• Voters in Venezuela rejected the International Court of Justice's (ICJ) jurisdiction over the country's territorial dispute with Guyana. Instead, they backed the creation of a new state in the potential oil-rich Esequibo region in a Sunday referendum.
• Last week, the court barred Venezuela from taking any action that would change the status quo in the area, which is the subject of an active case before the ICJ. However, President Nicolas Maduro's government went ahead with a five-question "consultative" referendum.
• All questions passed with more than 95% approval, according to electoral authority president Elvis Amoroso, who said at least 10.5 million votes were cast for 'yes' but did not confirm the number of voters.
• Some political and security analysts have called the referendum a show of strength by Maduro and a test of support for his government ahead of a planned 2024 presidential election. The court said in April it had jurisdiction, though a final ruling on the matter could be years away.
• The Sunday vote has caused anxiety in Guyana, with the government urging citizens to keep calm. Guyana's President Irfaan Ali participated in a patriotic rally on Sunday, joining hundreds of flag-waving supporters. He has said the ICJ ruling on Friday prohibits Venezuela from "annexing or trespassing upon Guyanese territory".
• On Wednesday, Brazil said it had intensified "defensive actions" along its northern border amid the territorial dispute.

(Source: Reuters)

• Panama is eyeing a sharp cut to its forecast for 2024 economic growth after a court ruling prompted the government to order the closure of Canadian miner First Quantum's lucrative copper mine.
• Gross domestic product (GDP) growth might be 1-2% next year, down from a previous estimate of 5%, Hernan Arboleda, director of public policies at the economy and finance ministry, said in an interview on Friday. In contrast, Fitch Solutions forecasts 5.5% growth for Panama in 2023 and 3.0% in 2024.
• President Laurentino Cortizo announced last week the government will move to shut First Quantum's Cobre Panama mine, which accounts for some 5% of the country's GDP, after the Supreme Court ruled that the contract was unconstitutional.
• Panamanians have protested vehemently against the mine since October, arguing the contract was too generous, and First Quantum has since lost over half of its market capitalization.
• First Quantum said on Friday it initiated international arbitration against Panama. Some experts calculate Panama would have to pay at least $50 billion if it loses the case, which is equivalent to nearly 70% of GDP.
• Cortizo's administration is reaching out to international rating agencies to assure them that Panama still has a sound legal framework that allows investors to do business. Panama recently enacted a law banning all new mining concessions and expansions. Arboleda said the country still has other attractive investment opportunities but did not give specific examples.

(Sources: Reuters & Fitch Solutions)

• U.S. Federal Reserve officials seem poised to conclude the year with interest rate hikes in the past. Despite concerns about inflation above the 2% target, policymakers express confidence that the existing federal funds rate range is curbing economic activity and lowering inflation.
• While the focus now is on maintaining a plateau or considering another hike, the challenge arises in signalling a potential shift to rate cuts. This decision could be influenced by factors like presidential election-year politics, financial market conditions, and the desire to prevent a rise in the unemployment rate.
• The Fed's final meeting of the year in December will involve discussions on the future path of interest rates. The central bank faces the delicate task of conveying a potential end to rate hikes without signalling a commitment to imminent rate cuts, navigating through the complexities of projections and public perception.
• Despite a historically hawkish tone, recent statements from Fed officials suggest a more cautious approach. The "dot plot" projections may indicate a halt to rate hikes and potentially forecast cuts, with attention shifting to the possibility of a rate reduction in 2024. Given the economic context and the upcoming presidential election, the challenge lies in effectively communicating this shift.

(Source: Reuters)

• Britain's manufacturing sector demonstrated signs of potential recovery, as indicated by the S&P Global/CIPS manufacturing Purchasing Managers' Index (PMI) rising to 47.2 in November from 44.8 in October.
• Despite the improvement, companies in the manufacturing sector remained cautious. Ongoing market uncertainty and the need to control costs led to measures such as job losses, stock depletion, and reduced purchasing.
• The severity of the downturn in the manufacturing sector eased, as reflected in improved readings for output and new orders, based on the PMI data. However, while input costs decreased, manufacturers raised their selling prices for the second time in six months, albeit marginally.
• This move aimed to repair profit margins, and it comes as the Bank of England monitors price pressures in the economy, having maintained interest rates at a 15-year high in September and November. The central bank has indicated a reluctance to consider rate cuts until there is sufficient easing in underlying inflation.

