• The Caribbean’s agriculture sector has been severely devastated by Hurricane Beryl, which made landfall on the islands of Barbados, Grenada, St. Vincent and the Grenadines Jamaica, and several other islands last week.
• This effefts of the Hurricne resulted in a setback of the region’s food security vision of reducing its food import bill by 25% by 2025. According to Guyana’s President and the Caribbean Community’s (CARICOM) chairperson Dr. Irfaan Ali, initial reporters have indicated that the sector has suffered tens of millions in losses.
• “The initial assessment is heart-wrenching to our farmers, our government, and the people of these countries. It is heart-wrenching because of the tremendous investment, policy commitment, and budget support that was placed in the agriculture sector since 2020,” Dr Ali, who is also the lead Head of Government with responsibility for agriculture, agricultural diversification, and food security in the region Quasi Cabinet, said.
• While an initial assessment of the impact of the sector is ongoing, Dr Ali noted that there will be a ‘comprehensive’ analysis with technical and financial stakeholders.
• Guyana’s Agriculture Minister, Zulfikar Mustapha, who is the Chairman of the Ministerial Task Force on Agriculture, has been tasked to convene a strategic meeting in the new week. It is expected that leaders will explore ideas on how the islands can rebuild, make technology available, and plant quick-yielding varieties to support farmers. In addition to this, leaders will seek to address price stability and critical commodities needed.
• In the meantime, the CARICOM chair has engaged with several regional and international stakeholders to discuss relief efforts.

(Source: Guyana Chronicle)

• Guyana’s Natural Resource Fund (NRF) received US$246Mn (GY$51.3Bn) in revenues from oil sales in June, government data shows. The funds were paid for three lifts of Guyana’s crude entitlement from the ExxonMobil-operated Stabroek Block.
• With 25 lifts of crude expected for Guyana in 2024, the government reported sales for 15 lifts in the first half of the year. Each lift contains approximately one million barrels. Therefore, given continued higher than expected production, Guyana could receive more lifts than it projected in 2024.
• Of the US$2.08Bn projection for government revenue from oil sales this year, the NRF has received US$1.22Bn.Of note, the Fund received no royalties in June. The last such payment was in April, and the next is expected in July. Of US$319.9Mn projected, the NRF received US$162.4Mn.
• Up to June, Guyana received US$1.38Bn of the US$2.4Bn in revenues from oil sales and royalties expected in 2024. Its projections are based on an expectation of approximately 552,000 barrels per day (b/d) oil production from the Stabroek Block this year, though average production in the first five months was 619,000 b/d.
• All revenues are derived from crude oil production at the Stabroek Block. The three projects in production are Liza 1, Liza 2, and Payara. Three additional projects are on track to come on stream in 2025, 2026, and 2027. They are expected to lift current production to more than double by 2027. ExxonMobil is the operator with a 45% stake, while Hess (30%) and CNOOC (25%) are its partners.
• Oil and gas royalties refer to the payments made to the owner of the mineral rights (often the government or private landowners) for the rights to extract oil and gas from the land. These royalties are typically a percentage of the revenue generated from the production and sale of the oil and gas extracted from the land. Contractor pays a Royalty of two percent to Guyana’s Government on the value of all petroleum produced and sold
• Revenues from crude oil lifts refer to the income generated from the sale or transfer of crude oil extracted from the ground. These revenues are usually calculated based on the volume of crude oil lifted (extracted and sold) and the prevailing market price per barrel at the time of sale.

 (Source: Oil Now & NCBCM Research)

• According to a Federal Reserve Bank of New York report, the path U.S. inflation is expected to follow over coming years generally softened in June amid retreating projections of price increases for a wide array of consumer goods and services.
• Inflation a year from now was seen at 3% as of June, from the expected rise of 3.2% in May, while three years from now, inflation was seen at 2.9% from May’s 2.8%, according to the bank’s latest Survey of Consumer Expectations. Inflation five years from now was seen at 2.8% from May’s 3%.
• The report found that expected price gains for gas, food, rent, medical, and college costs all moderated in June relative to what survey respondents projected in May. Expected year ahead home price gains also cooled, hitting 3% in June from the prior month’s 3.3%.
• Ebbing price pressure expectations came in a landscape where survey respondents said they see future earnings growth rising at a faster pace and future income growth slowing. Spending expectations held steady at a pace above where it was before the coronavirus pandemic struck. The survey also found respondents saying credit is getting slightly harder to get as they also marked down their household’s financial situation. Respondents' outlook on the job market was mixed.
• The New York Fed report, which is closely watched for what it says about how the public foresees inflation developing, came as central bankers are actively debating whether inflation pressures have moderated enough to allow them to cut their short-term interest rate target.

