MACRO ECONOMIC DASHBOARD DATA
DOMESTIC ECONOMIC INDICATORS
Labour Market
The quarter starting October 2024 saw a 0.70% reduction in the unemployment rate compared to the same period last year. This was due in part to increases of 6,700 in the labour force and an additional 8,000 within the employed labour force. Notably, there was a 10-basis-point (bps) decrease in the unemployment rate compared to Q3 2024.
The occupation group employing the most individuals overall was ‘Services and Sales Workers,’ with 343,400 people, accounting for 25% of the total employed labour force. This group also had the highest number of female employees, totalling 224,600 – 65.4% of the total number of services and sales workers. For males, the ‘Craft and Related Trades Workers’ category had the highest employment, with 154,200 individuals. The second largest occupation group overall was ‘Skilled Agricultural, Forestry and Fishery Workers,’ employing 201,400 individuals, followed by ‘Craft & Related Trades Workers,’ with 171,600 employees. These accounted for 15% and 13% of the total employed labour force respectively.
Estimatedastherewereno LabourForceSurveysconductedinthese months.
The industry containing majority of the employed labour force for October 2024 is “Wholesale and Retail Trade; Repair of
Motor Vehicles and Motorcycles”, like the previous period. This industry also saw an addition of 21,900 employees when compared to October 2023. Three industries’ labour force shrank in size: “Construction”, “Public Administration & Defence; Compulsory Social Security” and “Accommodation & Food Services Activities”, while all others grew.
Implications:
The reduction in the unemployment rate is a strong economic indicator for Jamaica, reflecting increased workforce participation and overall productivity. As more individuals secure gainful employment, disposable incomes are likely to rise, fostering increased consumer spending, savings and investment activity. This in turn could bolster the financial industry, potentially driving growth in savings, investment, and pension accounts across its corresponding entities. Increased employment has the potential to shape the areas where people reside, drawing people closer to their places of employment. This presents an opportunity for valuation companies to conduct more assessments, along with an increase in mortgages, as individuals may seek to relocate. Ultimately, this downward trend signals positive economic momentum for Jamaica making it more attractive to international investors. As of February 2025, there have been no updates
to the Labour Market section as the requisite reports from STATIN are yet to be published.
Inflation
The inflation rate for February 2025, as measured by the Consumer Price Index (CPI), decreased by 34 bps to 4.42%. This increase was accompanied by a 1.3-point decrease in the CPI, reflecting decreasing consumer prices. Despite this uptick, the inflation rate is still within the Bank of Jamaica’s (BOJ) target range of 4%-6% and signifies the sixth consecutive month that point-to-point inflation has fallen within this range.
“Food and Non-Alcoholic Beverages”, “Housing, Water, Electricity, Gas and Other Fuels”, and “Information and Communication” were the only divisions to record a monthly decline in the Consumer Price Index (CPI). These declines, particularly in food prices and
communication services, contributed significantly to the overall decrease. On the other hand, all other divisions experienced modest increases ranging from 0.00% to 0.60%, suggesting minimal inflationary pressures across most sectors. As a result, the overall CPI saw a decrease of approximately 0.9% for the month. These divisional price movements likely played a key role in influencing the shift in the inflation rate during this period.
Over the past years, inflation has trended downward from its peak in 2022. The recent trend of inflation consistently within the BOJ’s targeted band range is projected to continue, though persistent geopolitical risks pose potential challenges.
Implications:
Though there was a slight decrease of 34 bps, February’s point-to-point inflation rate remained within the targeted band for the sixth consecutive month. At the February Monetary Policy Committee (MPC) meeting, the BOJ held the policy rate at 6.00%. Given the current trajectory, there is a possibility that the BOJ will hold the rate at the upcoming meeting scheduled for March 27th.
As low inflationary periods typically boost consumer spending and increase confidence among businesses, higher yielding assets such as bonds become more attractive to investors. Considering this, we recommend that investors focus on adjusting their portfolios by increasing exposure to undervalued equities. We also suggest increasing portfolio duration in fixed income funds to benefit from the shifting economic conditions.
Lower interest rates make borrowing more affordable for growing companies. If these companies leverage this environment, it could speed up their growth and increase their valuations. As a result, private equity companies could see higher returns on their PE investments, as the value of its portfolio companies rises due to easier access to capital and more favorable borrowing conditions.
Money Market Interest Rates
At the MPC meeting held in February 2025, the BOJ held the policy rate at 6.00%. This decision was based on the improved inflation outlook and the ongoing rate cut cycle by the Federal Reserve. The next MPC meeting will be held on March 27th. The Treasury Bill auctions in January saw the yields on 91-day and 182-day T-bills fall by
19 basis points (bps) and the 273-day T-bill yield decrease by 14 bps.
February 26, 2025, was 1.13x oversubscribed, as $40.61 billion was tendered for $36 billion on offer. Compared to the previous weeks in February, this was the lowest level of oversubscription observed. The highest, 5.14x, occurred on the February 19th auction with $28.28 billion tendered for $5.5 billion on offer. The weighted average yield on February 26th increased by 21 bps from the prior week to 5.98%. The highest bid for a successful allocation throughout the month of February was 9.00% for February 5th, 12th, and 19th auctions.