(Source: Reuters)

• Output prices for producers in the Mining and Quarrying industry increased by 0.1% for October 2023, while the Manufacturing industry declined by 0.3% as released by the Statistical Institute of Jamaica (STATIN).
• The increase in the index for the Mining and Quarrying industry was influenced by a 3.1% increase in the index for the major group ‘Other Mining & Quarrying’. However, there was a negligible decline in the index for the major group ‘Bauxite Mining & Alumina Processing’, which tempered the industry’s movement.
• For the Manufacturing industry, there was a decline in its index of 0.3%. The decrease in the industry’s index was due mainly to a fall of 2.5% in the index for the major group ‘Refined Petroleum Products’. The overall movement was tempered by an increase of 1.8% in the index for the ‘Chemicals and Chemical Products’.
• For the period October 2022 – October 2023, the index for the Mining and Quarrying industry increased by 5.1%. This resulted from a 5.0% rise in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The point-to-point index for the Manufacturing industry increased by 2.6%, due primarily to an increase of 2.3% in the index for the major groups ‘Food, Beverages & Tobacco’. Also impacting the industry was the 5.3% increase in the index for the major group ‘Refined Petroleum Products’. However, these increases were moderated by a decline of 4.3% in the index for the major group ‘Fabricated Metal Products excluding. Machinery and 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. The decision this week by OPEC+ to curtail oil supply could potentially further escalate producer prices, despite oil prices slipping immediately. This is because a reduction in oil supply could drive up costs related to transportation and electricity.

(Source: STATIN)

• Peru's mining sector is keeping the economy from sinking deeper into repression, Economy Minister Alex Contreras said on Tuesday, adding that progress kick-starting projects was a priority in the near term.
• Peru has been preparing to launch a package of economic stimulus measures. Contreras said the first three measures, out of more than two dozen aimed at attracting mining investment and boosting production, would be published soon.
• Peru, the world's No. 2 copper producer, fell into a recession this year due to the El Nino weather phenomenon, lower private investment, and lingering effects from anti-government protests in late 2022 and early this year.
• Contreras said the mining nation was aiming to consolidate an industry "hub" in Peru's south, highlighting existing projects such as copper mines in Las Bambas, Antapaccay and Cerro Verde. Peru is betting on a boost from public-private partnerships, eyeing $7.98Bn in the partnerships next year, Contreras said. "In 2024, we want to at least triple the amount awarded to projects by public-private partnerships from this year."
• Contreras highlighted a port "hub" project "to make Peru the international trade centre of South America." A mega port project outside is set to open next year, but Peru is still working "against the clock" to make sure supporting infrastructure is ready in time.
• Contreras also said the Ancon industrial park, developed by the state near the port, would be a guinea pig for the special economic zones set to be proposed to Congress soon. "These will be special economic zones administrated by private organizations, on either public or private land," said Contreras, underscoring expectations for added tax revenues and greater investment in exports.

(Source: Reuters)

