• The Central Bank of Bahamas predicts economic growth to be in the low 2.0% range, still moderately above the estimate of the economy’s medium-term potential (below 2.0% per annum).
•  In 2023, the Bahamian economy was estimated to have grown in the 4.0% range, a levelling off from the significant post-pandemic recovery of around 14.0% in 2022. This period captured a robust boost in the cruise sector’s contribution, complete occupancy recovery in the stopover sector, and healthy appreciation in average pricing for stopover accommodations among hotels and vacation rental properties.
• In 2024, however, growth is expected to be within the low 2.0% range, still moderately above the estimate of the economy’s medium-term potential. Further, earlier this month, the World Bank revised its 2024 growth projection for The Bahamas down from 2.0% to 1.8%.
• According to Rolle, the Central Bank expects that growth in 2024 and beyond will settle further to more closely resemble The Bahamas’ longer-term potential. However, a period of acceleration could occur after hotel capacity is replenished in New Providence.
• Central Bank Governor John Rolle stated that although the economy has a positive outlook for 2024, enabling more employment creation and continued reduction in the fiscal deficit, downside risks persist from potential headwinds to tourism, particularly if international central banks prolong their fight against inflation. Additionally, travel demand and import inflation remain vulnerable to the harmful effects of conflicts in Europe and the Middle East.

(Source: Eyewitness News)

• A reimposition of U.S. sanctions on Venezuela's oil and gas sectors would hurt the OPEC country's ability to collect cash from its oil exports, crimp new energy investments, and raise the risks of domestic fuel scarcity, analysts and executives said.
• This week, Washington ordered a wind-down of all business transactions between U.S. entities and Venezuela's state miner Minerven. In addition, Washington noted it would unwind in April, easing of energy sanctions if President Nicolas Maduro's administration does not stick to an agreement signed last year to accept conditions for a fair presidential election.
• The U.S. is increasing its pressure since the South American country's top court upheld a ban blocking the leading opposition hopeful, Maria Corina Machado, from the election. The U.S., which first imposed oil sanctions on Venezuela in 2019, granted sanctions relief for the OPEC member country in October in recognition of the election deal.
• As a result of easing sanctions, Venezuela was expected to grow its total oil revenue to as much as $20Bn this year from some $12Bn in 2023, according to Caracas-based consultancy Ecoanalitica. However, larger exports of crude and petrochemicals to cash-paying customers in countries from the U.S. to India were behind its forecast.
• "Price discounts on Venezuela's crude had reduced a lot, and cashing sales proceeds became easier for state company PDVSA," said Francisco Monaldi, director of the Latin American Energy Program at Rice University's Baker Institute. "If the license is withdrawn in April, the proceeds will be reduced again and the scenarios of strong economic growth and a competitive election will fade," he added.
• Risks of a new bout of acute fuel scarcity also are poised to increase, experts said. Even if Washington continues authorizations for debt repayment deals to Chevron, Eni, Repsol, and Maurel & Prom to avoid a total break with Venezuela, that might not provide sustainable investment to expand output.

(Source: Reuters)

• The International Monetary Fund edged its forecast for global economic growth higher, upgrading the outlook for both the United States and China - the world's two largest economies - and cited faster-than-expected easing of inflation. The IMF's chief economist, Pierre-Olivier Gourinchas, said the global lender's updated World Economic Outlook showed that a "soft landing" was in sight. Still, overall growth and global trade remained lower than the historical average.
• The IMF said the improved outlook was supported by stronger private and public spending despite tight monetary conditions, increased labour force participation, mended supply chains, and cheaper energy and commodity prices. The IMF forecasts global growth of 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and retained a 3.2% forecast for 2025. However, this is below the 2000-2019 historical average of 3.8%.
• Likewise, global trade growth forecasts of 3.3% in 2024 and 3.6% in 2025, well below the historical average of 4.9%, weighed down by 3,000 trade restrictions imposed in 2023. The IMF also stuck with its October forecast for headline inflation of 5.8% for 2024 but lowered the 2025 forecast to 4.4% from 4.6% in October. Excluding Argentina, which has seen inflation spike, global headline inflation would be lower, Gourinchas said.
• Advanced economies should see average inflation of 2.6%, down four-tenths of a percentage point from the October forecast, with inflation set to reach central bank targets of 2% in 2025. By contrast, inflation would average 8.1% in emerging markets and developing economies in 2024 before easing to 6% in 2025.
• China's GDP is expected to grow by 4.6% in 2024, an upward revision of four-tenths of a percentage point from October and 4.1% in 2025. Gourinchas said the boost reflected significant fiscal support from the authorities and a less-severe-than-expected slowdown stemming from the property sector.
• Gourinchas said the global outlook reflected more balanced upside and downside risks, with the risk of a wider conflict in the Middle East offset by the prospect that lower fuel prices could help inflation fall faster than expected.

