• Guyana's upcoming auction of offshore oil exploration blocks has lured at least 10 companies including Shell, Petrobras and Chevron, to consider the decade's hottest oil region.
• The South American country is offering 14 offshore blocks in an attempt to speed up economic development and reduce an Exxon Mobil-led consortium's dominance of its oil sector. Winning bidders are expected to be picked next month.
• Companies interested in the April round have paid for seismic data to evaluate the blocks to decide whether to submit offers. They include six big international producers, Energy Minister Vickram Bharrat has said, without identifying the companies.
• Guyana estimates it has up to 25 billion barrels of oil and gas in place off its coast. A consortium that includes Exxon Mobil, Hess Corp, and CNOOC Ltd, operates the country's most important area, the 6.6-million-acre (26,800 sq km) Stabroek block, with more than 30 discoveries to date.
• Notably, Guyana plans to issue a new Production Sharing Agreement (PSA) model for leasing offshore blocks by the end of this month.
• The proposed rules will nearly double the government's take from oil production to 27.5% of royalties and profit oil, plus a new 10% corporate tax, compared to Exxon's main contract. The new agreement also will require producers to provide more information to the nation in order to reduce information asymmetries.

(Source: Reuters)

• Fitch Solutions holds its Short-Term Political Risk Index (STPRI) score for Costa Rica at 62.4 out of 100, as they expect broad political and social stability to persist during 2023.
• Despite a slowing economy and fiscal consolidation, President Rodrigo Chaves's high level of popularity and easing inflationary pressures will limit the risk of social unrest during 2023.
• Economic conditions improved during H222 despite moderating growth. Inflation peaked at 12.1% y-o-y in August before falling back to 7.9% by the end of the year, while the unemployment rate fell to 11.7% at end-2022, from 13.7% a year earlier. Further, the government's budget deficit fell to 2.5% of GDP in 2022 from 5.0% in 2021, easing fiscal risks.
• Additionally, Fitch believes easing inflationary pressures will contain the threat of social instability over the coming quarters. Currently, it is forecasted that inflation will fall gradually to 4.8% by the end of 2023, reducing pressure on household budgets (though above the Central Banks target of 2-4%). It is also expected that the central bank will begin to cut its policy rate in H223, easing borrowing costs for consumers and businesses.
• On the other hand, a forecasted uptick in the unemployment rate to 12.0% in 2023 as economic activity moderates will continue to weigh on its score, specifically, the 'social stability' component of the STPRI.
• Despite the relatively favourable outlook, Fitch believes there are still some downside risks to stability. A sharper economic downturn or more persistent inflationary pressures than currently expected would increase social instability risks. Additionally, a recent increase in migration into Costa Rica, particularly from Nicaragua, could also potentially lead to rising social tensions, which would be exacerbated by a more severe growth slowdown.

(Source: Fitch Solutions)

• The eurozone's economic recovery is tentative and fragile, several indicators suggested on Monday, adding to signs that even if a recession may have been avoided, no upturn is in sight. Some economic readings have been better than feared, particularly through the winter, but Monday's retail trade data, a key sentiment indicator, tempered any nascent optimism.
• Eurozone retail sales, a good proxy for consumer demand, rebounded much less than expected in January, challenging other data, including PMI surveys, which pointed to a steady recovery. Retail sales rose 0.3% on the month, below the 1% rise forecast by economists, and were down 2.3% year on year. That suggests "a weak start to the year for the consumer amid stubbornly high prices," ING economist Bert Colijn said.
• Data last week showed that inflation in Germany, France and Spain - three of the bloc's top four economies - unexpectedly rose in February.
• The European Central Bank is hiking rates at the fastest pace on record, and its chief economist Philip Lane said on Monday that the bank is still likely to keep raising them after a 50 basis point increase this month.
• "The current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting," Lane said in a speech in Dublin, confirming market expectations for more moves through the spring and possibly the summer.

