• Remittance data from across the Central American sub-region continues to show inflows far above historical levels, providing a key source of support for domestic private consumption.
• The bulk of these flows come from the US, where the strength of the labour market has increased the income available to send abroad. This trend first began in mid-2020, when the huge fiscal stimulus (roughly USD5.0trn) passed by the US in response to the Covid-19 pandemic boosted household incomes, even despite the collapse in employment during the period of intense lockdowns.
• This has continued into H222 and through Q322, the latest period for which data is available from all the markets that report remittances, receipts are up 18.2% y-o-y, and 60.3% from the same period in 2019.
• However, Fitch expects that remittance growth has peaked, as the US economy is likely to slow in 2023, hurting the labour market (the company forecasts unemployment to rise from 3.4% to 4.5% by the end-2023) and reducing the disposable income available to remit back to Central America.
• In 2023, the reduction in remittance inflow is a key factor that will impact real GDP growth in Central America with growth anticipated to slow from an estimated 4.3% in 2022 to 2.8% in 2023.

(Source: Fitch Solutions

• Colombia's government is expected to hike its 2023 budget by some 23 trillion Colombian pesos (US$4.71Bn) in a proposal to be sent to Congress on February 17, 2023, the country's interior minister said last Thursday.
• Almost all of the additional funds will come from a recently passed tax reform Interior Minister Alfonso Prada said in a radio interview.
• Notably, the approved tax reform approved back in November 2022, will raise an additional 20 trillion pesos (US$4 billion) annually for the next four years. The reform increases duties on oil and coal, raises income taxes on the rich, and targets single-use plastics and processed food and drinks.
• The funds will be aimed at backing President Gustavo Petro’s wide-ranging social programmes, specifically purchasing land for planned agrarian reforms. In addition to pending health reform, Petro also hopes to change the country's labour and pension systems, and offer free university education to low-income students.
• These programs will be pushed because more than half of Colombia's population currently lives in poverty, according to government data. These proposals are therefore intended to not only meet fiscal codes and reduce public debt but also aimed at targeting the social disparities in the country.

(Source: Reuters)

• Canada's annual inflation rate eased more than expected in January to 5.9%, data showed on Tuesday, which should allow the Bank of Canada to keep interest rates steady at its next meeting while it lets previous rate hikes sink in.
• Analysts had expected inflation to edge down to 6.1% from 6.3% in December. Month over month, the consumer price index rose 0.5%, Statistics Canada said, again lower than analysts' forecast of a 0.7% gain, after a 0.6% decline in December.
• Statscan cited a base effect, or comparison with last year's strong result, that should persist through June. In January 2022, prices surged at a time of Russia-Ukraine tensions and supply chain disruptions, and they increased to a peak of 8.1% in June.
• The inflation figure "allows (the Bank of Canada) to stay on hold in March, despite the fact that the labor market was extraordinarily hot in the month of January," said Andrew Kelvin, chief Canada strategist at TD Securities.
• The Bank of Canada in January raised its benchmark interest rate to a 15-year high of 4.5% and became the first major central bank to say it would hold off on further increases as long as prices eased in line with its forecast.

(Source: Reuters)

• Oil prices rose over 1% on Monday, buoyed by optimism over Chinese demand, continued production curbs by major producers and Russia's plans to rein in supply.
• Brent crude settled up $1.07, or 1.3%, at $84.07 a barrel. U.S. West Texas Intermediate crude (WTI) for March, which expires on Tuesday, last rose 85 cents, or 1.1%, at $77.19. Volumes were muted on Monday because of a U.S. market holiday for Presidents' Day. Both crude benchmarks settled $2 lower on Friday for a decline of about 4% over the week after the United States reported higher crude and gasoline inventories.
• Analysts expect China's oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries come on stream. "The optimism around China today may be responsible for the gains we're seeing in crude, which would make a lot of sense given it's the world's largest importer and expected to recover strongly from the COVID transition," said Craig Erlam, senior markets analyst at OANDA in London.
• China and India have become major buyers of Russian crude amid Western sanctions on Russian oil and more recently, embargoes and price caps because of the Ukraine war. Russia plans to cut oil production by 500,000 barrels per day (bpd), equating to about 5% of its output, in March after the West imposed price caps on Russian oil and oil products.
• Future oil supply shortages are likely to drive prices toward $100 a barrel by the end of the year, Goldman Sachs analysts said in a Feb. 19 note. Prices will move higher "as the market pivots back to the deficit with underinvestment, shale constraints, and OPEC discipline ensuring supply does not meet demand", they wrote.

