• TransJamaican Highway Limited (TJH) reported a 31.1% increase in its net profits for the quarter ending March 31, 2025 (Q1 2025) to US$9.07Mn.
• The growth in earnings was fueled by a 13.8% year-on-year increase in revenues and a 9.5% reduction in operating expenses, which was partially offset by a 29.9% decline in other income to US$0.9Bn. Strong revenue performance from the company's main operations, i.e. toll collections, led to the overall improvement in its topline performance, while the decline in other income was due to lower interest income, as the Group reduced investment activity to reserve funds for planned initiatives scheduled for the first half of 2025.
• Despite an increase in administrative expenses (7.1%), operating profit benefited from a reduction in operating expenses (-9.5%). Higher salary adjustments and increased travel expenses, linked to renewed contracts for operational team transportation, accounted for the rise in admin expenses. In contrast, lower amortisation of the Intangible Asset and a decline in repairs and maintenance activities carried out in the first quarter contributed to the reduction in operating expenses. That said, this was partially offset by higher marketing expenses and bank charges as TJH increased its marketing spend to support the expanded T-Tag and other campaigns, as well as higher bank charges.
• Against this background, operating profit amounted to US$15.42, a 21.9% increase over the period, resulting in a 456 basis point (bps) improvement in operating margins to 68.5%.
• Additionally, financing costs for the company fell (-4.9%), aligning with the gradual decline in interest expenses, as principal repayments on secured notes continue to be paid on a quarterly basis. Consequently, on the back of higher revenues and lower operating and financing expenses for the quarter ended March 31, 2025, TJH’s net profit margin rose to 40.3% from m34.9% in the previous corresponding quarter.
• At market close on Tuesday, TJH’s JMD stock price was J$3.67, down 20.7% since the start of the year. At its current price, the company trades at a P/E of 9.1x, below the average of 15.5x for the Main Market Energy, Industrials and Materials Sector.

(Sources: TJH Financial Release & NCBCM Research)

• While the Jamaican economy is estimated to have contracted by 0.5% in 2024, according to Fitch Solutions, expectations are for the country to grow by 1.0% in 2025, with sluggish external demand offset by steady domestic demand amid the continued economic recovery from Hurricane Beryl.
• Favourable domestic economic conditions influence the growth outlook, including a record-low unemployment rate of 3.5% in the fourth quarter of 2024 (Q4 2024) and 3.7% in Q1 2025, well anchored inflation rates within the BOJ’s target range, and an expected 6.7% minimum wage increase and rise in the income tax threshold from J$1.7Mn to J$1.8Mn in April 2025 that will help to boost disposable income.
• While domestic demand will help growth recover in 2025, Jamaica remains vulnerable to external shocks and challenging global economic conditions. These external factors include flagging U.S. demand, a challenging trade policy environment following Trump’s tariff announcement, and a potentially damaging hurricane season in 2025.
• Concerning the U.S., Fitch anticipates that it will fall into a modest recession over the second half of 2025 (H2 2025), which will have meaningful implications for Jamaica. The U.S. accounted for 47.2% of Jamaica’s total exports in 2023 and 40.9% of total imports. A slowing US economy will, therefore, impact remittances to Jamaica, which made up 18.5% of GDP in 2023 and an estimated 16.9% in 2024.  
• Additionally, slowing economic activity in the U.S. will impact investment levels in Jamaica, as evidenced by sharp declines in foreign direct investment inflows in 2024.

(Sources: Fitch Connect)

• A lower interest burden and a reversal of one-time expenditures will see Costa Rica’s budget deficit narrow from 3.8% of GDP in 2024 to 3.3% in 2025 and further drop to 3.1% in 2026.
• Fitch Solutions expects this to bring the primary surplus to 1.5% of GDP compared to 1.1% in 2024, and just above the government’s target of 1.3%.
• In 2024, expenditure growth (6.3%) outpaced revenue growth (3.2%), largely due to a one-off COVID-19-related expense tied to vaccine procurement agreements. This should cause spending to ease in 2025, with expenditures expected to fall to 18.4% of GDP (relative to 18.9% in 2024).
• The public employment reform law, which standardises salary structures and eliminates discretionary bonuses, will also help reduce the public wage bill, historically one of the largest components of spending.
• Revenue growth will, however, remain relatively flat at 14.9% of GDP in 2025 relative to the 15.1% of GDP in 2024, as political gridlock between the executive and legislators continues to block structural tax reforms.
• Nevertheless, an increased primary surplus will help reduce the debt-to-GDP ratio from 59.8% in 2024 to 59.5% in 2025, supported by adherence to the fiscal rule. Looking ahead, the debt-to-GDP ratio is also expected to continue on a downward path.