Implications:
Jamaica’s money market remains liquid, with strong demand for T-bills and CDs in response to the BOJ’s rate cuts. Investors are keen to secure current yields as the BOJ has lowered its policy rate to 6.00%, with expectations of further cuts. These cuts, unless they are influenced by significant external shocks, could trigger a spike in inflation. For investors with a long-term investment outlook, it is advisable to proactively acquire yields from longer-term money market instruments, as these are expected to decline further. The oversubscription in February’s auctions reflects strong investor interest, and fund managers should act quickly to take advantage of current rates before further cuts reduce returns. Money market fund
managers can also target yields at the longer end of the curve as a part of their strategy.
Stock Market
StockMarketSummary–February28,2025
Against the backdrop of February’s inflation rate of 4.4%, the Jamaica Stock Exchange (JSE) Combined Market Index decreased by 1.11% (3,864.01 points) in February, from trading in 131 stocks, of which 39 advanced, 88 declined, and 4 traded firm. Meanwhile, the JSE Main Market Index decreased by 0.57% (1,575.93 points) in January, from trading in 66 stocks, of which 30 advanced, 33 declined, and 3 traded firm.
TransJamaican Highway Limited 8.0% (TJH8.0) led trading activity on the Main Market with 181.63M units traded, accounting for 37.44% of total volume. The stock closed February at $1.80, reflecting a YTD return of -16.67%. Wigton Energy Limited (WIG) followed with 123.37M units traded (25.43% of total volume), ending the month at $1.24 and posting a YTD return of 34.78%. TransJamaican Highway Limited (TJH) rounded off the top 3 volume leaders with 54.92M units traded (11.32% of total
volume), closing at $3.73 and delivering a YTD return of 13.72%.
The JSE Junior Market Index saw a decrease of 4.2% (158.89 points) in February. Jamaica Teas Limited (JAMT) led trading activity with 47.64M units traded, accounting for 37.44% of total volume, and closed the month at $2.47, reflecting a YTD return of -1.20%. Kintyre Holdings JA Limited (KNTYR) followed with 32.72M units traded (15.15% of total volume), ending February at $0.48. Kintyre Holdings (formerly known as iCreate Ltd) was suspended for the period being considered, so there are no YTD returns. However, a 6month return of 17.07% was realized. One on One Educational Services (ONE) recorded 17.43M units traded (9.07% of total volume), closing at $0.98 with a YTD return of 5.38%.
In February 2025, several major investment offers were announced. TransJamaican Highway Limited (TJH), through National Road Operating and Constructing Company Limited (NROCC), is offering 1,750,700,000 ordinary shares at J$3.60 per share, with an option to upsize the offer by an additional 750,300,000 shares in case of oversubscription. The offer is open from March 4 to March 18, 2025. Atlantic Hardware & Plumbing Company Limited is offering 499,999,800 ordinary shares at
J$1.00 per share, with 100% of the offer underwritten, and the offer will run from February 27 to March 13, 2025. Mayberry Investments Limited (MIL) has upsized its bond offer to J$3.45 billion due to high demand, with 10.25% Secured Bonds due 2027 available for subscription. Lastly, JMMB Group Limited (JMMBGL) has repurchased 48,412 ordinary shares at an average price of J$21.41 per share as part of its share buyback program.
Implications:
Following the Bank of Jamaica’s (BOJ) decision to lower its policy rate by 25 basis points to 6.00% in December and maintain that rate in February, the outlook for the equities market in 2025 looks promising. While the full impact of the rate cut is still emerging, we anticipate the continuation of this accommodative policy for the remainder of 2025, which should support economic activity. This, in turn, is likely to bolster investor confidence in riskier assets, positively influencing market dynamics.
As the rate cuts progress, investors are expected to shift focus away from short-term instruments such as BOJ CDs and GOJ TBills, as their yields remain well below 7%. With yields on money market instruments falling, we anticipate continued interest in equities and long-term bonds, as investors seek better yields and capital appreciation
opportunities. Given these conditions, we advise asset managers and investors to position themselves for further rate cuts while capitalizing on the current market dynamics. Short-term investors, anticipating declining yields on BOJ CDs and GOJ TBills, should reposition towards sectors with higher short-term returns, including select equities or higher-yielding bonds, while staying agile for rate changes. Long-term investors should focus on undervalued stocks with strong fundamentals and growth potential.
External Sectors
Exchange Rates
The Jamaican dollar (JMD) appreciated by 0.26% month-over-month against the US dollar, with the weighted average selling rate (WASR) moving from $157.43 at the end of January 2025 to $157.33 at the end of February. During February, the central bank intervened in the foreign exchange market through three Bank of Jamaica (BOJ) Foreign Exchange Intervention Tool (BFXITT) flash sale operations, amounting to a total of 90 million USD. The BOJ is expected to continue influencing the foreign exchange market as its reserves steadily grow.