(Source: Reuters)

• The euro zone's economy stagnated last year, underperforming the rest of the world as former powerhouse Germany struggled with an industrial malaise that has no end in sight, data showed on Tuesday.
• The 20 countries that share the euro barely avoided a recession in the final quarter of last year even as the global economy expanded and the euro zone's biggest trading partner, the United States, chalked up impressively brisk growth.
• The euro area's underperformance was mostly due to weakness in Germany, which has seen its business model relying on cheap energy from Russia and intense two-way trade with China upended by geopolitical events.
• Europe's largest economy shrank by 0.3% in the last three months of 2023 while the bloc as a whole saw steady output, helped by expansions in Spain and Italy, Eurostat' preliminary flash estimates showed. That marked the sixth consecutive quarter of no or little growth.
• Economists expect more of the same in the coming months before a timid recovery in the summer, which should lead to another year of meagre growth for the euro area.
• "Stronger household consumption as the effects of the shock to energy prices subside and inflation falls, supporting real income growth, is expected to drive the recovery," the International Monetary Fund said on Tuesday in its World Economic Outlook. Still, it downgraded its euro area economic growth forecast to 0.9% this year and 1.7% in 2025.

 (Source: Reuters)

• According to data on the Producer Price Index (PPI) released by the Statistical Institute of Jamaica (STATIN), the Mining and Quarrying Index rose by 0.3% in December, while the Manufacturing Index fell by 0.8%.
• The 'Bauxite Mining & Alumina Processing' category was the main driver of the rise in the Mining and Quarrying industry index increased by 0.3%. The index for 'Other Mining & Quarrying' also increased by 0.1%. The upward movements resulted from the depreciation of the Jamaican dollar vis-à-vis the United States dollar.
• In contrast, the manufacturing index fell for the third consecutive month. This was largely influenced by a decline in the index for the major group, ‘Refined Petroleum Products’ by 4.6%.
• With the December 2023 performance, point to point movement in the index for the Mining & Quarrying industry, a 4.4% increase spurred by a 4.3% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The point-to-point increase in the index for the Manufacturing industry was more modest at 3.0%. Contributing to this increase were the major groups ‘Refined Petroleum Products’ (7.6%), ‘Food, Beverages & Tobacco’ (2.2%) and ‘Chemicals and Chemical Products’ (2.3%). However, these increases were moderated by a decline of 4.4% in the index for the major group ‘Fabricated Metal Products excl. Machinery & Equipment.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time. However, geopolitical tensions in Europe and the Middle East pose risks that could disrupt the oil supply and supply chain, which could result in higher costs for producers.
• Furthermore, the drought in the Panama Canal and the tensions in the Black Sea region bring more challenges to producers through higher shipping costs as shippers resort to finding alternative routes to avoid these disruptions.

(Sources: STATIN & NCBCM Research)

• The Jamaica Stock Exchange (JSE) will become the first Caribbean marketplace to facilitate the issuance of green, blue, and other sustainable coloured bonds by the end of June 2024. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, who made the disclosure, said this forms part of the Government’s framework to ensure that financing is available for sustainable initiatives.
• The colours include; blue, which represents marine and green, which represents climate, among others. This will be a very important step because investors who invest in these kinds of instruments want to know that the criteria for calling something green or blue are very firmly established
• Clarke indicated that the JSE “is being supported by the Inter-American Development Bank (IDB) to develop the infrastructure.”
• The Government is working on creating a financial facility as part of efforts to incentivise investments in Jamaica for sustainable projects and working towards partnerships with multilateral and bilateral to provide funding in a way that the Government can leverage its contribution several fold, noted Dr. Clarke. “Those funds will be available on concessional terms for investing in projects that have a green or blue lens, or features to them to incentivise investment in Jamaica that is sustainable”.
• The move aligns with an emerging theme in the global investment space, that of environmental, social, and governance (ESG), which encourages sustainable practices in key areas. It will serve to attract funding from investors who are particularly interested in projects with these mandates.

