• The President of Panama, José Raúl Mulino, made official this Wednesday, December 11, a $500Mn financing program with the international banks Citi and BBVA, aimed at promoting the country’s economic reactivation plan, which will be managed through the state-owned Caja de Ahorros (CA).
• The program includes a financial contribution of $250 million from Citi and another $250 million from BBVA.
• “The money for the Panamanian people will not come from subsidies or royalties from the State, but from economic reactivation through the private sector, which will result in fresh money to boost the economy” the president said.
• This financing is projected to support various productive sectors, with an emphasis on small and medium-sized enterprises (SMEs), seeking to promote economic development and job creation throughout the country.

(Source: Panama Newsroom)

• Brazil's central bank raised interest rates by 100 basis points on Wednesday and signaled same-size hikes for the next two meetings as it navigates increasing inflation challenges alongside fiscal woes.
• The bank's rate-setting committee, known as Copom, unanimously increased the benchmark Selic rate to 12.25%, highlighting the negative impacts of a recent fiscal announcement by the government on asset prices, inflation expectations, and the exchange rate.
• "The committee judges that these impacts contribute to a more adverse inflation dynamics," said policymakers in the decision statement, the last under Governor Roberto Campos Neto's leadership at the central bank.
• This comes after the release of a highly anticipated spending cut package by President Luiz Inácio Lula da Silva's administration, which failed to meet expectations and has weakened confidence in the government's ability to control the growing public debt.
• Bottom of Form

(Source: Reuters)

• The Bank of Canada slashed its key policy rate by 50 basis points to 3.25% on Wednesday and indicated that further cuts would be more gradual, a shift from previous messaging that continuous easing was needed to support growth.
• The 50-basis-point cut, while widely expected, marks the first time since the pandemic that the central bank has implemented consecutive jumbo-sized cuts. In a Reuters poll of economists, 80%, or 21 out of 27 respondents, predicted that the bank would cut the overnight rate by 50 basis points. The rest forecast a quarter-point reduction.
• The policy rate is now at the top end of the bank's so-called neutral range, which is considered to be the band within which rates are just enough not to restrict growth but not stimulate it either.
• Canada's economy grew at an annualised rate of just 1% in the third quarter, less than the Bank of Canada had predicted. The Bank said fourth-quarter growth might be weaker than expected, and that planned reductions in immigration levels could cause 2025 growth to also fall short of forecasts.
• With Wednesday's reduction, the bank has now shrunk benchmark borrowing costs five times in a row by 175 basis points in a space of six months, making it the only major central bank to have reduced borrowing costs at such a rapid pace.

(Sources: Reuters)

• U.S. consumer prices increased by the most in seven months in November, but that is unlikely to discourage the Federal Reserve from delivering a third consecutive interest rate cut next week, against the backdrop of a cooling labour market and rental costs.
• Most of the rise in inflation reported by the Labour Department on Wednesday came from higher food prices as well as more expensive motel and hotel rooms. Rents, which have been the major driver of inflation, increased at the slowest pace since July 2021. That bodes well for the inflation outlook.
• In the 12 months through November, the CPI climbed 2.7% after increasing 2.6% in October. The rise in the CPI was in line with economists' expectations. The annual increase in inflation has slowed considerably from a peak of 9.1% in June 2022. Nonetheless, progress in lowering inflation to the U.S. central bank's 2% target has virtually stalled in recent months.
• The Fed, however, is now more focused on the labour market. Though job growth accelerated in November after being severely restricted by strikes and hurricanes in October, the unemployment rate ticked up to 4.2% after holding at 4.1% for two consecutive months. Excluding the volatile food and energy components, the CPI increased 0.3% in November, rising by the same margin for the fourth consecutive month.
• Despite the lack of progress in the inflation fight, investors took comfort from the moderation in the cost of rent and the fact that the core inflation had not deteriorated.