(Source: Reuters)

• Euro area investor sentiment lost its recovery trend and fell sharply in July as both the current situation and expectations worsened amid geopolitical worries, a closely watched survey showed on Monday.
• Investor morale in the euro zone broke an eight-month streak of improvements with a bigger-than-expected decline in July, a survey showed on Monday, describing the results as a "bitter setback".
• The Eurozone Sentix Investor Confidence index for the euro zone fell to -7.3 points for July from 0.3 in June, which was the first positive score since February 2022, the behavioral research institute Sentix reported. The expected score was -0.6.
• The current situation index declined to -32.3 from -26.3 in June. The drop follows three consecutive months of gains. Simiarily, the expectations component lost 8.5 points, falling to 1.5 in July from 10.0 in June, a move that Sentix said was "likely to worry forecasters". "The recent recovery of the European economy has come to an abrupt end," Sentix said.
• The survey said that investors were concerned about French elections, upcoming German state elections, and uncertainty over the U.S. presidential election later this year.

(Sources: Reuters & Business Insider)

• “I am proud to share that the Financial Action Task Force, at its Plenary in Singapore on Friday, June 28, 2024, removed Jamaica from its ‘Grey List’ of countries that are assessed as having strategic deficiencies in their Anti-Money Laundering/Countering Financing of Terrorism (“AML/CFT”) Regimes”. The Minister Finance and the Public Service, Nigel Clarke, issued the aforementioned statement from the Financial Action Task Force (FATF) meetings in Singapore last week “
• This is a significant achievement for Jamaica. In February 2020, Jamaica was placed on the Grey List by FATF. Placement on FATF’s “Grey List” signals to international financial and other institutions to take special care when transacting with entities and individuals from a FATF “Grey Listed” country. This makes transacting with FATF “Grey Listed” countries more expensive.
• In the aftermath of the FATF “Grey Listing”, the Government of Jamaica (“GOJ”) agreed to a 13-point action plan with FATF to address Jamaica’s AML/CFT deficiencies. A Joint Group from FATF visited Jamaica six weeks ago for an onsite visit to assess the effectiveness of Jamaica’s implementation of Jamaica’s action plan.
• The Joint Group confirmed to FATF that Jamaica has a robust and comprehensive understanding of its money laundering and terrorist financing risks and in its report to FATF, the Joint Group highlighted that, in some instances of the implementation of its AML/CFT framework, Jamaica was an example of global good practice.

(Source: JIS)

• Panama's new president, Jose Raul Mulino, took office on Monday, July 1, vowing to curb illegal immigration, with his government quickly signing an agreement with the United States to crack down on migration through the treacherous Darien Gap jungle passage.
• In his first address as president, Mulino, 65, promised to seek international assistance to find solutions to what he described as a costly "humanitarian and environmental crisis."
• Last year, a record 520,000 migrants risked life and limb, often at the hands of people smugglers, to traverse the Darien Gap, a dense jungle on Panama's border with Colombia.
• "We cannot continue financing the economic and social costs that massive illegal immigration generates for the country, along with the consequent connection of international criminal organizations," Mulino said.
• Minutes later, Mulino's new foreign minister signed a memorandum of understanding with the U.S. government to "allow the closing off of the passing of illegal immigrants through the Darien," Panama's government said in a statement.
• The agreement was "designed to jointly reduce the number of migrants being cruelly smuggled through the Darien, usually en route to the United States," a spokeswoman for the White House National Security Council said in a statement.

(Source: Reuters)

• In line with Fitch Solutions’ and consensus expectations, Colombia’s central bank, BanRep, decided to cut rates by 50bps to 11.25% at its latest June 28 meeting in a 4-to-2 vote (one absence). Further, Fitch anticipates that BanRep will cut by another 50bps in July.
• In the meeting announcement, the Board of Governors noted that 12-month inflation expectations continued their downward trajectory from 4.6% y-o-y in April to 4.3% in May, which bodes well for further cuts at the next meeting.
• Given this, Fitch is maintaining its forecast that the central bank will lower rates to 8.75% by the end of the year. However, the agency increased its end-of-year inflation forecast from 4.9% y-o-y to 5.2%, as the decline in price pressures begin to moderate in H2 2024.
• Risks to the interest rate outlook are skewed firmly to there being fewer cuts through 2024, implying higher rates in 2025, as more resilient growth could keep demand-side pressures elevated, resulting in hotter, above-target headline inflation for longer.