Implications:
The BOJ has been consistent in its efforts to stabilize the exchange rate. The stock of Net International Reserves (NIR) was recorded at approximately $5.5 billion in February, representing a robust source from which the BOJ can continue its efforts to stabilize the exchange rate. BOJ’s interventions have been pivotal the exchange rate as of February 28th was $157.33, which is in close proximity to the VMWM Research team’s best-case projection of $157.02 for February 2025, indicating a period of stabilization driven by market conditions, as
seen with the BOJ's decision to hold the monetary policy rate at 6.00%.
Remittances
In December 2024, net remittance inflows decreased by 5.8% (US$17.1 million) yearover-year, totalling US$277 million. However, this represented a 12% increase (US$30 million) compared to November 2024. The yearly decline was primarily driven by a US$16.4 million (5.21%) decrease in total remittance inflows, partially offset by a US$750,000 (3.9%) increase in remittance outflows. The United States remained the largest source of remittance flows to Jamaica, accounting for 58.76% of total inflows, up slightly from 58.13% in December 2023. Other key source countries included the United Kingdom (10%), Canada (8.3%), and the Cayman Islands (6.2%).
Implications:
Remittances play a vital role in Jamaica’s economy, with the US and UK being the primary sources. Tracking economic developments in these markets is crucial for anticipating trends in remittance flows. The interplay between President Trump’s expansionary fiscal policies, employment rates in the US, and inflation will be crucial in determining remittance inflows and should be monitored. Financial institutions should continue monitoring the growth of digital remittances and position themselves to capitalize on the increasing demand for these services.
Net International Reserves
The stock of NIR as at the end of February 2025 was US$5.47 billion, a US$77.69 million decrease from the end of January.
NETINTERNATIONALRESERVES
Foreign assets decreased by US$28.27 million, mainly due to a US$14.75 million decrease in SDRs. Meanwhile, foreign liabilities remained unchanged as in January, at US$49.2 million with liabilities to the International Monetary Fund (IMF) accounting for 100% of total foreign liabilities.
Implications:
The NIR remained over the US$5 billion mark in February 2025, first attained in March 2024. This has been crucial in maintaining confidence in the JMD. The strong reserves position Jamaica favorably in terms of economic stability and the ability to manage external shocks such as global price fluctuations. This has been reflected in the comparatively low levels of depreciation year-to-date and augers well for local investors and companies. A strong NIR and reserves signals economic resilience which
can potentially attract more foreign investors. Additionally, it supports Jamaica’s ability to service external debt without putting significant pressure on the exchange rate, as evidenced by the consistent decrease in external debt (primarily to the IMF).
Regional
Trinidad & Tobago
The Central Bank of Trinidad and Tobago, in its March 28, 2025 Monetary Policy Announcement, decided to maintain the repo rate at 3.50 per cent. This decision reflects a careful assessment of both global and domestic economic conditions marked by ongoing uncertainties and relatively stable internal dynamics. Globally, the economic landscape is being shaped by significant policy uncertainty, particularly surrounding trade tensionsand thethreatof tariffwarsthat could adversely affect global trade and rekindle inflationary pressures. According to the International Monetary Fund’s January 2025 World Economic Outlook Update, global economic growth is projected to hold steady at 3.3 per cent, while inflation is forecasted to decline to 4.2 per cent from 5.7 per cent in 2024. However, these forecasts are subject to downside risks, especially considering the volatility in global trade dynamics. In terms of monetary policy trends
among major economies, the European Central Bank reduced its policy rate by 25 basis points to 2.5 per cent its sixth cut since June 2024 while the US Federal Reserve held its federal funds target range at 4.25 to 4.50 per cent. These developments have kept US Treasury yields stable, with the interest rate differential between Trinidad andTobago andtheUSon3-monthtreasuries standing at -201 basis points in February 2025, significantly narrower than the -432 basis points recorded a year earlier.
Domestically, inflation remains wellcontained. Data from the Central Statistical Office showed that headline inflation rose slightly to 0.7 per cent year-on-year in February 2025from 0.5per centin December 2024. Core inflation, which excludes food prices, fell marginally by 0.1 per cent, while food prices rose by 3.9 per cent, driven by both domestic and international factors. Other indicators, such as wholesale and building materials prices, recorded minimal increases of 0.2 per cent and 0.6 per cent, respectively, up to September 2024. Notably, a recent 7 per cent rise in the price of cement is expected to influence construction costs. On the growth front, the energy sector continued to face challenges due to maturing oil and gas fields, with crude oil and natural gas output declining by 1.9 per cent and 0.8 per cent, respectively, in the third quarter of 2024. In contrast, petrochemical production
showed improvement, with ammonia and methanol output rising by 16.1 per cent and 1.1 per cent, respectively. In the non-energy sector, GDP data for the first half of 2024 reflected gains in manufacturing and financial services, though contractions in construction and accommodation services offset these. More recent indicators, such as increased activity in distribution, finance, new car sales, and higher visitor arrivals during Carnival 2025, suggest resilience in the non-energy segment.