(Source: Reuters)

• Honey Bun Limited recorded a 52.3% year-over-year increase in its net profit to $68.29Mn for the first quarter ended December 31, 2022 relative to the corresponding period of 2021.
• Operating revenue for the quarter was up by 23.0% yoy to $817.40Mn. Gross profit for the quarter grew by 35.2% to $357.64Mn and consequently, the gross profit margin improved to 43.8% from 39.8%. This was attributable to management’s focus on islandwide distribution and efficiency. The company opened its Old Harbour outlet in Q1, bringing the total wholesale outlets across the island to nine (9).
• As a hedge against the negative impact of current and future supply chain disruptions, inventory increased by 78.4% to close at $217.67Mn and payables increased by 30% to close at $250.95Mn in Dec 2022. The revenue growth also contributed to the increase in receivables of 64% to $198.5Mn.
• HoneyBun’s stock price has decreased by 7.60% since the start of the calendar year. The stock closed Thursday’s trading session at $7.38 and currently trades at a P/E of 15.4x, which is below the Junior Market Manufacturing Sector Average of 36.4x.
• Further growth is anticipated for the financial year, and to that end, additional outlets are being planned country-wide, along with adding more vehicles to its fleet as it builds out its distribution plans. Additionally, the company plans to increase exports, improve efficiency and further automate production, thereby boosting profitability. 

(Source: JSE)

• Guyana's government is forecasting the nascent oil producer's economy, which has recently been among the world's fastest-growing, will expand by at least 25% per year in the next three to four years with a favourable outlook, according to Finance Minister Ashni Singh.
• Since oil production was inaugurated in 2019 by a consortium led by U.S. major Exxon Mobil Corp, Guyana's economy has boomed and the government has proposed devoting an increasing portion of its budget to infrastructure projects.
• According to the public budget, the government's National Resource Fund will receive $1.6Bn in deposits this year, while withdrawals for funding the country's capital expenditures will be around $1Bn. By the end of 2026, the fund is expected to have increased its balance to $5.4Bn.
• Guyana's economy registered a real growth of 62% last year and has been forecasted to expand by another 25% this year. Revenue from oil exports and royalties is expected to climb 31% to $1.63Bn this year, fueled by an average $83 per barrel price for Guyana's export basket.

(Source: Reuters)

• Barbados has been removed from the European Union’s (EU) state-of-play document (Annex II), which means the island has been deemed compliant with tax requirements.
• Barbados was added to the EU list in October 2020 after it received a ‘partially compliant’ rating released by the OECD Global Forum for Transparency and Exchange of Information (Global Forum). It has now been granted a supplementary review by the Global Forum and has therefore been moved to a state-of-play document pending the outcome of this review.
• The state-of-play document identifies cooperative jurisdictions which have made further improvements to their tax policies or related cooperation. It reflects the ongoing EU cooperation with international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards. For the purposes of the list, the EU requires jurisdictions to be at least ‘largely compliant’ with the international standard on transparency and exchange of information on request (EOIR).
• Minister of Energy and Business, Senator Lisa Cummins, said the announcement followed substantial work by government officials and stakeholders, from last November until now. The minister explained that officials in the International Business Unit, the Barbados Revenue Authority, the Barbados International Business Association, and all of the service providers, including members of the Barbados Bar Association, worked earnestly on this matter.
• Acknowledging that there was still more work to be done going forward, Senator Cummins gave the assurance that government would continue working with the Forum on Harmful Tax Practices, the Organization for Economic Co-operation and Development, and sovereign jurisdictions.

