• The Jamaican Government is moving to develop Jamaica as a planning supply hub for the local tourism sector and for other tourism-dependent nations in the region. Tourism Minister, Hon. Edmund Bartlett, made the disclosure as he closed the 2022/23 Sectoral debate in the House of Representatives on June 14. 
• The idea of the logistic supply hub for Jamaica and the other Caribbean islands came out of the Tourism Recovery Task Force chaired by Wilfred Baghaloo in 2020 and aims to give Jamaican entities the necessary muscles needed to grow locally, regionally and internationally. 
• As supply chain issues continue to present a challenge for many countries, it is believed that the hub will help to eliminate some of the supply chain uncertainties. The establishment of the supply logistics centre in the free zone is expected to enable the local suppliers to scale up and to be able to respond effectively. 
• This announcement came on the cusp of Jamaica welcoming the first million stop-over visitors for the year on Wednesday (June 15), bringing earnings of US$1.5Bn. Minister of Tourism, Hon. Edmund Bartlett, said that the strong arrival figure is a sign that the industry is on the “cusp of restoring its 2019 levels of arrivals and earnings”, following the disruptions caused by the pandemic. 
• He noted that summer bookings “are pacing ahead of 2019 (pre-pandemic), to be the strongest summer we have ever experienced”. In addition to this, tourism arrivals for 2023 are projected to reach 3.7 million and $3.5Bn in earnings, with 2024 expected to surpass 2019 levels with 4.2 million visitors and $4Bn in revenue. Considering these expectations, the supply hub would help to reduce potential challenges that the sector could face in sourcing goods to meet the rising demand.

(Source: JIS News & Ministry of Tourism)

• The Limners and Bards Limited (LAB) reported an 8.5% year-over-year rise in net profit to J$123.1Mn for its six months ended April 30, 2022. 
• Revenue for the period was $781.7Mn, a 26.3% increase supported by growth in the company’s core business as the effects of the pandemic on the business recede. Revenue from media placement was up $149.6Mn (or 53.4%), while the advertising agency’s was up $16.1Mn (or 71.3%). The overall expansion in revenue was however tempered by a 6.0% decline in funds from production services. Consequently, gross profit and operating profit surged by 35.7% and 26.4%, respectively. 
• Although direct and indirect costs rose by 21.7% and 46.0%, respectively, the gross margin increased by 2.5 percentage point to 35.2%, while the operating profit margin remained stable at 16.5%. 
• It is expected that The LAB will see continued growth and profitability for 2022 as the company repositions to take advantage of opportunities that may arise and to satisfy clients’ digital shift following the pandemic. The company relies heavily on technology and is growing its newest business segment (content) to capitalize further on new opportunities in the marketplace, which should generate revenues. Additionally, management also remains focused on cost containment in light of the high inflationary environment which should support its bottom-line. 
• LAB’s stock price has decreased by 26.6% since the start of the calendar year. The stock closed Friday’s trading session at $2.82 and currently trades at a P/E of 20.1x which is above the Junior Market  Average of 17.4x.

(Sources: JSE and NCBCM Research)

• Fitch Solutions revised its end-2022 interest rate forecast for Brazil to 13.75%, from 13.25% previously, as higher inflation expectations, rising rates globally and fiscal concerns will lead the Banco Central do Brasil (BCB) to extend its hiking cycle through its August 3 meeting. 
• Inflation is expected to moderate towards the end of the year, reaching 8.6% y-o-y from 11.7% in May. It is forecasted that it will remain far above the BCB’s 3.5% target through 2023, ending the year at 4.6%. 
• Inflation is expected to average 5.8% throughout 2022, and end the year at 4.6%. While this remains above the BCB target, it is expected that once a consistent disinflationary trend has been established, expectations will begin to stabilise, allowing the BCB to lower the rate to support economic growth. 
• In fact in 2023, the BCB is expected to begin loosening monetary policy by bringing the policy rate down to 9.75% by the end of the year as inflation eases.