(Source: Reuters)

• China set a modest target for economic growth this year of around 5% on Sunday as it kicked off the annual session of its National People's Congress (NPC), which is poised to implement the biggest government shake-up in a decade.
• China's gross domestic product (GDP) grew by just 3% last year, one of its worst showings in decades, squeezed by three years of COVID-19 restrictions, the crisis in its vast property sector, a crackdown on private enterprise, and weakening demand for Chinese exports.
• This year's growth target of around 5% was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year's target of around 5.5%.
• Beijing faces a host of challenges, including increasingly fraught relations with the United States and a worsening demographic outlook, with plunging birth rates and a population drop last year for the first time since the famine year of 1961.
• China plans to lower the costs of childbirth, childcare, and education and will actively respond to an ageing population and a decrease in fertility, the nation's state planner said in a work report released on Sunday.
• "While the official growth target has been lowered for the second consecutive year, which might be a disappointment to the market, we reckon investors (should) pay attention to the underlying growth momentum to gauge the recovery pace," said Zhou Hao, an economist at Guotai Junan International.

(Source: Reuters)

• The Executive Board of the International Monetary Fund (IMF) approved a 24-month arrangement under the Precautionary and Liquidity Line (PLL) with access of US$968 million (190 per cent of quota), to provide insurance against risks from higher commodity prices, a global slowdown, tighter-than-envisaged global financial conditions, and new COVID outbreaks.
• The Executive Board also approved an arrangement under the Resilience and Sustainability Facility (RSF) for US$764 million (150 per cent of quota) to strengthen physical and fiscal resilience to climate change, advance decarbonization of the economy, and manage transition risks. The RSF is expected to catalyze funding for climate priorities from other official lenders and the private sector.
• The PLL will support the authorities’ plans to improve financial supervision, the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, and data reporting.
• Reforms in the RSF, built on Jamaica’s home-grown climate policy, were prepared in close collaboration with the World Bank and other international partners. They create incentives to switch to renewables, reduce energy consumption, develop green financial instruments, and require proper management of climate risks in the financial sector. Reforms are expected to catalyze private and official financing for climate-related investment.
• The Finance Minister said although Jamaica has US$4 billion in gross reserves, the PLL provides an additional balance of payment buffer in the event of additional economic shocks. Funds under the RSF are being made available at an interest rate of 3.8 per cent with 20 years to repay, and no principal repayment for the first 10 years.
• Clarke said this facility should allow Jamaica to attract significant private sector investment so it can implement policies conducive to climate financing. It should also help to reduce Jamaica's refinancing risks and to create fiscal space, compared with the alternative of international capital market refinancing in a rising interest rate environment.

(Sources: IMF and RJR)

• Grace Kennedy Limited recorded a net profit to shareholders of $7.03Bn for the financial year ending December 2022. This represents a 14.2% yoy decline. If adjusted for non‐recurring gains of $895Mn in 2021 and $170.5Mn in 2022, the decline in net profit for 2022 compared to 2021 would have been 7.7%.
• The decline occurred despite a 10.5% increase in revenues, due to higher costs. Direct and operating expenses amounted to $136.10Bn for the financial year 2022, which represents an 11.9% increase compared to last year. This was primarily due to rising distribution, input and interest costs, supply chain disruptions, and ongoing geopolitical tensions.
• GK’s food business recorded strong overall growth in revenues and an increase in PBT when compared FY 2021. However, the Financial Group recorded a decline in PBT despite an expansion in revenues.
• The stock price has decreased by 4.8% since the start of the calendar year. The stock closed Thursday’s trading session at $79.21 and currently trades at a P/E of 11.2x, which is above the Main Market Conglomerate Sector Average of 10.0x.
• GK also announced that it will launch a share buy-back this year, subject to the approval of its regulators. The proposed share buy‐back is being implemented because the share price is considered to be below its true value and is an opportunity to enhance shareholder value by helping to raise earnings per share.
• Rising inflation, an inconsistent supply chain, increasing interest rates and distribution costs, as well as geopolitical tension remain the main headwinds to GK’s performance in 2023.  Further, currency movements in key operating markets are also expected to factor into business performance for the company this year.