(Source: Caribbean National Weekly)

• British inflation fell by more than expected in January and there were signs of cooling price pressure in parts of the economy watched closely by the Bank of England, adding to signs that further hefty interest rate hikes are unlikely.
• Annual consumer price inflation (CPI) cooled to 10.1% last month, the lowest reading since September, the Office for National Statistics (ONS) said on Wednesday. Economists polled by Reuters had forecast that the annual CPI rate would drop to 10.3% in January, moving further away from October's 41-year high of 11.1% but continuing to squeeze households' living standards.
• Despite the fall, inflation remains higher than in the United States or the eurozone, and many forecasters think it will stay higher as a result of Britain's acute labour shortages and other constraints on the economy such as Brexit.
• Earlier this month, the BoE said it saw signs that the surge in consumer prices had turned a corner and it suggested it was close to ending its run of interest rate hikes.
• Prices of services, which are also in the BoE's spotlight, slowed their rise in January, increasing by an annual 6.0% compared with 6.8% in December. The ONS said transport and hospitality prices helped to drag down inflation last month. Economists said the numbers added to signs that inflation was on course to fall further from its peak last year but could also be heralding the recession expected for Britain's economy in 2023.

(Source: Reuters)

• U.S. household debt jumped to a record $16.90Trn from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday.
• Household debt rose by $394Bn last quarter and is now $2.75Trn higher than just before the COVID-19 pandemic began. Mortgage debt increased by $254Bn to $11.92Trn at the end of December. Meanwhile, credit card balances increased by $61Bn in the fourth quarter while auto loan balances rose by $28Bn, the report said.
• Much of the rise in overall debt can be attributed to a tumultuous 2022 in which the U.S. central bank raised its benchmark interest rate from near zero last March to more than 4% by the end of December, the fastest pace of monetary tightening since the early 1980s, as it fought to quash an inflation rate that had surged to a 40-year high.
• Delinquency rates rose too for credit cards, auto loans, and mortgages, although the overall share of debt in arrears by more than 90 days remains below pre-pandemic levels for now. However, younger borrowers appear to be struggling more to make repayments for both credit card and auto loans.
• "Although historically low unemployment has kept consumer's financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts," said Wilbert van der Klaauw, an economic research advisor at the New York Fed.

(Source: Reuters)

• For January 2023, the All-Jamaica Consumer Price Index (CPI) decreased by 0.6% when compared to the previous month. However, the point-to-point inflation rate for the month was 8.1%, which indicates that inflation has been decelerating over the last two months.
• For January, the decline in monthly inflation was largely driven by the 2.4% decrease in the index of the ‘Housing, Water, Electricity, Gas and Other Fuels’ division and a 0.9% decline in the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ division. The main contributor to the movement in the ‘Housing, Water, Electricity, Gas, and Other Fuels division was lower electricity rates. The decline in the ‘Food and Non-Alcoholic Beverages’ was due to a 5.8% decline in the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ as a result of an oversupply of some agricultural produce.
• These movements, however, were tempered by increases in the index for the divisions; ‘Restaurants and Accommodation Services’, which increased by 1.3%, and the ‘Education’ division, which increased by 1.4%. 
• The All-Jamaica Consumer Price Index (CPI) was 8.1% for the period January 2022 to January 2023. The main contributors to this increase were the divisions ‘Food and Non-Alcoholic Beverages’, which moved up by 12.7%, ‘Restaurants and Accommodation Services’, which increased by 15.8%, and ‘Personal Care, Social Protection and Miscellaneous Goods and Services up by 7.7%
• On February 20, 2023, the BOJ will have its monetary policy meeting and we anticipate that the bank will continue to hold the rate steady due to the fact that at the bank’s previous meetings, it was deemed appropriate to pause the policy rate increases and watch the pass-through effects on deposit and loan rates.

(Source: STATIN)