(Source: Fitch Connect)

• Panama’s real GDP growth is expected to come in at 2.6% in 2025, slightly below 2024’s estimated outturn of 2.8%. Growth will be supported by a return to more normal water levels in the Panama Canal (which accounts for roughly 7.5% of GDP) after several years of reduced throughput due to drought.
• An upward revision to the projections would have been on the cards given solid incoming data; however, those prints largely predate the aggressive shifts in U.S. trade policy seen since March 2025 and the deterioration in foreign relations between the U.S. government and the Mulino administration over President Donald Trump’s insistence that the Panama Canal be either returned to U.S. hands or that appropriate compensation should be paid.
• Panama is not particularly exposed to the direct effect of tariffs, given that goods exports account for a small share of GDP. Nonetheless, its status as a major logistics hub does leave it more vulnerable to the knock-on consequences of tariffs on goods trade, but the impact will be masked in 2025 by a surge in global trade over H1 2025 as firms race to front-run tariffs.
• As a result, the primary impact on growth in the near term will be a drop in business confidence, exacerbated by persistent concerns that the Trump administration may impose financial sanctions of some sort, which Panama is highly exposed to as a dollarised economy, in response to Mulino’s reluctance to hand back control of the Canal.
• Further, two domestic headwinds will add to the existing pain. First, the government’s aggressive fiscal consolidation plans, which will likely take the form of spending cuts, will likely see public investment set to bear the brunt. Second, a national strike that began in mid-to-late April in response to the government’s social security reforms will weigh heavily on economic activity in Q2 2025, with the Chamber of Commerce estimating that the stoppages are coming at a daily cost to the economy of around US$100Mn (approx. 0.1% of GDP).

(Source: Fitch Connect)

• U.S. consumer prices rebounded moderately in April as declining food costs partially offset rising rents, leading to the smallest annual increase in four years, but the inflation outlook remains unclear against the backdrop of tariffs.
• The rise in prices reported by the Labour Department's Bureau of Labour Statistics on Tuesday, May 13, 2025, was below economists' expectations and showed little impact from President Donald Trump's sweeping import duties, whose impact economists expected to become evident by the middle of this year.
• The Consumer Price Index (CPI) increased 0.2% last month after dipping 0.1% in March, which was the first decline since May 2020, the Labour Department said. Economists polled by Reuters had forecast that the CPI would rise 0.3%.
• Shelter, which includes rents, rose 0.3% and accounted for more than half of the increase in the CPI. That said, that jump following a 0.2% gain in March was partially offset by a 0.1% decline in food prices, which followed a 0.4% acceleration in March. Furthermore, grocery store prices decreased 0.4%, the largest decline since September 2020, pulled down by a 12.7% drop in the cost of eggs, the biggest drop since 1984.
• The data suggested price pressures were cooling before Trump's tariffs policy, but did not change economists' views that the Federal Reserve would continue to pause its interest rate-cutting cycle until late in the summer.
• Though the U.S. and China took a major step towards de-escalating their trade war over the weekend with a 90-day truce, a 10% blanket duty on almost all imports remains in place. Sectoral tariffs also continue to be levied. "Improvements in global trade will provide some clarity on the future path of inflation," said Jeffrey Roach, chief economist at LPL Financial.

 (Source: Reuters)

• U.S. President Donald Trump signed a wide-reaching executive order on Monday, May 12, 2025, directing drugmakers to lower the prices of their medicines to align with what other countries pay, which analysts and legal experts said would be difficult to implement.
• The order gives drugmakers price targets in the next 30 days and will take further action to lower prices if those companies do not make "significant progress" towards those goals within six months of the order being signed.
• Trump told a press conference that the government would impose tariffs on companies if the prices in the U.S. did not match those in other countries and said he was seeking cuts of between 59% and 90%.
• The United States pays the highest prices for prescription drugs, often nearly three times more than other developed nations. Trump tried in his first term to bring the United States in line with other countries but was blocked by the courts.
• Trump's drug pricing proposal comes as the president has sought to fulfil a campaign promise of tackling inflation and lowering prices for a host of everyday items for Americans, from eggs to the gas pump. He noted his order on drug prices was partly a result of a conversation with an unnamed friend who told the president he got a weight loss injection for $88 in London and that the same injection in the U.S. cost $1,300.
• If drugmakers do not meet the government’s expectations, it will use rulemaking to bring drug prices to international levels and consider a range of other measures, including importing medicines from other developed nations and implementing export restrictions, a copy of the order showed.

(Source: Reuters)

• Tropical Mobility, a majority-held subsidiary of Tropical Battery Company, recently announced a partnership with Snap-on to distribute the group’s Total Shop Solutions brands in Jamaica, including Hofmann, Challenger Lifts, Ecotechnics, and Pro-Cut.
• Snap-on is a leading global developer, manufacturer, and marketer of tool and equipment solutions for professional technicians. Snap-on Incorporated is a USD$3.7Bn, S&P 500 Company with product lines that include high-quality hand tools, tool storage solutions, diagnostic equipment, management systems, and “under-car” shop implements.
• The partnership with Snap-on perfectly aligns with Tropical Mobility’s growth and diversification strategy in the automotive sector.
• Under the agreement with Snap-on, Tropical Mobility provides sales and service on a wide range of automotive lifts, wheel aligners and wheel balancers, tire removal equipment, brake disc skimming lathes, and air conditioning service equipment.
• This partnership comes less than a month after the company’s announcement of a signed Memorandum of Understanding with Zero Emisión RD to Service Tesla Electric Vehicles in Jamaica.

