• Fitch anticipates that historically high inflation will continue coming down in Jamaica, relieving the pressure on households and supporting social stability.
• Inflation has already fallen from a high of 11.8% y-o-y in April, to 10.2% in August, and it is further expected that inflation will slow to 8.6% by end-2022 and 4.8% at end-2023, mainly due to falling commodity prices.
• On the other hand, employment, which has been bolstered by a recovering tourism sector, will contribute further to Jamaica’s stability. Consequently, the unemployment average is expected to come in at 6.8% in 2022 and 7.0% in 2023, down from 8.4% in 2021.
• Jamaica’s ‘social stability’ component has come up significantly, from 45.0 to 52.5 out of 100 due to the aforementioned fall in inflation and rebound in employment. As such Fitch revised the country’s overall score in its Short-Term Political Risk Index (STPRI) from 69.2 to 72.7 out of 100.
• Nevertheless, longer-term risks to social stability come from the government’s commitment to fiscal consolidation, and possible lack of additional fiscal support in the event of an economic downturn.

(Source: Fitch Solutions)

• Guyana’s oil-and-gas sector has already contributed significantly to the economy through increased revenues, consequently, the oil sector GDP is expected to grow more than 100% this year, with roughly 30% average growth continuing for most of the decade according to the IMF.
• However, diversification in other non-oil sectors and government investment in innovative policies will be key elements for driving sustainable growth. The IMF foresees that, over the next five years, Guyana will continue to see significant growth in its non-oil economy, with non-oil sectors accounting for 32% to 40% of total GDP, from 2022 through 2027.
• The report added that non-oil GDP growth is expected to average 5% per year, while inflation is set to ease, thanks to more stable projected international food and fuel prices.
• This year, the country’s sugar and rice industries started to recover after a series of floods hampered those industries. Sugar and rice cultivation, alone, are projected to grow by almost 12% and 25% respectively, according to the government’s projections.
• These improvements will go a long way in encouraging investments in regional agriculture to reduce the regional food-import bill by 2025. Furthermore, this level of investment and development in Guyana is an important indicator of the government proactively working to avoid the resource curse and Dutch Disease early in its oil-producing history.

(Source: Guyana Chronicle)

• Fitch Solutions has forecast that the Panamanian fiscal deficit will narrow from 6.7% of GDP in 2021 to 5.1% in 2022 and 4.2% in 2023, due to rising revenues stemming from growing tax and Panama Canal earnings, and fiscal consolidation measures enacted by President Laurentino ‘Nito’ Cortizo. 
• Prior to the COVID-19 pandemic, Panama ran modest fiscal deficits averaging 2.1% of GDP from 2015-2019. After running a record fiscal deficit of 10.2% of GDP in 2020, the government has seen a rebound in revenues and has limited expenditure growth.
• In 2022, the post-pandemic economic rebound is expected to continue and will support 10.5% revenue growth, while the government implements austerity measures that will limit expenditure growth to 3.4%. Consequently, Fitch forecasts that the Panamanian economy will grow 7.0% in 2022, reaching 2019 GDP levels and driving higher sales and income tax growth than last year. 
• However, while tax revenue growth will ease with slowing economic growth in 2023, revenue growth will be sustained by higher expected profits from the Panama Canal, underpinning Fitch’s view that revenues will grow to 7.9%. 
• On the expenditure side, the government will attempt to strike a balance between getting closer to compliance with the country’s Fiscal and Social Responsibility Law (FSRL) and maintaining some social spending, to address the cost-of-living crisis which has led to nationwide protests and demonstrations. This will support total expenditures growth of 3.5% in 2023.

