“Liquidity of the financial sector was relatively comfortable. Commercial banks’ excess reserves at the Central Bank averaged TT$3,441 million in April 2017 and hovered around this level for much of May,” the Monetary Policy Committee (MPC) the Trinidad and Tobago central bank in commenting on the country’s economy stated recently.
The MPC went on to state that “credit growth remains slow with credit granted by the financial system to the private sector increasing by 2.6 percent (year-on year) in March 2017 compared with 3.2 per cent a month earlier, with loans to businesses actually declining by 0.7 per cent in the year to March.”
“Oil production in the first quarter of 2017 was higher than over the previous three quarters, but 1.6 per cent lower than in the first quarter of 2016. Evidence of a pick-up in energy exploration activity was visible which is expected to bolster output in the short to medium term. Natural gas production output in January to March fell by 8.4 per cent than the period in 2016. Other available non-energy statistics suggest that construction and distribution activities were very subdued in early 2017,” the MPC stated.
“Inflation remained low with the 12-month headline rate in March 2017 at 2.8 percent, up from 2.6 per cent in the previous month and close to the 3 percent averaged over the past 6 months. Core inflation was 2.6 per cent (year-on-year) in March. The weak inflationary pressures were also reflected in the indices of producer prices and building material prices (an increase of 2.8 per cent and a decline of 0.6 per cent on a 12-month basis respectively, in March 2017)” the Committee observed.
In its deliberations, the MPC noted that the domestic economy continued to need support toward recovery, and that the risk of overheating did not appear imminent in light of the recent information on inflation. At the same time, the narrowing of interest differentials between Trinidad and Tobago and the US has implications for the balance of payments. In light of these factors, the MPC decided to maintain the Repo rate at 4.75 per cent.
Trinidad economy remains pressured
Jamaica’s exports surged 31%
Jamaican Teas CEO, John Mahfood, telling shareholders about a strong increase in exports for the March Quarter.
Jamaica’s exports earnings grew by a strong 31 percent or US$27 million to US$114 million in January this year at a faster pace than 25 percent jump in imports as the country’s trade deficit increasing by US61 million or 23.3 percent to US$323 million.
Imports rose US$88 million to US$437 million compared to US$349 million in January last year. For the period, imports of Mineral Fuels, increased of US$41.8 million or 76.6 percent to US$96 million, due to higher imports of Petroleum, Oils, Bunker C fuel, Automotive Diesel Oil, Motor Spirit, Propane and Butane. Imports of Machinery and Transport Equipment rose by 46.7 percent or US$40 million to US$125 million due to higher imports of motor vehicles. Manufactured Goods increased by US$11 million to US$53 million, mainly due to more iron and steel being imports. Miscellaneous Manufactured Articles increased by US$6 million to US$42 million. Beverages & Tobacco imports grew 41 percent increased to US$7 million.
Traditional Domestic Exports climbed 20.3 percent or US$10 million to US$61 million, above the comparable 2016 period, as all commodity groups recorded increases. Traditional Domestic Exports accounted for 56.2 percent of total Domestic Exports during the 2016 review period. Non– Traditional Domestic Exports jumped 56.4 percent by US$17 million to US$47 million.
Taxes push Jamaica’s April inflation
Increased taxes pushed inflation in April.
Increased taxation on fuel, cigarettes and pure alcohol and increase motor vehicle license were mostly responsible for the 0.3 percent increase in Jamaica’s inflation for April as measured by the Consumer Price Index.
The calendar year-to-date inflation amounts 1.3 percent, while inflation rate since April 2016 is 4.8 percent.
This upward movement was mainly due to the divisions, Transport recording an increase of 1.7 percent and the highest weighted division Food and Non-Alcoholic Beverages moving up by 0.1 percent. The upward movement in the Transport division was due mainly to the increase in the Special Consumption Tax levied on petrol. While increased consumption tax pushed inflation by of 0.9 percent in the Alcoholic Beverages and Tobacco division.
