• For the period January to May 2022, Jamaica’s total spending on imports was valued at US$3,050.0Mn which represents a 34.1% increase relative to last year, while earnings from exports amounted to US$641.4Mn which represents a 2.8% decline relative to the prior period.
• The increase in imports was primarily attributed to higher imports of “Fuels and Lubricants”, “Raw Materials/Intermediate Goods” and “Consumer Goods”, which rose by 56.0%, 28.1% and 35.9% respectively.
• Meanwhile, the fall in the value of exports was due primarily to a 59.0% decline in the value of exports of “Crude Materials (excl. Fuels)”. Domestic exports from January to May 2022 fell by 6.1% to US$531.7 million, due to a 60.7% decline in exports from the Mining and Quarrying industry as this industry has been negatively affected by Jamalco’s plant closure after its fire in August 2021. Earnings from domestic exports accounted for 82.9% of total exports.
• The value of imports for the period January to May 2022 from Jamaica’s five main trading partners, the United States of America (USA), Brazil, China, Trinidad and Tobago and Japan, was US$1,977.4 million, representing 64.8% of the total imports.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, Canada, the United Kingdom and the Russian Federation. The value of exports to these countries increased by 25.2% to US$517.0 million, due mainly to higher exports of fuels to the USA.

(Source: STATIN)

• Jamaica’s tourism earnings are expected to be “significantly higher” this year, exceeding pre-COVID-19 levels, according to Tourism Minister, Hon. Edmund Bartlett.
• The ministry now expects that Jamaica will earn in excess of US$4 billion this year, which would exceed 2019 figures by between US$500 million to US$600 million. This growth is expected to be supported by an increase in visitor arrivals, including cruise ship arrivals which are projected to be above three million, which is similar to 2019 figures.
• Overall, visitors are staying longer in Jamaica and are spending more. In 2019, the average length of stay for visitors would have been approximately 7 nights. In 2022, visitors are staying just over eight nights. Additionally, the average daily spending rate in 2019 was approximately US $168 per person, per day while in 2022, the rate is US $180 per person, per day.

(Source: JIS News)

• Fitch expects that economic growth in Latin America will ease in the latter half of 2022, making it an underperformer compared with other regions.
• Latin America's real GDP growth will only be 3.0% in 2022 and 1.8% in 2023, making it a global underperformer, outpacing only EM Europe among the world’s major regions.
• The economic tailwinds of the post-pandemic recovery will continue to give way to headwinds posed by weak demand in key export markets and persistent inflationary pressures.
• Inflationary pressures will weigh on private consumption in most of the region’s major markets, while the deteriorating US growth outlook will depress exports from and remittance inflows to the region.
• Additionally, elevated political uncertainty will also play a significant role in dampening investment growth throughout the region.

(Source: Fitch Solutions)

• Fitch Ratings reported that Petroleos Mexicanos (PEMEX) has failed to leverage elevated oil prices to strengthen itself and evolve into a sustainable, reliable energy company due to a stubbornly high government take.
• Saverio Minervini, Head of Latin American Energy, Utilities, and Natural Resources Corporates noted that “PEMEX faces a mountain of maturities in a higher rate environment that will further squeeze its profitability and ability to effectively invest. This will pressure the government to provide further support through an equity injection or to lower its take from the company.”
• Notably, Pemex’s ‘BB-’ rating is three notches below Mexico’s (BBB-/Stable) due to weak government support, which to date has been insufficient and uncertain.
• For PEMEX to be upgraded, the company’s Standalone Credit Profile would need to improve to ‘b’ from ‘ccc-’. This could only be achieved through a combination of massive debt repayment or a significant reduction in the government’s take from the company via taxes, royalties, and other measures, including consistent government support.
• Mexico’s government has financially supported PEMEX by cutting its effective tax rate, injecting more capital into the company, and devoting a greater share of public investment toward PEMEX and energy-related projects. However, the support has been insufficient and has not improved the company’s credit profile.
• The continued need for fiscal resources has led to a negative notch adjustment for the sovereign rating assessment, as the support is likely to negatively affect public finances. However, Fitch does not expect further deterioration of the sovereign rating in the near term due to PEMEX’s financial position.

(Source: Fitch Ratings)

• Treasury yields climbed on Monday as traders anticipated the Federal Reserve’s next moves in the face of persistently high inflation.
• The benchmark 10-year Treasury yield gained 6 basis points to 3.518%, hitting its highest level since April 2011. The yield on the 2-year Treasury bond rose 8 basis points to trade at 3.942%, trading around levels not seen since 2007.
• The Fed’s two-day meeting will begin Tuesday, with most market participants expecting another 75-basis-point hike by the central bank. Some analysts have, however, argued the Fed could increase interest rates by a full point, or 100 basis points.
• It comes after inflation rose more than expected in August. The consumer price index increased 0.1% for the month and 8.3% over the past year — higher than economists expected. The data has led investors to expect the Fed to double down on higher interest rates for longer until prices fall.

(Source: CNBC)

• A group of bank regulators appointed by U.S President Joe Biden is considering new rules which will require big regional banks to add financial cushions that can be used in times of crisis, the Wall Street Journal reported on Sunday.
• The new steps include the regional banks raising long-term debt that will help absorb losses in cases of insolvency.
• The WSJ report comes over a week after U.S. Federal Reserve chief Michael Barr said that there soon may be tougher rules on large regional lenders after a 'holistic' review of bank capital requirements is concluded.