The domestic financial system continues to exhibit strong liquidity. Commercial banks’ excess reserves at the Central Bank averaged $4.8 billion in January, rising to $6.6 billion in February and $7.2 billion by mid-March 2025. In this context, banks did not utilize the interbank market or the repurchase facility during March. Despite government borrowing for budget financing, banks were able to expand their lending to the private sector. Private sector credit grew by 8.4 per cent year-on-year in January 2025, up from 8.0 per cent a month earlier. This included an 11.6 per cent rise in consumer loans, a 9.7 per cent increase in business credit, and a 6.4 per cent uptick in mortgage lending. In its deliberations, the Monetary Policy Committee considered the risks posed by global trade policies, the relatively stable inflation environment, mixed signals on domestic growth, and strong financial system
liquidity. The Committee also emphasized the need to monitor credit quality amid rising bank lending. Based on these assessments, the MPC opted to keep the repo rate unchanged and reiterated its commitment to closely monitor international and domestic developments. The next Monetary Policy Announcement is scheduled for June 27, 2025.
Dominica Republic
In March 2025, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 5.75% for the third consecutive time, in line with market expectations. This decision was influenced by both domestic and external factors. Domestically, inflation remained within the Central Bank's target range of 3.0%–5.0% for the fifteenth straight month through February, and there were signs of moderatingprivatesectorcredit anddomestic demand. Externally, high U.S. interest rates and ongoing global trade uncertainty presented potential risks to the stability of the Dominican peso, encouraging a cautious stance. Additionally, recent volatility in international financial markets reinforced the need for a wait-and-see approach.
Although the Central Bank did not issue explicit forward guidance on future interest
rate changes, it reaffirmed its commitment to maintaining macroeconomic stability and keeping inflation within the target range. Analysts anticipate that the policy rate could decline by 25 to 75 basis points by the end of 2025,thoughthisoutlook issubject tochange depending on global and domestic developments. Upside risks to interest rates stem from potential pressure on the peso, while a weaker domestic economy could prompt earlier or deeper rate cuts.
AsofMarch2025,theDominicanRepublic’s inflation rate stood at 3.58%, slightly up from 3.56% in February, remaining well within the Central Bank's comfort zone. Historically, inflation in the country has averaged 12.80% since 1984, peaking at 82.49% in 1991 and reaching a low of -1.57% in 2009. Within the country’s consumer price index, the largest components are food and non-alcoholic beverages (24%), followed by transport (17%), housing and utilities (13%), and miscellaneous goods and services (10%). Other significant categories include restaurants and hotels (9%), with the remaining 28% distributed among furniture, health, clothing, education, and other sectors.
Barbados
Barbados enters 2025 with strong economic momentum and a positive growth trajectory. Real GDP is projected to expand by 3 percent, supported by sustained investments in key sectors such as tourism, renewable energy, utility infrastructure, business services, and food security. The outlook is underpinned by both public and private sector initiatives that are expected to stimulate construction, create jobs, and improve productivity. The tourism sector, a major driver of foreign exchange earnings and employment, is poised for another strong year, with forward bookings for the winter season already exceeding 2024 levels and 34 additional cruise calls scheduled. Inflation is forecast to remain contained, ranging between 1.5 and 2.5 percent, aided by stabilising global commodity prices. However, downside risks persist from global trade disruptions, geopolitical tensions, and adverse weather events that could affect food production and shipping costs.
The Government remains committed to fiscal and debt sustainability, aiming to reduce the debt-to-GDP ratio below 100 percent by 2026 and ultimately to 60 percent by FY2035/36. Fiscal surpluses and improved tax collections driven by the adoption of global minimum corporate tax rules are
expected to support further debt repayments and infrastructure investments. Financial stability is anticipated to remain strong, with continued credit growth, healthy capital buffers, and declining non-performing loans. Strategic policy tools such as the debt-forclimate swap will continue to finance climate resilience projects, while strengthening economic sustainability and preserving external buffers.
These 2025 projections build on a strong foundation laid in 2024. Lastyear, Barbados’ economy grew by 4 percent outpacing global growth marking the third consecutive year of expansion. The tourism sector recorded a 10.7 percent increase in long-stay arrivals, particularly from the US market, which surged 29.2 percent due to expanded airlift. Cruise passenger arrivals grew by 40.8 percent, supported by the resumption of summer cruise operations. Accommodation performance improved as well, with hotels achieving a 12.6 percent increase in revenue per available room.
Non-tourism sectors also performed well in 2024. Construction grew by 7.1 percent, buoyed by projects such as new hotels, infrastructure upgrades, and preparations for the 2024 ICC T20 World Cup. The fiscal position strengthened significantly, with a primary surplus of 5.3 percent of GDP and a fiscal surplus of 1.5 percent, contributing to a
reduction in the public sector debt-to-GDP ratio to 103 percent. Inflation slowed to 1.4 percent, and unemployment declined to 7.1 percent by September, reflecting improved labour market conditions. International reserves reached a record high of $3.2 billion, or 31.2 weeks of import cover.