(Source: Fitch Solutions)

• British finance minister Kwasi Kwarteng, fresh from sowing turmoil in financial markets with a plan for big tax cuts, heads to Washington this week with International Monetary Fund criticisms of his new policy direction ringing in his ears.
• Kwarteng is due to attend the IMF's semi-annual meeting of global policymakers for the first time since being put in charge of Britain's economy by Prime Minister Liz Truss and tasked with delivering on her promises of ending policy-making "orthodoxy".
• On Sept. 23, Kwarteng made his first fiscal announcement including a controversial plan to scrap Britain's top income tax rate for the highest earners, part of a package of measures he said would speed up sluggish economic growth.
• But the IMF took the rare step of criticising the proposals, saying they could worsen inequality and work at cross-purposes with the Bank of England's drive to tame surging inflation which is the highest among the Group of Seven rich nations.
• In a nod to concerns about the impact of his plans on Britain's public finances, Kwarteng announced on Monday he was bringing forward the date for announcing his medium-term budget plans and independent forecasts on how much they would cost.
• BoE Governor Andrew Bailey is also due to attend the IMF meetings this week, from where he will watch how investors react to the central bank's newly expanded measures to calm financial markets after the turmoil sparked by Kwarteng last month.

(Source: Reuters)

• China's services activity in September contracted for the first time in four months, as COVID-19 restrictions dented already fragile demand and dimmed business confidence, a private-sector business survey showed on Saturday.
• The Caixin services purchasing managers' index (PMI) fell to 49.3 from 55.0 in August as COVID containment measures disrupted supply and demand and restricted national travel.
• An official survey published last week also showed services activity slowing, although its reading remained slightly above the 50-point mark that separates growth from contraction on a monthly basis. China's economy showed signs of improvement in August with faster-than-expected growth in factory output and retail sales but is being held back by protracted COVID curbs and a worsening property slump.
• The Caixin survey showed services companies are grappling with sluggish demand, shrinking production and rising costs, although foreign orders are recovering. The new business sub-index registered the first drop in four months in September, of which the new export business expanded for the first time since December 2021. Input prices have risen every month since June 2020, the sub-index showed, mainly driven by higher raw material and labour costs.
• That led services firms to reduce their payrolls at a sharper rate, with a sub-index for employment at 48.5, in contraction territory for the ninth straight month and down from 48.9 in August. With few signs COVID containment measures will ease in the near term, the market was much less optimistic.

(Source: Reuters)

• Minister of Tourism, Hon Edmund Bartlett has announced that Jamaica has earned US$5.7Bn since reopening its borders in June 2020. The data also shows that the island welcomed over 5Mn visitors over the same period. According to arrivals figures, the announcement follows the destination’s strong tourism recovery efforts that resulted in its best summer ever.
• Since reopening in June 2020, the island has welcomed approximately 5,173,000 visitors, including stopover arrivals and cruise passengers. Tourism is a key driver in the overall economic recovery for Jamaica, as such, the improvement in tourist arrivals augurs well for the economy, lives and livelihoods.
• Earnings from tourism are expected to return to pre-pandemic levels by end-2022 while arrivals should return to 2019 levels by end-2023 and this performance will be boosted by strong investments in the sector and the return of robust cruise demand.
• The island was one of the first destinations to reopen amidst the global coronavirus pandemic through its robust health and safety protocols and World Travel and Tourism Council-approved resilient corridors. These innovative approaches allowed for the safe reopening of borders and travel and tourism activities.

(Source: Caribbean News Now)

• Palace Amusement reported a net loss of $260.68Mn for its financial year ended June 30, 2022, despite seeing revenue growth of 513.6%. This loss was mainly attributed to higher direct and indirect expenses.
• Direct costs increased by 106.6% year-over-year, mainly due to increased business activity in tandem with the reopening of the economy which took place in the second half of the company’s financial year. Specific costs such as Film and Staff costs increased by 446.0% and 70.4%, respectively, resulting in an overall increase in direct costs. Additionally, the 54.3% increase in admin expenses also contributed to higher expenses.
• Going forward, the company should see stronger revenues in FY2023 given that the economy is now fully reopened. The company is expected to see higher revenue in the first half of the current financial year relative to the corresponding period last year which was marred by lockdown measures. Consequently, the company is anticipated to experience better Q1 2022/23 financial performance given its ability to contain cost.
• Palace’s stock price has decreased by 25.15% since the start of the calendar year. The stock closed Thursday's trading session at $800.00. 