(Source: JIS)

• Rating agency Fitch Ratings forecasts a decline in economic growth across Latin America this year amid dampened demand, high borrowing rates, and considerable exposure to China and the U.S., which are also facing a slowdown. The agency put its average 2024 growth forecast for the region at 1.5%, down from 2.3% in 2023.
• Fitch Managing Director Shelly Shetty said that expected declines in larger economies like Mexico and Brazil have weighed down the region's overall forecast. Fears of a recession in Argentina, under the new government of Javier Milei, also had an impact.
• Shetty added that in the medium term, Latin America had several aspects working in its favor, including relative geopolitical calm, a wealth of commodities needed for the "green transition," and a shift in manufacturing from Asia to Mexico.
• However, the agency stressed that much of the region could struggle to capitalize on these advantages due to state interventionism, limited reform, and political disagreement, with the notable exception of Brazil.

(Source: Reuters)

• There are only a few days left until the start of the Reduced Workweek Pilot Plan in the Dominican Republic, which will seek to improve the health and well-being of workers and the productivity of companies.
• This plan proposes the reduction of weekly working hours from 44 to 36, which translates into eight hours less.
• The program, which will start on the first day of February, will operate for six months, divided into two phases: three months of execution in five companies, where some 400 employees will receive 100% of their salary, a reduction of 20% of their working hours and the maintenance of 100% of productivity.
• The other three months will be taken for the survey and processing of the results of the pilot plan, the analysis of which will be made by the Pontificia Universidad Católica Madre y Maestra (PUCMM) (English: Mother and Teacher Pontifical Catholic University).
• According to the Ministry of Labor, the educational institution will analyze the health and welfare of the worker, the reconciliation between work and family life, absenteeism, and the contribution to the environment.
• Some companies have already adopted this work model (four days on and three days off), allowing them to maintain a constant productivity rate. With this reduction in hours, workers could have more time to spend with their families, attend to personal matters, reduce absenteeism, and increase their health capabilities, both physical and psychosocial (mental).

(Source: Dominican Today)

• A strong economic outlook is helping U.S. stocks weather a rise in Treasury yields, though that could change if factors such as tighter monetary policy drive yields higher or if they move up too fast, Goldman Sachs strategists said.
• The S&P 500 and 10-year Treasury yield had been negatively correlated - meaning they have moved in opposite directions - since long-term yields began rising last July, Goldman equity strategists led by David Kostin said in their latest weekly kickstart note.
• The S&P 500 sold off sharply over that period as yields marched to a 16-year high in October, making stocks relatively less attractive. Equities staged a swift rebound when yields, which move inversely to bond prices, tumbled in the final months of the year.
• In 2024, however, stocks have hit record highs even as the 10-year yield has risen about 30 basis points to 4.2%. One reason for stocks' resilience is the improving economic outlook, Goldman's strategists said.
• Returns have been substantially stronger when economic growth expectations are improving rather than weakening, regardless of whether the yield curve steepened or flattened, the strategists said.
• "As investors worry less about the potential for Fed tightening, growth expectations should become a more important driver of yields, contributing to a less negative correlation between stocks and yields in 2024," they wrote.
• In a separate note, Goldman's economists raised their fourth-quarter economic growth estimate to 2.4% from 2.1%.

(Source: Reuters)

• A Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group, with over US$300Bn in total liabilities, dealing a fresh blow to confidence in the country's fragile property market as policymakers step up efforts to contain a deepening crisis. This deal follows Evergrande's inability to offer a concrete restructuring plan more than two years after defaulting on its offshore debt and following several court hearings.
• Evergrande, which has $240Bn of assets, sent a struggling property sector into a tailspin and dealt a blow to the economy when it defaulted on its debt in 2021. The liquidation ruling creates further uncertainty for China's already fragile capital and property markets.
• Justice Chan appointed Alvarez & Marsal as the liquidator, emphasizing the need for a restructuring plan. This move raises questions about how Chinese authorities will treat foreign creditors and adds complexity to the process, especially with Evergrande's chairman under investigation for suspected crimes.
• Evergrande's shares plummeted to 20%, prompting a halt in trading for its listed subsidiaries. The decision's repercussions extend beyond financial markets, affecting Evergrande's daily operations, property management, and electric vehicle units. The ruling's potential effects on creditors, shareholders, and the broader Chinese economy are also highlighted.

(Source: Reuters)