Overall, 2024 laid the groundwork for sustained growth in 2025. Barbados' focus on climate resilience, public-private collaboration, and innovative financing mechanisms has positioned the economy to weather external shocks and pursue a path of inclusive, sustainable development.
Colombia
Colombia’s economy showed signs of recovery in 2024, growing by 1.7% after a period of adjustment. Private consumption was the main driver, supported by falling inflation and increased real household income. However, investment was mixed: machinery and equipment improved, while construction, especially residential, remained weak.Exportsgrewmodestly,ledbyservices such as tourism, but imports increased more rapidly, contributing negatively to growth. Inflation declined to 5.2% by year-end, allowing the central bank to lower its interest rate from 13% to 9.5% in 2024.
The current account deficit improved significantly to 1.8% of GDP, its lowest level in recent history, aided by strong tourism revenues, higher remittances, and dividend inflows from Colombian companies abroad. These factors helped strengthen Colombia’s external position. Despite global uncertainty, the country maintained economic stability and entered 2025 with better inflation control, more favorable monetary policy, and a foundation for accelerating growth.
For 2025, Colombia's GDP is projected to grow by 2.5%, rising to 2.9% in 2026. Growth will continue to be led by private consumption, which is expected to benefit from lower inflation, rising incomes, and easier credit conditions. Durable and semidurable goods will see the fastest recovery due to postponed demand and improved household finances. The services sector, especially tourism, is also expected to rebound, while employment and wage growth will further support consumption.
Fixed investment is forecast to become a key engine of growth, expanding by 5.1% in 2025 and 6.0% in 2026, driven by public infrastructure projects, increased machinery purchases, and a recovery in non-residential construction. Residential construction is expected to pick up meaningfully only in 2026. Employment is projected to grow
moderately, although the urban unemployment rate will remain around 9.5–9.8%.
Inflation is expected to continue falling, ending 2025 at 4.4% and 2026 at 3.7%. This will support further interest rate cuts, with the policy rate projected at 7.75% by the end of 2025 and 7.25% in 2026. However, structural pressures on inflation such as high rent costs and indexed prices will limit the speed of disinflation.
The current account deficit is set to widen again to 2.7% of GDP in 2025 and 3.1% in 2026, due to higher imports from stronger domestic demand. Foreign direct investment will remain the main financing source, but with narrower coverage. Meanwhile, fiscal challenges persist. The national government’s deficit is projected at 5.1% of GDP in 2025 and 4.3% in 2026. Revenue shortfalls and rigid spending limit room for public investment, and additional fiscal adjustment will be necessary to meet medium-term targets.
Colombia’s exchange rate is expected to average 4,350 pesos per dollar in 2025 and appreciate slightly to 4,230 in 2026, depending on interest rates in advanced economies and fiscal confidence. Risks to the outlook include global trade tensions, commodity price volatility, and the impact of
potential U.S. protectionist policies on Colombian exports. Despite these uncertainties, Colombia’s economic fundamentals remain stable, and its recovery is expected to strengthen in the coming years provided it can boost productivity, attract investment, and address structural challenges in education, informality, and fiscal sustainability.
Mexico
Mexico’s government has revised its economic growth forecast for 2025 downward to a range of 1.5% to 2.3%, compared to an earlier estimate of 2.0% to 3.0%. The revision, published in a draft budget by the Ministry of Finance, comes amid rising concerns about a potential recession. The government remains more optimistic than both the private sector and the Bank of Mexico (Banxico), which now project slower growth. Banxico has warned that the economy could shrink by up to 0.2% or grow by at most 1.4%, while private analysts surveyed by the central bank have lowered their average growth forecast to 0.5%.
The downgraded forecast is attributed to weaker residential investment, persistent supply chain disruptions, and business uncertainty stemming from evolving U.S. trade policies. The Mexican economy
already showed signs of weakness by contracting in Q4 2024 and again in January 2025, raising the likelihood of a technical recession.
Despite these challenges, the finance ministry remains hopeful, citing domestic consumption, job creation, and strategic investments as potential growth drivers. It projects a further growth range of 1.5% to 2.5% in 2026. On the fiscal side, the government expects a budget deficit of 3.9–4.0% of GDP in 2025, narrowing slightly to 3.2–3.5% in 2026. President Claudia Sheinbaum continues to resist calls for major fiscal reform despite inheriting the largest budget gap since the 1980s.
Inflation is easing, with headline inflation forecast to end 2025 at 3.5%, within the central bank’s target range, and expected to decline to 3.0% by 2026. The peso is projected to trade at 20.0 per U.S. dollar by the end of 2025 and strengthen slightly to 19.7 in 2026. Crude oil production is expected to average 1.762 million barrels per day (bpd) this year and 1.775 million bpd next year.