(Source: Fitch Solutions)

• Global commodity inflation, aggravated by the war in Ukraine, threatens to leave 14Mn people in Latin America with challenges accessing food supply, almost 50% more than the current figure, the United Nations World Food Program (WFP) warned yesterday at a press conference. 
• There are currently 9.7Mn people in this situation of food insecurity in 13 countries of the region. However, they are trying to alleviate food shortages with imports from regional producers such as Mexico or Argentina, said the organization’s director for the region, Lola Castro. 
• The region had suffered multiple crises due to climate change and adverse supply chain impacts of the pandemic, which put 17.7Mn people in a situation of food insecurity. By the end of 2021, the figure had dropped to 8.3Mn. 
• However, implications of the current geopolitical issues on food supply are exacerbating the food security issues in the region. Although Russia and Ukraine do not export large quantities of grains and other foodstuffs to the region, the generalized rise in food prices across the global market has severely affected many Latam countries, which in some cases are net importers of these basic goods.

(Source: Dominican Today)

• The Bank of England stuck to its gradual increases in interest rates on June 15, 2022, as other Central Banks such as the US Fed, took more urgent action. It increased its Bank Rate by another 25 basis points even as it warned that Britain's economy would shrink in the April-June quarter. 
• The Monetary Policy Committee voted 6-3 for the hike to 1.25%, the same breakdown as in May with the minority voting for a 50 basis-point increase. Britain's benchmark rate is now at its highest since January 2009, when borrowing costs were slashed as the global financial crisis raged. It was the fifth time the BoE has raised rates since December when it became the first major central bank to tighten monetary policy following the COVID-19 pandemic. 
• The BoE continues to raise rates even though it has warned a sharp economic slowdown is coming, because consumer price inflation hit a 40-year high of 9% in April, more than four times the BoE's 2% target. The central bank has said that inflation would peak slightly above 11% in October when energy bills go up again. 
• Britain's inflation surge looks set to last longer than in many other economies, partly reflecting its mechanism for domestic power tariffs but also because of the hit to trade. Further, a chronic lack of workers to fill vacancies is worrying the BoE because it could lead to a jump in wages that further feeds inflation.
• A fall in the pound in recent weeks, caused largely by rising interest rate expectations elsewhere, threatens to add to inflation pressure in Britain. The BoE said the sterling had been "particularly weak against the U.S. dollar".

 (Source: Reuters)

• For the month of May, the All-Jamaica Consumer Price Index (CPI) increased by 0.3%. May’s outturn meant that the point-to-point inflation was 10.9% for the 12 months to May 2022, down from the 11.8% reported in April 2022. 
• For May, the increase in consumer prices was largely driven by the 7.7% increase in the index for the division ‘Restaurant and Accommodation Services’. Higher prices for items within the class ‘Restaurants, cafes and the like’ accounted for the increase. 
• Also contributing to the upward movement in the CPI is an increase of 0.4% in the index for the heavily weighted division ‘Food and Non-Alcoholic Beverages’. Within this division, the class ‘Cereals and cereal products’ had the largest increase (2.4%) due to increases in the price of flour, bread, and rice, as global shortages around inputs such as wheat, drove up the prices of these imported goods. 
• However, the increase in the ‘Food and Non-Alcoholic Beverages’ division was tempered by a 2.9% decline in the index for the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’. This decline was due to lower prices for agricultural produce such as vegetables, as a result of an improvement in the local supplies. 
• Importantly, the overall rate of inflation was moderated by a 3.0%  decline in the index for the ‘Housing, Water, Electricity Gas and Other Fuels’ division, due largely to a decline of 9.0% in the index for the group ‘Electricity, Gas, and Other Fuels’. 
• Although the point-to-point inflation has declined by 0.9 percentage points, it remained outside the BOJ’s target range of 4% to 6%, for the 10^th consecutive month. This breach is expected to continue as the BOJ  projects successive breaches of the target over the next two years. Although the rate was expected to peak within the range of 12.0% and 15.0% by June 2022, this may occur later than expected as global challenges continue to develop. Inflation will likely remain elevated as drought and the Russian Ukraine war raises food security challenges. This is expected to drive continued transmission of higher international commodity and shipping prices to domestic processed foods, food-related services, and energy costs. 
• On June 29th the BOJ will have its monetary policy meeting and it is speculated that it will increase its policy rate once more. This increase will likely carry the policy rate to 5.5%, from the current rate of 5.0%. This decision will be driven by the expectation for future breaches in the inflation range and the still elevated inflation expectations for 12 months ahead, which rose to 12.1% in the March’s Survey from 9.1% in the prior survey. The recent increase in the Fed funds rate to the target range of 1.5% and 1.75% from 0.75% and 1.0% will also likely play a role in the BOJ’s policy rate decision.