(Sources: NCBCM Research and Company Financials)

• Over the past 17 months, there have been numerous defaults marking a collapse in Mexico’s shadow bank or non-bank financial sector.
• A year into the pandemic, Panton, who was then a debt strategist in New York for Stifel, Nicolaus & Co., had warned that the math underlying Crédito Real SAB de CV didn’t add up. Hedge funds and big banks had ignored him, instead backing the company, a rising star of Mexico’s shadow banking industry that borrowed cash from big-time foreign investors and cut smaller loans to low-income people and businesses.
• However, a revision was done in which the microlender admitted that its bad-loan book was 82% larger than it originally disclosed—just the type of issue Panton had cautioned about.
• The revision, combined with an accounting error revealed the same week by a smaller payroll lender called Alpha Holding SA de CV, (AlphaCredit), would eventually lead to the collapse of Mexico's alternative banking sector, a loss of nearly $5Bn for foreign bondholders, and a series of debt restructuring battles in the country's opaque courts, undermining investor confidence in Latin America's No. 2 economy.
• Following this, Unifin, Mexico’s largest shadow lender, defaulted in August 2022—just weeks after its chief executive officer snapped at investors during an earnings call about how healthy the company was.
• The future looks bleak for Mexico’s shadow lenders, according to Rafael Elias, a managing director for fixed income at BancTrust Investment Bank Ltd. The business depends on strong consumer spending, he says, which hasn’t recovered in Mexico since the pandemic.
• For now, investors in AlphaCredit, Crédito Real, and Unifin are hoping for restructuring deals that will pay some portion of the outstanding debt balances on bonds trading for pennies on the dollar. But the process is already proving arduous, with ever-shifting corporate leadership and cases proceeding through both US and Mexican courts.

(Source: Bloomberg)

• Revenue collection in Grenada surpassed projections for the period January to June 2022 while real GDP growth is projected to reach 3.3% by year-end.
• According to a mid-year review prepared by the Ministry of Finance, public finances improved in 2022 with revenue collections for the first 6 months exceeding the target and the comparable period of 2021 by $62.2Mn and $67.4Mn, respectively.
• The improvement in revenue came on the back of the administration’s decision to remove the cap on freight and petrol, as this allowed revenue collection agencies to earn more than what had been projected in the 2022 Estimates of Revenue and Expenditure.
• Notably, the recovery in the economy will continue to support revenues in the form of higher tax collection through wages due to higher employment, increased production, and consumption. Further, as the economy continues to recover, foreign direct investment should also improve bolstering economic output, as well as increasing foreign exchange inflow from pent-up tourism demand.
• Further, a primary surplus including grants of $58.2Mn is estimated for 2022, surpassing the budgeted deficit of $34.2Mn while a modest overall deficit of $1.6Mn is estimated at the end of this year compared to a budgeted deficit of $97.9Mn.

(Source: CARICOM TODAY)

• The Bank of England told lawmakers that several pension funds were hours from collapse when it decided to intervene in the U.K. long-dated bond market last week.
• The central bank’s Financial Policy Committee stepped in after a massive sell-off of U.K. government bonds — known as “gilts” — following the new government’s fiscal policy announcements on Sep. 23.
• The emergency measures included a two-week purchase program for long-dated bonds and the delay of the Bank’s planned gilt sales, part of its unwinding of pandemic-era stimulus.
• The plunge in bond values caused panic, particularly for Britain’s £1.5 trillion ($1.69 trillion) so-called liability-driven investment funds (LDIs). Long-dated gilts account for around two-thirds of LDI holdings.
• Many LDIs are owned by final salary pension schemes, workplace pension plans popular in the U.K. that provide a guaranteed annual income for life upon retirement, based on the worker’s final or average salary.

(Source: CNBC)