In response to slowing inflation and weak economic activity, Banxico cut its benchmark interest rate by 50 basis points to 9.50% in February 2025, signaling the beginning of a cautious easing cycle. The
central bank noted that inflation is returning to pre-pandemic levels, but risks remain skewed to the upside due to factors such as core inflation persistence, currency volatility, trade disruptions, and climaterelated pressures.
While Banxico anticipates continuing rate cuts, it emphasized that the monetary stance will remain restrictive until inflation fully converges with the 3% target, projected for the third quarter of 2026. The central bank reaffirmed its commitment to low and stable inflation and will adjust rates gradually to maintain macroeconomic stability amid ongoing external and domestic uncertainties.
China
China's economic outlook for 2025 reflects a cautiously optimistic recovery, supported by a large-scale stimulus package, resilient domestic demand, and continued monetary easing. BBVA Research has raised its GDP forecast for China to 4.5% in 2025, up from 4.1%, driven by lower-than-expected US tariffs, a more measured trade response by China, and positive momentum in high-end manufacturing and technological innovation. Notably, the“Madein China 2025” initiative has exceeded expectations, with over 86% of its industrial development targets met by 2024, helping to bolster investor sentiment and stabilize markets. This is complemented
by robust growth in electric vehicles, renewable energy, and AI sectors.
From a monetary perspective, the People's Bank of China reported that by the end of March, broad money supply (M2) had grown by 7% year-on-year to RMB 326.06 trillion, while narrow money (M1) increased by 1.6%, and currency in circulation (M0) rose sharply by 11.5%. In the first quarter alone, RMB loans surged by RMB 9.78 trillion, led by corporate and public sector borrowing (RMB 8.66 trillion), while household loans grew more modestly (RMB 1.04 trillion). Deposits also expanded significantly, with RMB deposits increasing by RMB 12.99 trillion households contributing the bulk at RMB 9.22 trillion. These credit trends reflect sustained support for economic activity despite ongoing concerns around domestic demand and structural imbalances.
Monetary policy remains expansionary but cautious. Interbank rates stayed low in March, with average lending and repo rates at 1.85% and 1.87% respectively, reinforcing liquidity conditions. China’s foreign exchange reserves held steady at USD 3.24 trillion, and the yuan has appreciated slightly amid easing trade tensions and a softer US dollar.Cross-borderRMBsettlementreached RMB 3.96 trillion under the current account and RMB 2.09 trillion in direct investments,
underscoring the ongoing internationalization of the renminbi.
Despite stronger-than-expected GDP growth of 5% in 2024, China's economy still faces key risks. Retail sales have been improving due to policy measures like consumption couponsandequipmenttrade-in schemes,but high youth unemployment, falling property prices, and weak wage growth continue to constrain consumption. The real estate sector remains fragile, with only marginal improvements in housing prices and ongoing declines in construction activity. Meanwhile, deflationary pressures persist due to subdued domestic demand, excess capacity, and price caps in sectors such as finance and stateowned enterprises.
Looking ahead, China’s pro-growth stance is expected to continue, with further interest rate and reserve requirement ratio (RRR) cuts likely. However, the success of the recovery will hinge on more efficient allocation of stimulus funds, improved policy communication, and navigating escalating global uncertainty, particularly with potential US tariffs reaching 60% by the second half of 2025. The balance between monetary easing and structural reform will be critical in ensuring sustained, high-quality growth amid a complex global environment.
Canada
Canada’s economic outlook remains cautiously stable, with growth projected to reach1.8% inboth2025 and2026,buoyedby past interest rate cuts and increased household consumption. According to the Bank of Canada’s January 2025 Monetary Policy Report, inflation has remained close to the 2% target since late 2024. However, the near-term inflation profile has been volatile duetoa temporaryfederal GST/HSTholiday, which muted consumer price pressures from mid-December to mid-February. Once the tax break expired, inflation momentum picked up again, most notably in food and alcohol prices, causing a temporary spike in March. The Bank acknowledges that inflation in shelter remains elevated, though slowly easing, while other major CPI components generally remain below their historical averages.
Statistics Canada’s March inflation data revealed a surprising slowdown in the annual inflation rate to 2.3%, down from 2.6% the previous month, primarily due to declining gasoline and travel-related prices. Analysts had anticipated a steady rate, but the monthover-month increase of just 0.3% undershot expectations. This reflects the combined effects of lower global crude oil prices driven by subdued demand and tariff-related
economic uncertainty and the expiration of the sales tax break, which temporarily concealed underlying price pressures. Food prices rose by 3.2% year-over-year, while alcohol prices increased by 2.4%, a reversal from previous months’ declines. However, these gains were offset by a 1.6% drop in gasoline prices and notable declines in travel tours (-4.7%) and airfares (-12.0%).
Core inflation remains sticky, with CPImedian holding at 2.9% and CPI-trim easing slightly to 2.8% in March. This underscores the Bank of Canada’s challenge: inflation expectations have normalized, yet underlying price pressures, especially in shelter and core services persist. This inflation stickiness complicates monetary policy, particularly amid trade-related uncertainty as the threat of US tariffs looms. Business and consumer confidence are already being impacted, and the Canadian dollar has weakened accordingly.