(Source: Fitch Solutions)

• Canada's services economy moved back into contraction in June as a decline in new business weighed on the sector's performance even as inflation pressures cooled, S&P Global Canada services PMI data showed on Thursday. The headline business activity index fell to 47.1 from 51.1 in May, its lowest level since March.
• A reading below 50 signals a deterioration in activity. The reading for May was the first time in a year that the index had been above the 50 threshold. "Following a return to growth in May, Canada's services economy slipped back into the moribund trend that has so characterized its performance in the post-pandemic period," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
• "Activity and new business both fell at solid rates, amid reports of weak market demand." The new business index dropped below the 50.0 no-change mark for the first time in three months, falling to 47.9 from 51.8 in May, while the measure of outstanding business was at 45.1, its lowest level since December 2020, as firms comfortably managed their workloads.
• One bit of "good news" in the data was a slowdown in both input and output price inflation, which could contribute to the Bank of Canada's confidence that inflation pressures are contained, Smith said. Last month, the BoC became the first G7 central bank to begin cutting interest rates. The prices charged index fell to 50.9 last month from 55.4 in May and the measure of input prices was at 56.2, down from 60.0, marking its lowest level since February 2021.
• The S&P Global Canada Composite PMI Output Index, which captures manufacturing as well as service sector activity, also slipped back into contraction in June, falling to 47.5 from 50.6 in May. Data on Monday showed that Canada's manufacturing PMI was 49.3 last month, matching the level posted in May.

(Source: Reuters)

• With signs that the labour market is at least slowing, if not something worse, the June nonfarm payrolls report takes on added significance. Payroll gains so far in 2024 have totalled 1.24 million, down about 50,000 a month below the same period a year ago.
• In historical terms, the pace of job gains is still solid. However, there are signs bubbling underneath that conditions could be getting softer and possibly pointing at broader economic weakness down the road. “This is a report that’s coming at a point where there’s a little more uncertainty about the economic landscape than there has been in a few months,” said Nick Bunker, head of economic research at the Indeed Hiring Lab.
• The jobless level in May did nudge higher to 4%, the first time it hit that threshold since January 2022, up from 3.7% a year ago. The forecast is for the rate to hold there. Under normal circumstances, a 4% unemployment rate would be cause for celebration, not concern. However, what is catching the eye of some economists is where the rate is now compared with where it’s been over the past year.
• The May rate was 0.5 percentage points above its 12-month low of 3.5% in July 2023, potentially triggering a recession indicator called the Sahm Rule. The rule has shown consistently that whenever the unemployment rate on a three-month average eclipses its 12-month low by half a percentage point, the economy is in recession. While there are scant data signs that a recession is at hand, the trend in unemployment is generating some attention.
• There are also lingering inflation concerns that could keep the Fed on the sidelines for a while longer in terms of lowering interest rates. One other area of concern has been the divergence between the nonfarm payrolls count, as taken from establishments participating in the Bureau of Labor Statistics survey, against the household count of people reporting that they’re holding jobs.

(Source: Reuters)

• At its meetings on 26 and 27 June 2024, the Bank of Jamaica’s (BOJ’s) Monetary Policy Committee (MPC) unanimously agreed to start a gradual easing of its monetary policy stance. However, the MPC decided to maintain the policy rate at 7.0% per annum, at this time, and to continue its proactive stance of preserving relative stability in the foreign exchange market. This marks a little over a year since the policy rate was initially raised to 7.0%, and comes after four consecutive months of decline in the point-to-point inflation rate.
• Jamaica’s headline inflation at May 2024 was 5.2%, representing the third consecutive month in which inflation fell within the Bank’s target range of 4%-6%. This outturn was also significantly lower than the Bank’s most recent forecast and was largely due to some containment in domestic demand, a stable exchange rate, and a decline in imported inflation.
• Additionally, inflation expectations have stabilised, and anecdotal information suggests that wage pressures have moderated. The MPC also noted the surplus on the current account of the balance of payments for the December 2023 quarter, as well as the positive outlook for the balance of payments over the next year. This surplus underpins the relatively strong flows in the foreign exchange market and the relative stability in the exchange rate.
• In this context, projected inflation will likely be revised downward and generally remain within the target range over the next two years, except for a few months in 2025, primarily attributed to agricultural price inflation, following sharp declines in March 2024.
• The MPC has assessed that the risks to the inflation outlook are balanced (which means that inflation is likely to be in line with projections). The Committee will continue to monitor upside risks to inflation, which could influence higher inflation in the future. These risks include rising international shipping costs and the possibility of worse-than-anticipated weather conditions due to the emerging La Niña weather phenomenon.
• Future monetary policy decisions will continue to depend on incoming data, which, if they indicate a sustained anchoring of inflation within the target range, could lead to further easing of monetary policy. The date of the next policy decision announcement is 20 August 2024.

(Source: BOJ)