 containment measures, including the withdrawal of the Disaster Risk Management Order during the period, positively impacted economic activity which supported the expansion in output. 
• All industries within the Services Industries grew: Hotels & Restaurants (107.1%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (8.8%), Transport, Storage & Communication (8.8%), Other Services (12.4%), Finance & Insurance Services (0.7%), Real Estate, Renting & Business Activities (1.1%), Producers of Government Services (0.4%) and Electricity & Water Supply (1.4%). 
• The performance of the Hotels & Restaurants industry was due to growth in hotels & other short-stay accommodations and restaurants, bars & canteens. The 230.1% increase in foreign national arrivals during the period positively impacted this industry. This sector could see a further improvement in its performance as the Jamaica Tourist Board (JTB) is projecting that the country will welcome approximately 800,000 visitors for the 2022 summer period with destination earnings exceeding US$1.1Bn. 
• Within the Goods Producing Industries, higher output levels were recorded for Agriculture, Forestry & Fishing (8.2%), Manufacturing (4.0%) and Construction (3.5%). However, the Mining & Quarrying industry declined by 60.0%. The Agriculture, Forestry & Fishing industries benefitted from favourable weather conditions which influenced greater output.
• The IMF currently expects the economy to grow by 2.5% this calendar year. This will continue to be supported by a recovery in the tourism sector which is expected to see its strongest summer ever, greater consumer demand for other services, and higher private consumption. However, the high inflation and interest rate environment poses downside risks to this forecast. 

(Source: STATIN & NCBCM Research)

• The Dominican Republic is authoring a strong tourism rebound after hosting more than 2.2Mn visitors in the first four months of 2022. The DR closed the best month of April in the history of the country’s tourism with 736,000 visitors. The rebound comes following the government’s implementation of policies intended to attract visitors following the March 2020 pandemic’s outset such as implementing a state-funded visitor travel insurance. 
• The Dominican Republic expects to host seven million land-based and cruise ship visitors in 2022 said government officials at the recent Dominican Annual Travel Exchange (DATE) conference. 
• Reaching the seven million visitor threshold will bring Dominican Republic travel within close proximity of its pre-pandemic high-water mark of 6.4Mn land-based travelers and 1.1Mn cruise ship visitors in 2019, according to Caribbean Tourism Organization data. 
• In May, Expedia Group reported Dominican Republic summer bookings grew 40% year-over-year compared with 2021. International travelers drove this increase, led by the U.S., DomRep’s primary travel audience, representing 80% of visitors.  The Dominican Republic has launched several projects, from infrastructure improvements in the historic capital city of Santo Domingo to new hotel developments and cruise port expansion in locations across the country. This will further attract and support the rebound and buoyancy of the country’s tourism sector.

(Source: Travel Pulse)

• Guyana and Barbados are currently working out the modalities for the hospitality training of 6,000 Guyanese set to get underway in Barbados. The governments of Guyana and Barbados agreed last year on the training of Guyanese in hospitality, to effectively prepare Guyana for the imminent boom in the tourism sector. 
• Mohamed Irfaan Ali said last year that Barbados has an established world-class hospitality programme that will benefit Guyana. This will assist in fulfilling the need for technical capacity and human resources to manage and work in the many hotels that will be established locally. 
• Meanwhile, Minister Walrond said the establishment of the local Hospitality Training Institute is progressing smoothly, as well as all areas of collaboration with Barbados regarding airlift and joint marketing.

 (Source: Caribbean News Global)

• Chinese businesses ranging from services to manufacturing reported a slowdown in the second quarter from the first, reflecting the impact of the recent lockdown in Shanghai. This statement was made by the U.S.-based China Beige Book, which claims to have conducted more than 4,300 interviews in China in late April and the month ended June 15. 
• “While most high-profile lockdowns were relaxed in May, June data do not show the powerhouse bounce-back most expected,” The analysis found few signs that government stimulus was having much of an effect yet. 
• Shanghai, China’s largest city by gross domestic product, was locked down in April and May. Beijing and other parts of the country also imposed some level of COVID controls to contain mainland China’s worst outbreak of the virus since the pandemic’s initial shock in early 2020. 
• Between the first and second quarters, hiring declined across all manufacturing sectors except for food and beverage processing, according to the China Beige Book report. The employment situation likely won’t start to improve until China stimulates its economy more in the fall, China Beige Book Managing Director Shehzad H. Qazi said on June 29, 2022, on CNBC’s “Squawk Box Asia.”