Markets are now betting on a likely pause in the Bank’s monetary easing after seven consecutive rate cuts, with a 60% probability assigned to a hold at the upcoming policy meeting. The Bank faces a delicate balancing act stimulating growth while containing inflation. As such, future rate decisions will hinge on the interplay between domestic consumption strength, wage dynamics, the
resilience of core inflation, and the evolving global trade environment.
United States
The US economy grew at a 2.3% annualized rate in Q4 2024, a slowdown from the 3.1% expansion in Q3. Full-year GDP growth slightly decelerated to 2.8%, down from 2.9% in 2023. Consumer spending was the key driver, rising by 4.2%, the strongest increase since early 2023, despite a decline in business investment. Projections for 2025 suggest that growth will range from 1.2% to 2.1%, supported by domestic demand and wage gains. Inflationary pressures remained elevated, with the Personal Consumption Expenditures (PCE) price index increasing by2.3%inQ4,upfrom1.5% inQ3,signaling persistent inflation challenges. Core inflation is expected to gradually return to the Federal Reserve's 2% target. The labor market remained strong, with the unemployment rate ending December at 4.1%, reflecting continued job creation in a tight labor market, despite ongoing economic uncertainty. However, in January 2025 job growth came in below expectations, with only 143,000 jobs added, impacted by severe weather and data adjustments.
The ISM Manufacturing Purchasing Managers' Index (PMI) for February 2025
fell to 50.3%, down 60 basis points from January's 50.9%. This represents the second expansion in the index after 26 consecutive months of contraction. A PMI above 50% indicates expansion, and this increase, combined with January’s improvement, suggests that a recovery may be underway as conditions stabilize. Meanwhile, the ISM Services PMI dropped to 53.7% in February, down from 52.8% in December. Despite this decrease, the services sector expanded for eight consecutive months, underscoring the resilience of the broader economy. The Hospital PMI also rose by 250 basis points to 56% in February from December's 53.5%, marking the 18th consecutive month of growth in the healthcare sector.
In the housing market, existing home sales rose by 4.2% month-over-month in February, reaching a seasonally adjusted annual rate of 4.26 million units. Despite this increase, sales were down 1.2% compared to February 2024. This suggests that while sales activity saw a positive shift from January, the year-over-year comparison reflects a slight decline, indicating ongoing challenges in the market. The median sales price continued to rise, increasing by 3.8% year-over-year to $398,400, marking the 20th consecutive month of price gains. Inventory grew by 5.1% from January, reflecting a 17% yearover-year increase, which may offer some
relief to homebuyers. However, high mortgage rates and elevated home prices continue to limit broader market growth, particularly for first-time buyers, who made up 31% of sales in February.
China’s Economy
China's economy grew by 5.0% in 2024, in line with the government’s target, supported by a 5.4% expansion in Q4. Despite this, challenges remain, particularly in the real estate sector and external trade headwinds. For 2025, China has set a GDP growth target of "around 5%," consistent with prior years, although analysts, including the IMF, project a more moderate 4.6% expansion.
Early indicators for 2025 are positive, with industrial output up 5.9% YoY and retail sales rising 4% YoY in January-February. Fixed asset investment grew 4.1% YoY, while the unemployment rate stood at 5.3%. CPI registered a slight decline of -0.1% YoY, reflecting deflationary pressure. To shift towards a consumption-driven model, the government is prioritizing domestic demand, including measures such as doubling ultra-long treasury bond issuance to support consumer goods trade-in programs. A more flexible monetary and fiscal policy is set to stabilize the property and stock markets.
In response to ongoing trade tensions with the US., China is diversifying trade
partnerships, including the removal of tariffs on goods from the world’s least developed countries starting in December 2024. This aims to mitigate risks from external pressures. While stock market sentiment remains positive, bond markets remain cautious about the sustainability of growth. With foreign exchange reserves projected to stay above $3.2 trillion, China has a solid buffer against global shocks, though significant risks remain in both domestic and external sectors.
Trump Presidency: Tariffs & Trade Policies
In February 2025, the Trump Administration escalated its protectionist policies, significantly impacting trade relations and financial markets. A series of tariff announcements were made, beginning with a 25% tariff on imports from Canada and Mexico, which was introduced on February 1, 2025. Citing national security concerns, such as illegal immigration and drug trafficking, the tariffs are set to take effect on March 4, 2025. However, goods that meet the USMCA rules of origin were later exempted from the new duties, slightly tempering the potential market impact. This move marked a significant escalation in the US. Trade policy, creating volatility in both equity markets and trade relationships.