(Source: Reuters)

• The 2024/25 winter tourist season, which begins on December 15, promises to be “very good” for Jamaica, according to Tourism Minister, Hon. Edmund Bartlett. “We have improved bookings and airlift. In fact, out of the United States, we have 70,000 more seats than we did last year,” he told JIS News.
• The Minister further informed that 45,000 additional seats will come out of South America. He pointed out that with direct flights now available from Lima, Peru, to Sangster International Airport in Montego Bay via LATAM Airlines, a strong response is expected from the South American market.
• “That flight connects to about five countries in South America. So we are very comfortable with the expansion of the South American market,” he added.
• Meanwhile, Mr. Bartlett said Jamaica continues to be a destination of choice for other markets. “The European market is performing and certainly the United Kingdom (UK). Jamaica is the number-one Caribbean destination for tourism out of the UK now; we clipped Barbados and we’re moving ahead strongly there,” he indicated, adding that Canada has also shown very strong bookings for the season.
• This augurs well for Jamaica's tourism sector, building on the record-breaking year of 2023 to meet its goal of earning US$5 billion from five million tourist arrivals within a targeted five-year period ending in 2025.
• However, the sector has faced challenges this year due to Hurricane Beryl in July and a Level 3 travel advisory from the U.S. in January 2024.  The advisory was revised in July to soften its language on crime, boosting optimism for better performance for the rest of the season.

(Sources: JIS & NCBCM Research)

• Jamaica’s Net International Reserves (NIR) stood at US$5,408.51Mn at the end of November 2024, 3.3% lower than October 2024, according to the Bank of Jamaica (BOJ). The decline in the NIR reflects a 3.3% (or US$187.94Mn) decrease in total foreign assets, which outweighed the 1.3% decline (or US$0.90Mn) in Foreign Liabilities.
• The dip in foreign assets reflects a fall in Currency and Deposits to US$3,431.58Mn from US$3,660.67Mn, Special Drawings Rights (-92.7% or $18.31Mn) and IMF Reserve Position (-1.3% or $484.45K). However, this was tempered by a 3.1% (or US$59.95Mn) increase in Securities.
• The lower NIR came against the backdrop of three interventions by the BOJ in the foreign exchange market during the month totaling US$130Mn. This represented a slight increase from October, when there were four interventions totalling US$120Mn.
• Despite the month over month decline, the NIR is X% above the November 2023 level. Furthermore, the current level of NIR equates to 28.5 weeks of goods & services imports (29.5 weeks at the end of October 2024). At this level, the NIR is more than double the international benchmark of 12 weeks of imports.

(Source: BOJ)

• As 2024 draws to a close, Guyana has emerged as the standout performer in Latin America and the Caribbean, with exports set to increase by an astounding 77%, largely driven by the country’s oil and gas, and agriculture sectors according to the latest ‘International Trade Outlook for Latin America and the Caribbean, 2024’ report from latest Economic Commission for Latin America and the Caribbean (ECLAC).
• The December report highlighted that following a contraction of 1.2% in global goods trade in 2023, the world economy is tentatively rebounding in 2024, with global goods trade growing by 1%. Latin America, however, presents a brighter picture, with regional goods exports projected to rise by 4% in value this year. Among the regional leaders, Guyana stands out, driven by a substantial increase in the volume of its oil exports and key agricultural products like soybeans.
• Guyana's exceptional performance places it ahead of other nations. Suriname, for example, is expected to see a more modest export growth of 12%. Larger economies like Brazil and Mexico are forecast to experience more restrained growth, with exports increasing by just 3% and 2%, respectively.
• Latin America and the Caribbean are set to move from a US$26 billion trade deficit in 2023 to a US$36 billion surplus in 2024, driven by strong export performance in countries like Guyana and Argentina. Guyana’s exceptional export growth is helping to boost the overall Caribbean trade performance, with export volumes in the subregion set to expand by 24%.
• Despite the positive export trends, the region’s economic growth remains sluggish with a projected GDP growth of just 1.8% for 2024. Latin America continues to experience weak demand for imports, with regional imports expected to increase by only 2%. Nonetheless, the region’s trade balance has been improving.
• The value of goods exports from Latin America and the Caribbean is expected to grow by 4%, driven by a 5% increase in export volumes, despite a 1% decline in prices. Agricultural exports will lead this growth with an 11% increase, followed by a 5% rise in mining and oil exports and a 3% uptick in manufactured goods.