(Source: CNBC)

• A Federal Reserve tracker of economic growth is pointing to an increased chance that the U.S. economy has entered a recession. Most Wall Street economists have been pointing to an increased chance of negative growth ahead, but figure it won’t come until at least 2023. 
• However, the Atlanta Fed’s GDPNow measure, which tracks economic data in real time and adjusts continuously, sees second-quarter output contracting by 1%. Coupled with the first-quarter’s decline of 1.6%, that would fit the technical definition of recession. 
• “GDPNow has a strong track record, and the closer we get to July 28th’s release [of the initial Q2 GDP estimate] the more accurate it becomes,” wrote Nicholas Colas, co-founder of DataTrek Research. 
• The tracker took a fairly precipitous fall from its last estimate of 0.3% growth on June 27. Data this week showing further weakness in consumer spending and inflation-adjusted domestic investment prompted the cut that put the April-through-June period into negative territory. 
• One big change in the quarter has been rising interest rates. In an effort to curb surging inflation, the Fed has jacked up its benchmark borrowing rate by 1.5 percentage points since March, with more increases likely to come through the remainder of the year and perhaps into 2023. 
• Fed officials have expressed optimism that they’ll be able to tame inflation without sending the economy into recession. However, Chair Jerome Powell at a panel discussion presented by the European Union earlier this week said getting inflation down is the paramount job now.

(Source: Reuters)

• On June 29, 2022, the Bank of Jamaica (BOJ) announced its decision to increase the policy interest rate (the rate offered to deposit-taking institutions on overnight placements with BOJ) by 50 basis points to 5.50% per annum, effective 30 June 2022. This reflects a cumulative increase in the policy rate of 500 bps since October 2021. 
• Although the point-to-point inflation outturn fell in May (10.9%) relative to April (11.8%), core inflation remained elevated and headline inflation is likely to continue to breach the Bank’s target range of 4%-6.0% over the next year owing to global developments and heightened uncertainty. The decision also factored in the US Federal Reserve’s signal of a faster pace of increase in interest rates in the US. 
• The Bank’s current decision will cause liquidity conditions to remain tight and interest rates on bank deposits and loans to rise further, making savings in Jamaican dollars more attractive relative to foreign currency assets and borrowing in Jamaican dollars more expensive. 
• The Bank also decided to continue pursuing other measures to contain Jamaican dollar liquidity expansion and maintain relative stability in the foreign exchange market. Thus far the bank has sold approximately US$552Mn to the foreign exchange market since October 2021 to complementing its policy rate increases. This is more than twice the amount when compared with the previous corresponding period. 
• While inflation is forecasted to rise further over the next two months, the Bank forecasts that the rate will fall in the second half of the year, consistent with consensus forecast for a fall in commodity prices. This means that the public should start to see lower inflation rates each month, beginning in the latter part of the second half of 2022, as long as tensions between Russia and Ukraine do not escalate and inflation among Jamaica’s trading partners falls.

(Source: BOJ)

• The Bank of Jamaica has advised that the phased rollout of JAM-DEX has progressed with the amendments to the Bank of Jamaica Act (BOJA) 2020 being passed into law on June 14, 2022. 
• These amendments designate BOJ as the sole authority to issue Central Bank Digital Currency (CBDC), JAM-DEX, which is now legal tender. With the amendments, all references to “notes and coins” are now expanded and replaced with, “notes, coins and central bank digital currency”.   
• Given these amendments the Bank can now advance the national issuance of CBDC and in that regard, members of the public are encouraged to sign up for a digital wallet which facilitates access to JAM-DEX. Currently, National Commercial Bank offers JAM-DEX through LYNK®, its digital wallet. 
• Other wallet providers are expected to come on board for the distribution of JAM-DEX later this year. JAM-DEX provides a safe, efficient and convenient way to pay for goods and services.

(Source: BOJ)