(Sources: JSE and NCBCM Research)

• International oil and gas explorer giant Woodside Energy found significant prospects for natural gas and potential for oil off Barbados’ coast in its assessment of offshore fossil fuel reserves.
• The announcement of the find was made by the Director of Natural Resources in the Ministry of Energy and Business Jamar White in an update to Parliament. The announcement was made during the parliamentary scrutiny of the 2023-2024 Estimates of Expenditure and Revenue, which continued on Monday (February 27).
• According to White, “they completed a 2,600-square kilometre 3D seismic survey offshore Barbados in an effort to better understand what the prospects were. From what we are hearing – and we are awaiting official notice from the company – the results look very encouraging.”
• Barbados has no major offshore discoveries, but for decades, has been producing about 1,600 barrels of oil daily from inland wells. Its neighbour Trinidad has been producing oil and gas—gas especially—in large quantities for more than 100 years.
• The country’s economic growth prospects would benefit greatly from natural gas production, transportation, and consumption. This development has the potential to provide significant employment and attract investments, while significantly reducing fuel costs and ultimately the cost of goods for consumers.

(Sources: Our Today and NCBCM Research)

• Peru's government announced the launch of more than 30 public-private projects worth nearly $9 billion, hoping to revive the economy hit by violent anti-government protests.
• The projects, involving road infrastructure, energy and sanitation, are set to begin between this year and 2024, according to the head of the state's agency for investment promotion Jose Salardi. "The key is to regain confidence," Salardi said, adding the government is simplifying processes, standardizing contracts and coordinating with the private sector.
• Anti-government protests have swept the country since former President Pedro Castillo was ousted on December 7, with clashes between protesters and security forces leaving dozens dead.
• Private investment in Peru fell 0.5% last year, in contrast to the 37.4% growth recorded in 2021, according to economy ministry data. Economic growth stood at 2.7% at the end of 2022, a steep decline from the 13.6% climb recorded the year before.
• The International Monetary Fund (IMF) recommended earlier in February that Peru implements "targeted, temporary" fiscal stimulus, given the slump in economic activity. The country aims to increase private investment by 3% this year, as early economic indicators show a recovery in February.

(Source: Reuters)

• The number of Americans filing new unemployment claims fell again last week, pointing to sustained labour market strength that could fuel further rate hikes from the Federal Reserve.
• Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 190,000 for the week ended Feb. 25, the Labour Department said on Thursday. It was the seventh straight week that claims remained below 200,000.
• There is still no sign that high-profile layoffs, mostly in the technology sector, have had a material impact on the labour market, with economists and policymakers saying these companies over-hired during the pandemic and were not representative of the overall economy. Economists also speculate that severance packages were keeping some laid-off workers from filing claims.
• The unemployment rate, at 3.4% in January, was the lowest in more than 53 years. Economists expect strong employment growth in February, though the pace probably slowed from January's blockbuster 517,000 jobs.
• Labour market resilience and stubbornly high inflation have increased the odds of the Fed raising interest rates at least three more times this year instead of twice. The U.S. central bank has hiked its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December.

(Source: Reuters)

• Eurozone inflation fell less than expected last month and underlying price growth surged, reinforcing the case for the European Central Bank to keep raising interest rates at a brisk pace, data from Eurostat showed on Thursday.
• Consumer price inflation in the 20 countries sharing the euro currency eased to 8.5% in February from 8.6% a month earlier as a big fall in energy costs offset a price surge in nearly all other areas, but still came in above expectations for 8.2% in a Reuters poll of economists.
• Investors now see the ECB's 2.5% deposit rate rising by a combined 100 basis points in March and May, then to around 4.1% at the turn of the year, with markets having priced in an extra 50 basis points of hikes in the past month alone.
• Bundesbank President, Joachim Nagel, has already argued that the recent fall in energy prices only lowers short-term inflation and does not improve medium-term prospects, so the ECB may need to opt for another large rate hike in May.
• However, ECB’s chief Christine Lagarde argued that disinflation will pick up speed from next month as surging gas prices at the onset of Russia's war in Ukraine get knocked out of base figures.

(Source: Reuters)