(Sources: STATIN & NCBCM Research)

• Given ExxonMobil’s aggressive approach towards unlocking more oil in the Stabroek Block, which already holds almost 11Bn barrels of oil equivalent resources, the World Bank is now warning Guyana to be wary of the environmental and economic consequences that come with an accelerated pace of development. 
• The financial institution has been one of the nation’s key development partners since the discovery of oil back in May 2015. Over the years, it has spoken glowingly about the nation’s potential to be a state with oil and gas as well as the significant revenues that will come. 
• Of note, in an updated economic review of the nation, the World Bank said Guyana, is poised to be the fastest growing economy in the world, fuelled primarily by the expansion of oil output. Nevertheless, the World Bank was keen to note that the real challenge will be for Guyana to transform this newfound oil boom into a better standard of living for citizens. 
• It also underscored the importance of the country being cognizant of its vulnerability to oil-related shocks, both price and output, and highlighted the possibility of increased spending as the revenues pour in, which could overheat the economy. The bank cautioned that the nation must spend according to the effectiveness of its systems to monitor and control wastage and ensure efficiencies.

(Source: Kaieteur News)

• The Central Bank of Trinidad & Tobago stated that the supply-side stimulus to both food and core inflation in the twin island is anticipated to persist to the end of 2022. According to its latest Monetary Policy Report, rising fertilizer prices will lead to higher costs of imported food. 
• The war in Ukraine has disrupted the supply of agricultural factor inputs such as potash fertiliser, and any resolution to reduce fertiliser application may result in lower crop yields which can elicit export restrictions from major food-exporting nations. 
• Inflation remained relatively anchored at 4.1% in March 2022 (up from 3.9% in October 2021), but several supply-side factors such as high and rising international food prices and international transport delays had notable pass-through to domestic prices. Elevated energy and food prices and increased external demand as economies recover are expected to be the driving factor for inflation. 
• Thus far the Central Bank of Trinidad and Tobago has kept its monetary policy stance unchanged with its short-term rate on its overnight collateralised financing to commercial banks, at 3.5%. Fitch Solutions expects the bank to raise the rate moderately to 3.75% as inflation rises.

(Sources: Trinidad and Tobago Guardian & CBTT)

• The average interest rate on the most popular U.S. home loan climbed to its highest level since the 2008 financial crisis and purchase applications were down more than 15% from last year, Mortgage Bankers Association (MBA) data showed on June 15, 2022. 
• The average contract rate on a 30-year fixed-rate mortgage rose by 25 basis points to 5.65% for the week ended June 10, the highest level since late 2008, towards the end of the financial crisis and Great Recession. 
• The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for the purchase of a single-family home, increased 8.1% from a week earlier and its Refinance Index rose 3.7%. This means that more homebuyers sought properties compared to a week earlier, perhaps signalling a flurry of activity before aggressive tightening by the Federal Reserve further impacts the sector.

(Source: Reuters)

• Russia’s Gazprom announced a reduction in natural gas flows through a key European pipeline for the second day in a row Wednesday, creating further energy turmoil for Europe as it tries to reduce its extensive use of Russian oil and natural gas amid the war in Ukraine. 
• The state-owned energy giant said on Twitter that deliveries through the Nord Stream 1 pipeline to Germany would be cut again Thursday, bringing the overall reduction through the undersea pipeline to 60%. 
• The drop in shipments of gas used to power industry and generate electricity would amount to some 16 billion cubic meters by the end of the year, or around 10% of total European Union gas imports from Russia, according to Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels. 
• In light of the unfair invasion of Russia, the sanctions and the instability of the oil market in the West, Europe is working to reduce its dependence on Russian energy as the war worsens rising oil and gas prices that are fueling record inflation. Gas demand has fallen after the end of the winter heating season, but European utilities are racing to refill storage ahead of next winter with prices high and supplies uncertain. 
• While gas storage is refilling well, the cutoffs and reductions come on top of an explosion at a liquefied natural gas terminal in Texas whose exports were largely going to Europe, adding another squeeze to the tight natural gas market, energy expert Tagliapietra said. He urged Europe “not to be complacent and urgently scale-up coordination” so the continent is “prepared for a possibly difficult winter ahead.”

(Source: AP News)