Further intensifying trade tensions, President Trump on February 10, 2025, expanded
Section 232 tariffs on steel and aluminum imports, eliminating all country-specific exemptions. As a result, the tariff rate on aluminium was increased from 10% to 25%, a change that took effect on March 12, 2025. This step is expected to add pressure on industries reliant on these metals and further strain international trade relations, particularly with key US trading partners. The expansion of steel and aluminium tariffs could lead to rising production costs, especially for manufacturers and downstream industries, ultimately contributing to inflationary pressures. On February 13, 2025, the Trump Administration also moved forward with a plan for reciprocal tariffs, aimed at responding to other countries' trade policies. A memorandum was issued directing the development of a plan, with recommendations due by April 1, 2025, and tariffs set to begin on April 2, 2025. These tariffs could have far-reaching effects on global trade, as the US. Targets countries with which it perceives imbalanced trade practices.
In addition to these measures, President Trump unveiled plans to impose tariffs on key industries such as automobiles, semiconductors, and pharmaceuticals. Proposed tariffs on autos are expected to reach around 25%, with semiconductors and pharmaceuticals potentially facing even
higher rates. These sectors are crucial to both the US. The economy and the global supply chain, and any disruption could significantly impact stock performance and investor sentiment.
The financial markets reacted to these announcements with significant volatility. Major US. Stock indices, which had seen growth in January, reversed course in February. The S&P 500 dropped by 1.42%, following a 2.8% gain the previous month. Similarly, the Dow Jones Industrial Average (DJIA) retreated by 1.42% after its strong 4.7% rise in January. The Nasdaq Composite suffered the sharpest decline, falling by 3.97%, as the technology sector faced pressure. The uncertainty surrounding the new trade policies led investors to shift toward safer assets, such as bonds, as they sought to mitigate risk. The tariffs, combined with broader market concerns, played a pivotal role in the negative sentiment across financial markets during the month.
Retaliatory Measures in Response to US Tariffs Canada
In response to President Trump's tariffs on Canadian goods (steel, aluminium, and energy products), Canada announced a series of retaliatory measures on February 1,
2025. Canada's imports of goods from the US. totalled $277.04 billion in 2023, which represented approximately 33.82% of Canada’s GDP when considering total imports of goods and services. The Canadian government unveiled plans to impose a 25% tariff on $155 billion worth of US. Goods, signalling a strong reaction to the US. Trade actions. The first phase of these tariffs targeted $30 billion in goods, with the tariffs set to take effect on February 4, 2025. However, a temporary pause in the trade dispute was reached on February 3, 2025, when both countries agreed to delay the implementation of these tariffs for 30 days. As a result, the retaliatory measures were pushed back until March 4, 2025. In addition to the tariffs, Ontario considered imposing a 25% export tax on electricity sent to the US., but this plan was later suspended, preventing further escalation in the energy sector. Beyond these policy actions, Canada also launched a public campaign encouraging its citizens to "buy Canadian." This initiative urged Canadians to support domestic products over American goods, aiming to reduce reliance on the US. Imports and bolster local businesses during the trade tensions.
China
In response to President Trump's tariffs announced in February 2025, China quickly
enacted several retaliatory measures that targeted the US. Goods and companies. On February 10, 2025, China imposed a 15% tariff on the US. Coal and liquefied natural gas (LNG), and a 10% tariff on a range of US. Products, including crude oil, agricultural machinery, large-displacement vehicles, and pickup trucks. These measures were designed to counteract the US. Trade actions and to exert pressure on key sectors of the American economy. Alongside these tariff measures, China also took steps to expand its export controls on critical minerals, including tungsten, tellurium, bismuth, molybdenum, and indium. Exporters of these minerals are now required to obtain licenses from the Ministry of Commerce, a move that could disrupt global supply chains and impact industries reliant on these materials. Furthermore, China added two US. Companies, Illumina and another unnamed company, to its Unreliable Entity List, potentially restricting their trade activities and investments in China. In another move, China launched an antitrust investigation into Google, a direct challenge to the operations of one of the largest US. Tech companies in the Chinese market. Additionally, China took its grievance to the global stage, filing a formal complaint with the World Trade Organization in response to the US. Tariffs. These retaliatory measures underscore China's resolve to counteract US trade actions, escalating the trade conflict
and raising tensions between the two countries.
Mexico
On February 2, 2025, Mexico vowed to retaliate against the US. Tariffs were introduced but did not immediately provide specific details regarding the products targeted. This announcement came in response to the 25% tariffs imposed by the US. On Mexican imports, signaling Mexico's commitment to defending its economic interests. On March 4, 2025, Mexican President Claudia Sheinbaum officially confirmed that retaliatory tariffs would be implemented, with the precise targets set to be revealed on March 9, 2025, during a public event in Mexico City's central plaza. The delay in announcing the specific measures may indicate Mexico's desire to de-escalate tensions and leave room for diplomatic negotiations. However, the situation remains volatile, with ongoing talks between the US and its trading partners. The uncertainty surrounding the retaliation underscores the broader challenges in US.-Mexico trade relations.
APPENDICES
*Projections/Budget ^Actual
* Projections are taken from Bloomberg's survey of economists as of December 16, 2024
Trinidad & Tobago
Barbados