 (Sources: JIS)

• Mexico's annual inflation rate came in line with market expectations in April, accelerating from the previous month but still within the central bank's target range. That should allow the Bank of Mexico to keep lowering borrowing costs in Latin America's second-largest economy, which faces a weakening trend amid mounting global trade uncertainties.
• Consumer prices in Mexico rose 3.93% in the year through April, according to national statistics agency INEGI, roughly in line with economists' forecasts in a Reuters poll and up from 3.8% the previous month.
• Mexico's central bank, also known as Banxico, has an inflation target of 3%, plus or minus a percentage point. In March, it cut its interest rate by 50 basis points for the second consecutive time to 9%, the lowest since September 2022, and policymakers have signalled that further easing should come if inflation holds steady as expected. The central bank's next decision is scheduled for May 15.
• JPMorgan economist Gabriel Lozano said that Banxico is widely expected to keep the 50-basis-point easing pace, noting that although the impact of U.S. tariffs brings downside risks to growth, inflation has not substantially improved. In April alone, consumer prices in Mexico rose 0.33%, while the closely watched core index, which strips out some volatile food and energy prices, rose 0.49%. Both were in line with market forecasts.
• The 12-month core index stood at 3.93%, up from 3.64% in March, with core inflation driving the overall index up.

(Source: Reuters)

• The International Monetary Fund (IMF) has commended Guyana’s rapid economic transformation and strong macroeconomic performance following the conclusion of its 2025 Article IV Consultation. Guyana’s economic transformation is advancing strongly and broadening in scale. Rapidly expanding oil production, strong non-oil output, and large-scale public infrastructure investment supported the highest real GDP growth rate in the world, averaging 47% per year since 2022.
• Despite the strong economic performance, inflation reached 2.9% by the end of 2024, up from 2% in 2023, driven largely by higher food prices.
• In terms of fiscal position, the overall fiscal deficit widened from 5.1% of GDP in 2022 to 7.3% of GDP in 2024, reflecting a large increase in capital expenditure.
• That said, driven by higher oil exports, Guyana’s current account surplus more than doubled in 2024, reaching about 24.5% of GDP. Consequently, gross international reserves surpassed US$1Bn, while the Natural Resource Fund (NRF) accumulated over US$1.1Bn in 2024, reaching US$3.1Bn (over 12.5% of GDP).
• Looking ahead, the economy is expected to grow, inflation should rise slightly and the fiscal deficit and the current account surplus should narrow. The economy should grow on average by 14% per year over the next five years, driven by robust oil production and strong non-oil GDP growth. Positive spillovers from the oil sector and improvements in infrastructure, productivity, and resilience are also expected to boost the real non-oil GDP growth. While inflation is projected to edge up to around 4% in 2025, the overall fiscal deficit and the current account surplus are expected to narrow in 2025.
• Risks to the outlook are broadly balanced. On the upside, additional oil discoveries and productivity-enhancing investments, including strengthening energy resilience, would further bolster Guyana’s long-term economic prospects, while expanding construction activity would support higher short-term non-oil GDP growth. Downside risks stem from overheating pressures, which, if not contained, would lead to higher inflation and a real exchange rate appreciation

• The Bank of England (BOE) cut its main interest rate by 0.25 percentage points to 4.25% on Thursday, May 8, 2025.
• The minutes of the Bank's meeting showed the rate-setting committee was divided. Of the nine members, five voted to cut rates to 4.25%, two voted in favour of a larger reduction to 4%, and two voted for no change.
• "The Monetary Policy Committee is clearly very divided on how policy should respond to the many shocks currently hitting the economy. This is highly unusual and will make it hard for the Bank to send a clear signal to the market about the likely path of policy. But with the bank maintaining its guidance that further cuts will be 'gradual and careful', the chance of another cut in June probably has fallen significantly", said Luke Bartholomew, Deputy Chief Economist of Aberdeen London:
• Most recent U.K. inflation figures show prices rose 2.6% in the year to March. However, the rate is expected to jump following a series of household bill increases at the start of April, including energy and water prices.
• Inflation is expected to rise "temporarily" to 3.5% this year due to the bill increases before falling back due to lower oil and gas prices set to feed through in the coming months.
• That said, the Bank expects UK growth for the first three months of this year to be stronger than it originally forecast at 0.6%, boosted by U.S. firms stockpiling goods ahead of Trump's tariffs coming into effect. The official figures are set to be released next week. A boost in growth would be welcomed news to the government, which has made growing the economy its main priority to boost living standards.

(Source: Reuters & BBC)