• The Government narrowly missed its deficit target for the recently closed 2022-2023 fiscal year despite a near-$160Mn undershoot on its VAT forecast. The Ministry of Finance, unveiling its monthly report for June 2023, which also represented the fiscal year-end, disclosed that the $533.4Mn full-year deficit was just 2.5% or $12.8Mn higher than the revised target of $520.6Mn presented with the 2023-2024 Budget at end-May.
• That outcome was also some $42Mn, or 7.3% lower, than the $575.4Mn deficit target set in the original 2022-2023 Budget. The Government largely kept the latter figure, which represents the difference between its spending and revenue income, on target despite failing to achieve its VAT ambitions for the period.
• VAT, the Government’s main revenue source, accounting for almost 48% or nearly half its recurrent income, came in a material 11.3% below the 2022-2023 full-year projection of $1.412bn to stand at $1.252bn.
• As a result of this outcome, the Davis administration must now bridge a $339Mn gap between that figure and this year’s $1.591Bn forecast if it is to achieve its VAT ambitions and likely wider revenue and budgetary goals. That would amount to a 27% year-over-year increase.
• Fiscal observers suggested this was too wide a gulf to overcome, as figures for July 2023 - the first month of the current fiscal year - showed VAT revenues increasing year-over-year by just $6.8Mn from $140.1Mn the prior year to $146.9Mn.
• Based on the $339Mn ‘gap’, they added that the Government needs an average increase in VAT collections of $28Mn per month to bridge this, and July’s jump was well short of the latter figure even though it represented June’s filings and is one of four ‘bumper’ months in which all registrants - quarterly as well as monthly filers - remit taxes collected from the end consumer to the Public Treasury.
• Despite the VAT undershoot, the Government can take comfort in the fact it almost scored a direct hit on its total revenue target for 2022-2023. Total income came in just $1.5Mn below target at $2.856Bn, with taxes on international trade and transactions and other taxes on goods and services exceeding Budget targets to compensate for the VAT miss.

(Source: The Tribune)

• Despite a relatively steady inflation rate and a recent halt in price increases between September and October, the overall cost of goods and services in the U.S. remains higher than pre-pandemic levels. Gasoline prices have dropped, and food prices have plateaued, but the public perception is that prices remain elevated.
• Joe Biden's approval ratings have declined, reaching a disapproval rate of 56%, primarily due to the persistent inflationary environment. The Federal Reserve has also faced criticism, with a record 25% of respondents giving it a "poor" performance rating in a September Gallup poll.
• Despite inflation-adjusted incomes being 6% higher than pre-pandemic levels, surveys indicate a prevailing scepticism about the future. While inflation expectations have slightly decreased, they remain above the central bank's target. The public mood has shifted from general optimism before the pandemic to persistent pessimism amid rising inflation.
• The challenge for both President Biden and the Federal Reserve lies in changing public perception. The public's memory of economic challenges is slow to recede, and even positive economic indicators may not immediately shift attitudes.
• Further, if economic data continues to show a slowdown in inflation and weaker job growth, there might be an opportunity for both entities to focus on sustaining the job market and improving real incomes to regain public trust.

(Source: Reuters)

• In October, British inflation unexpectedly dropped to 4.6% from 6.7% in September. This was primarily attributed to a decrease in household energy prices and a general softening of price pressures. Following the release of the data, investors increased their expectations of future Bank of England (BoE) rate cuts.
• Finance Minister Jeremy Hunt hinted at moving to the next phase of the economic plan, focusing on the long-term growth of the British economy. He is expected to announce investment incentives for businesses in a budget update on November 22.
• Despite the decline, the BoE warns that the last phase of reducing inflation might be challenging, projecting a return to the 2% target by late 2025. Furthermore, Britain still has the highest rate of consumer price growth among Group of Seven nations, narrowly above France.
• However, with the U.S. Federal Reserve and European Central Bank seemingly reaching peak interest rates, the global economic landscape suggests a broader trend of economic slowdown and uncertainty. Investors are increasingly betting on BoE rate cuts in the coming year.

(Source: Reuters)

• DOLLA Financial Services announced that the Company has been approved as an accredited microfinance institution (MFI) by the Development Bank of Jamaica (DBJ).
• With this status, DOLLA now qualifies for funding and has been approved for a J$500 Million facility under their Micro Small and Medium sized Enterprise (MSME) Line of Credit to be disbursed and managed by Mayberry Investments Limited.
• This substantial funding marks a key strategic move for DOLLA, underlining its dedication to growth and innovation in the microfinance industry.
• This approval from DBJ not only attests to DOLLA’s financial stability and vision but also contributes to the economic landscape.
• The proceeds may be used to expand Dolla’s loan book, allowing it to bolster its revenues and ultimately its net profit.

(Source: JSE)