The overall inflation rate was tempered by the decline of 0.2 percent in the division Housing, Water, Electricity, Gas and Other Fuels, due to lower rates for electricity, resulting in a fall of 0.5 percent for the group Electricity, Gas and Other Fuels.
Government of Jamaica ends year in surplus
Minister of Finance Audley Shaw pulled in revenues ahead of target.
Government of Jamaica ended the 2017 fiscal year with a surplus that flowed from a near $9 billion over performance in operating inflows and a reduction in expenditure to the tune of $5 billion.
The fiscal operations ended with a deficit of $3.5 billion nearly $14 billion better than forecast. $14.6 billion from divestments proceeds pushed the fiscal operations into a surplus of $11 billion. Although ending with a surplus, government had net borrowings $14 billion as $26 billion more was borrowed in the local market and $11 billion net was repaid in foreign currency loans.
Overall, government collected $515 billion compared with $506 billion projected for the fiscal year, with spending coming in at $503 billion down from $508 billion projected. The primary surplus originally projected at $123 billion, ended $13 billion better at $136 billion.
Helping with the boost revenues was Corporations’ payment of 14 percent more tax on profits or $6.4 billion over budget, Special Consumption rose by $4 billion or 29 percent above forecast and stamp duty on local transactions climbed 15 percent or $1.7 billion over forecast. On the other hand telephone tax fell nearly 23 percent to $4.2 billion.
Bank of Jamaica cuts rates
Bank of Jamaica cut interest rate by 25 basis points effective today April 5 resulting in the rate offered on its 30-day certificate of deposit, the policy rate, falling to 4.75 percent from 5 percent.
The last time the rate was adjusted was in May 2016 when 0.25 percent was cut off the 30-day certificate of deposit. “The rates applicable to the Bank’s overnight lending and deposit facilities that are linked to the policy rate will correspondingly fall by 0.25 percentage points,” the central bank stated.
The decline comes against the back ground of a slight decrease in the 192 Treasury bill rate rate at the March auction and IC Insider forecast that Treasury bill rates should fall towards 4 percent by 2018.
The central bank cited a number of developments that led to the recent cut. The adjustment reflects “the Bank’s assessment that inflation for FY2017/18 will be within BOJ’s inflation target of 4 percent to 6 percent for the fiscal year. This assessment has been reinforced by the Government’s strong commitment to maintaining a 7 percent primary surplus for FY2017/18 and to meet the overall public sector fiscal targets under the precautionary Stand-By Arrangement, as approved by Parliament. The continued tight fiscal policy posture supports an easing in monetary conditions.”
“Jamaica’s main economic indicators continue to improve in the context of a strong reform programme and a favourable external environment. Economic activity continues to expand although at a slower pace than its potential rate of growth. Other key macroeconomic indicators have been reflecting generally positive trends: inflation expectations remain firmly anchored in single digits, international reserves remain strong, the current account of the balance of payments is projected to remain at a sustainable level, private sector credit is expanding strongly and market interest rates have been trending downwards.
The change in rates has implication for investments and is very positive for the stock and real estate markets and should lead to a rise in value around 5 percent as a result. The move should also result in more demand for preference shares on the local market as they become more appealing with their fixed coupon rates and help boost lending at banks and improve their profit.
Jump in Caricom exports fall in imports
Petroleum imports fell in 2016
The improvement flowed from a decline in imports by 22 percent to US$466 million, down from US$598 million in 2015 and a sharp 42 percent increase in exports of US$26.5 million to US$90 million.
Imports of Mineral Fuels, Chemicals, Beverages, Tobacco and Food, mainly contributed to this decline in the import bill.
Re-exports to Caricom were valued at US$21 million, US$11 million greater than the US$10 million recorded in 2015. Domestic exports were valued at US$68 million, US$15 million or 29.0 percent than the US$53 million in 2015, due mainly to higher exports of Chemicals and Food.
Big gains in Jamaica’s trade balance
Imports of fuel fell in 2016
The trade deficit has declined each since it hit US$4.8 billion in 2011 and is now lower than the US$3.99 billion in 2010. Exports that reached US$1.73 billion in 2012 is now at its lowest since 2010 when it ended at US$1.34 billion.