(Source: Guyana Chronicles)

• The Brazilian central bank will step up its campaign to raise interest rates with a big 75 basis point hike on Dec. 11, possibly also hinting at more restrictive monetary policy next year, a Reuters poll showed.
• This would mark the third consecutive rate hike as inflation accelerates, following increases of 25 basis points in September and 50 basis points last month, bringing the Selic benchmark rate to 12%
• Banco Central do Brasil (BCB)'s rate hike acceleration coincides with the U.S. Federal Reserve's recent caution on its cutting push in the face of the risk of a resurgence in consumer prices in 2025.
• The majority of analysts, 31 of 40, predicted a 75 basis points increase on Dec. 11 to 12% from the current 11.25%. Five called for a more moderate 50 basis points increment, while four anticipated a steeper full percentage-point hike.
• BCB's incoming chief highlighted those current conditions, which pointed to "higher interest rates for longer" and said that the bank would not intervene in foreign exchange markets despite the turbulence there that has stoked imported inflation pressure.
• Brazil's consumer prices rose more than anticipated in the month to mid-November, driving annual inflation to 4.77%, above the central bank's target range of 1.5% to 4.5%.
• Looking ahead, the Selic rate is expected to reach a peak of 13.50% in the second quarter of next year and hold steady until the final quarter of 2025. At that point, median forecasts from a smaller sample anticipate a 0.50 percentage point reduction, bringing it to 13.00%.

(Sources: Reuters & US News Money)

• U.S. unit labour costs grew far less than initially thought in the third quarter, pointing to a still favourable inflation outlook, even though price increases have not moderated much in recent months.
• The report from the Labour Department on Tuesday also showed labour costs declined in the second quarter, instead of rising as had been estimated last month. Moderate labour costs growth is likely to be welcomed by Federal Reserve officials when they hold their last meeting of the year next week. The U.S. central bank is expected to cut interest rates by 25 basis points, the third reduction in borrowing costs since it started its monetary policy easing cycle in September.
• Unit labour costs - the price of labour per single unit of output - increased at a 0.8% annualised rate last quarter, the Labour Department's Bureau of Labour Statistics said. Economists polled by Reuters had expected labour costs growth would be revised down to a 1.5% rate from the previously reported 1.9% pace in the July-September quarter. That followed a downwardly revised 1.1% pace of decline in the second quarter. Labour costs were previously reported to have advanced at a 2.4% rate in the April-June quarter.
• It increased at a 2.2% pace in the third quarter from a year ago, revised down from the previously reported 3.4% rate. The revisions reflected updated compensation data from the Bureau of Economic Analysis.
• A resilient economy, lack of progress lowering inflation to the Fed's 2.0% target and concerns over President-elect Donald Trump's proposed policies, including higher tariffs and mass deportations, have made the rate outlook next year unclear. The Fed's policy rate is now in the 4.50%-4.75% range.

(Source: Reuters)

• In one of their most dovish statements in more than a decade, Chinese leaders signalled on Monday they are ready to deploy whatever stimulus is needed to counter the impact of expected U.S. trade tariffs on next year's economic growth. After a meeting of top Communist Party officials, the Politburo, officials said they would switch to an "appropriately loose" monetary policy stance, and "more proactive" fiscal levers.
• The previous "prudent" stance that the central bank had held for the past 14 years coincided with overall debt - including that of governments, households and companies - jumping more than 5 times. Gross domestic product (GDP) expanded roughly three times over the same period.
• The Politburo rarely details policy plans, but the shift in its message shows China is willing to go even deeper into debt, prioritising, at least in the near term, growth over financial risks. It's unclear how much monetary easing the central bank could deploy and how much more debt the finance ministry could issue next year. But analysts say that works in Beijing's favour.
• Next year's 2025 growth, budget deficit, and other targets will be discussed - but not announced - in the coming days at an annual meeting of Communist Party leaders known as the Central Economic Work Conference (CEWC). Reuters reported last month that most government advisers recommend that Beijing should maintain a growth target of around 5.0%, although that pace seemed difficult to reach throughout this year.
• The tone of the Politburo statement suggests that China won't lower its growth ambitions for 2025, says Zong Liang, chief researcher at state-owned Bank of China. However it also suggests that China is likely to set an initial budget deficit target of around 4%, its highest ever.
• What else Beijing is prepared to do to boost consumption is another unknown, but demand-focused measures are key to improving the effectiveness of monetary policy easing in an economy that for decades has put production at its core.

(Sources: Reuters)