(Source: Reuters)

• For August 2022, the All-Jamaica Consumer Price Index (CPI) increased by 0.9%. August’s outturn is the highest monthly CPI reading seen thus far in 2022. However, on a year-over-year basis, the August point-to-point inflation figure of 10.2% shows that inflation has remained constant for the past two consecutive months. 
• For August, the rise in monthly inflation was largely driven by the 1.7% increase in the index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division. The main contributor to the increase in the division was a rise in the prices for agricultural produce such as Irish potatoes, carrots, onions, and pumpkins.
• The inflation rate for August 2022 was also impacted by the divisions, ‘Housing, Water, Electricity, Gas and Other Fuels’ and ‘Recreation, Sport and Culture’. The increase in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division of 0.4% was primarily due to higher electricity rates, while higher prices for textbooks due to increased demand ahead of the restart of the school year resulted in a 0.8% rise in the ‘Recreation, Sport and Culture’ division.
• The current point-to-point outturn for inflation is in keeping with expectations, as the BOJ noted that inflation was projected to stabilize in the range of 9.0% to 11.0% for the remainder of 2022. 
• The near-term risks to the inflation forecast are assessed to be balanced, which means that actual inflation could continue to be in line with the forecast. On the upside, risks include further disruptions to international supply chains, higher than anticipated pass-through of imported inflation to domestic inflation and a reversal in the trends in commodity prices. On the downside, weaker-than-expected global growth could negatively impact domestic demand. There is also a risk of lower than projected imported inflation from international commodity prices, given the headwinds to global growth.
• On September 29, 2022, the BOJ will have its monetary policy meeting and it is expected that it will continue its hawkish stance. This increase will likely carry the policy at or above 6.25%, from the current rate of 6.00%. This decision will be influenced by the sustained expectation for future breaches in the inflation range and the still elevated inflation expectations for 12 months ahead, which rose to 13.1% in the June Survey from 12.8% in the prior survey.

(Sources: STATIN and NCBCM Research)

• Brazil's Economy Ministry on Thursday upgraded its forecast for economic growth this year to 2.7%, from 2% expected in July after official data for the second quarter showed brisk activity.
• The Ministry’s Secretariat for Economic Policy said the upbeat revision comes after GDP growth between April and June surprised expectations with a 1.2% rise. Activity will continue to grow in the second half, though more slowly, it added.
• The ministry kept its GDP growth forecast of 2.5% for 2023. Notably, private economists estimate that Latin America's largest economy will expand 2.39% this year and just 0.5% next year, affected by the central bank's sharp monetary tightening to tame inflation.
• Policymakers have already pushed interest rates to 13.75% from a record low of 2% in March last year. But the ministry again stressed that its much more optimistic prospects for 2023 are supported by greater private investment and historically high capital goods imports in relation to GDP.
• Despite the moderate deceleration expected for global growth, Brazil sees more jobs in the formal sector and increased services with greater productivity. The ministry decreased its 2022 inflation forecast to 6.3% from 7.2% in July; however, for 2023, it was maintained at 4.5%.

(Source: Reuters)

• Peru's economy expanded 1.41% in July compared with the year before, the government said on Thursday, feeling the effects of a slowdown in the key mining sector. The country's economy expanded 3.44% in June.
• The July result brings year-on-year growth between January and July to 3.22% in the world's number 2 copper producer, the national institute of statistics reported. July's growth rate is the slowest since Peru lifted pandemic-related restrictions last year.
• Mining is vital to Peru's economy because it accounts for 60% of the country's total exports. However, this year, Peru's mining sector has suffered from several protests by indigenous communities demanding greater benefits, including one that paralyzed production in the Las Bambas copper mine for almost two months.
• The Minister of Economy and Finance Kurt Burneo has launched a package of measures to reactivate production in the country, which includes subsidies and tax exemptions, increased public spending and cash transfers. This should help to boost growth.

(Source: Reuters)

• The world may be edging toward a global recession as central banks across the world simultaneously hike interest rates to combat persistent inflation, the World Bank said on Thursday.
• The world's three largest economies - the United States, China, and the euro area - have been slowing sharply, and even a "moderate hit to the global economy over the next year could tip it into recession," the bank said in a new study.
• The global economy was now in its steepest slowdown following a post-recession recovery since 1970, and consumer confidence had already dropped more sharply than in the run-up to previous global recessions. World Bank President David Malpass indicated that there are concerns that these trends could persist, with devastating consequences for emerging market and developing economies.
• “Synchronized interest rate hikes underway globally and related policy actions were likely to continue well into next year, but might not be sufficient to bring inflation back down to levels seen before the COVID-19 pandemic,” the bank said.
• Unless supply disruptions and labour-market pressures subsided, the global core inflation rate, excluding energy, could stay at about 5% in 2023, nearly double the five-year average before the pandemic.
• The study suggested that central banks could combat inflation without tipping off a global recession by communicating their policy decisions clearly, while policymakers should put in place credible medium-term fiscal plans and continue to provide targeted relief to vulnerable households.

(Source: Reuters)