Imports were valued at US$4.75 billion, down from US$5.16 billion for 2015. Total exports for 2016 reached US$1.2 billion, a fall from US$1.25 billion for the 2015.
Jamaica’s Non-Traditional exports grew in 2016
Traditional Domestic Exports were valued at US$627 million, when compared to US$765.0 million recorded in 2015, an 8.1 per cent or US$138 million fall, due to declines in Mining and Quarrying and Manufacture. Non–Traditional Domestic Exports for 2016 grew US$28 million to US$464 million.
1.4% GDP growth for Jamaica in 2016
The Jamaican economy grew 1.4 percent for 2016, preliminary estimates by the Statistical Institute of Jamaica, (STATIN) the government body charged with gathering and reporting on economic data shows.
The Jamaican economy grew by 1 percent in 2015, recent data from STATIN shows. Since 2004, the closest economic growth came close to the 2016 pace, is in 2007 with 1.45 percent and 2011 with 1.7 percent.
Growth was 1.1 percent for the fourth quarter of 2016 compared to the corresponding period in 2015, representing eighth consecutive quarters of economic growth. “Increased output levels of 0.5 percent in the Services and 3.1 percent in the Goods Producing Industries contributed to the overall growth,” STATIN stated.
Growth was achieved in seven of the eight Services Industries: Electricity & Water (2.0 percent); Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (0.2 percent); Hotels & Restaurants (2.5 percent); Transport, Storage & Communication (0.5 percent); Finance & Insurance Services (1.0 percent); Real Estate, Renting & Business Activities (0.3 percent) and Other Services (0.7 percent).
Agriculture, Forestry & Fishing, increased by a strong 17.1 percent and Construction by just 0.6 percent. STATIN said “the Agriculture, Forestry & Fishing industry was positively impacted by favourable weather conditions which resulted in higher crop yields, while the Construction industry benefitted from hotel expansion and renovation as well as the construction of office spaces to facilitate the expansion of Business Process Outsourcing activities.
Decreased output was recorded in Manufacturing by 0.2 percent and Mining & Quarrying by 11.9 percent. Manufacturing decline was influenced by a 5.3 percent fall in Other Manufacturing, due largely to lower output levels in petroleum refining. The effect of the decline was tempered by a 4.9 percent rise in Food, Beverages & Tobacco sub – industry. Mining & Quarrying industry continued to be negatively affected by reduced demand for bauxite from the overseas refineries.”
Caricom exports jump sharply
Jamaica’s exports to CARICOM region jumped sharply for the 11 months to November last year with an increase of 45.3 percent.
The increase amounts to US$26 million and put exports at US$84 million up from the US$58 million earned 2015. Exports of “Chemicals” increased by US$5 million, to US$9 million, due mainly to increased exports of plastics in primary form, medical and pharmaceuticals products and essential oils. Exports of Food increased to US$27 million by US$4.7 million than the recorded amount for 20125. Re-exports goods rose by US$11 million to US$21 million.
Imports from the Caricom region dropped sharply for the same period, with a fall of US$126.4 million and resulted in total imports from the region of US$430 million. While oil imports accounted for the bull of the decline, chemicals, beverages & tobacco and foods accounted for a sizable amount.
Jamaica’s Trade balance improves
Jamaica’s recorded an 8 percent improvement in its trade deficit in 2016 up to November with imports declining to US$3.2 billion compared to the US$3.48 billion 2015.
Export earnings for the similar period declined at a slower pace than imports by US$69 million to US$1.09 billion.
Total imports amounted to US$4.28 billion, 7.5 percent less than the US$4.63 billion in 2015.
Fuel, Manufactured Goods, Chemicals and Food were mainly responsible for this fall in spending for the 2016 review period.
Traditional Domestic Exports, valued at US$575 million, fell 18.7 per cent below the US$707 million recorded for January to November 2015 but Non–Traditional Domestic Exports for the 2016 period performed better than the traditional exports with growth of 2.4 percent to US$414 million.