• According to Moody’s, Non-financial industry companies in Latin America are facing a negative outlook for next year because of continued high interest rates, slow regional economic growth, and projected low prices for commodities because of a deceleration in China.
• The rating agency said that though credit conditions for Latin American companies will be better in 2024 than during this year, uneven growth and still-high debt costs will affect spending, investment, and employment.
• "Strict financial conditions will continue until the market uncertainty in regards to the path of U.S. rates dissipates, which will limit financing options, especially for the more than two-thirds of corporate issuers who have a speculative grade," Moody's said in a report.
• Furthermore, the El Nino climate phenomenon will last until at least mid-2024 and contribute to price instability for agricultural, metallurgical, and mining raw materials and operative disruptions in much of the region.
• Of note, it is expected that Mexico will benefit from nearshoring efforts and higher activity in the automotive, real estate, and communications sectors; however, the mining industry is at risk of government intervention, Moody's said.

 (Source: Reuters)

• After raising the policy rate by 5.25 percentage points since March of 2022, the central bank placed the policy rate on hold since July as inflation edges closer to its target. Simultaneously, the Fed signaled in new economic projections that the historic tightening of U.S. monetary policy engineered over the last two years is at an end, and lower borrowing costs are coming in 2024.
• In a new policy statement, U.S. central bank officials took explicit account of the fact that inflation "has eased over the past year," and said they would watch the economy to see if "any" additional rate hikes are needed. Implying directly that, after months of aggressive tightening and a bias towards moving rates higher, they may not need to raise them again.
• Powell also flagged the uncertainty of the outlook and said he couldn't definitively rule out higher rates at this point, even as officials looked toward a lower policy rate. He noted, "While we believe our policy rate is at or near its peak for the tightening cycle, the economy has surprised forecasters,"
• Considering the unpredictable nature of the economy, he said that while Fed officials "do not view it as likely to be appropriate to raise interest rates further, neither do they want to take the possibility off the table" if it's needed.
• However, Powell emphasised that the central bank believes it has done enough in terms of rate hikes. While Fed policymakers did not want to take another rate hike off the table, it is no longer the central bank's "base case". Therefore, while officials remain free to raise the Fed's benchmark overnight interest rate again in the coming months if inflation resurges, that seems increasingly unlikely given the recent performance of inflation that has edged steadily towards the central bank's target.
• The economic projections, as a whole, cling closely to the "soft landing" scenario that has become the base case for U.S. central bankers hoping that inflation continues to slow without a recession and sharp rise in unemployment.

 (Source: Reuters)

• US. producer prices remained unchanged in November, defying expectations of a 0.1% increase. This was attributed to cheaper energy goods, with services prices also holding flat for a second consecutive month.
• The report from the Labour Department has boosted optimism that overall inflation will continue to subside. This is seen as a positive development, potentially allowing the Federal Reserve to consider interest rate cuts in the coming year. The Federal Reserve signalled a shift in its economic projections, indicating the end of a historic tightening of monetary policy.
• Goods prices were stable, with a decline in energy product costs offset by a rebound in food prices. Notably, avian flu-related issues impacted egg prices. Energy costs were pulled down by lower gasoline prices. Excluding food and energy, core goods prices rose modestly, raising concerns about potential goods deflation.
• The cost of services, a key driver of inflation, was unchanged, with lower transportation and warehousing costs. However, wholesale prices for hotel and motel rooms rose.
• Despite ongoing inflation above the Fed's 2% target, markets are anticipating a potential rate cut in May. Analysts suggest that while consumer spending continues to fuel inflation, a downward trend in service providers' costs may stabilize inflation if consumer demand cools.

(Source: Reuters)

• Scotia Group Jamaica Limited recorded a net profit attributable to shareholders of $17.23Bn for its financial year ended October 30, 2023, representing a 66.9% YoY increase in profitability. This was driven by strong performance in all its business lines as well as the efficient management of its operations.
• Total revenues, excluding expected credit losses for the year ended October 31, 2023, grew by $12.33Bn to $55.46Bn, reflecting an increase of 28.6% over the previous year. This was primarily driven by an increase in net interest income of $8.8Bn stemming from the strong growth in its loan portfolio, higher insurance revenue, higher gains on foreign currency activities, and higher fee and commission income earned, given the significant increase in transaction volumes.
• Operating expenses continue to be anchored by the Group’s expense management initiatives and totaled $27.63Bn for the year ended October 2023, an increase of $2.9Bn or 11.8% driven by higher technical support fees arising from the higher transaction volumes.
• Expected credit losses for the period showed a reduction of $661.54Mn or 21.6% compared to full year 2022. The Group’s credit quality remains strong and the company is well provisioned for both its performing and non-performing loans, ensuring adequate coverage for possible future non-performing loans.
• SGJ's stock price has increased by 0.9% since the start of the calendar year. The stock closed Tuesday’s trading session at $34.53 and currently trades at a P/E of 6.2x which is below the Main Market Financial Sector Average of 11.9x.
• As part of its strategic move to target more businesses in the middle to upper-income band, the company recently partnered with American Express to issue Jamaica’s first metal AmEx platinum card. This partnership augurs well for the company as the embedded benefit may increase card usage, allowing more revenues to be generated from credit card interest and merchant fees.

 (Source:  JSE)

• The Government’s prior year performance gives confidence that it remains on track to eliminate the fiscal deficit even if 2023-2024 “slides” from its original targets, a governance reformer said last night.
• Hubert Edwards, the Organisation for Responsible Governance’s (ORG) economic development committee head, told Tribune Business that while reaching a fiscal surplus “may take a bit longer” than the Government’s 2024-2025 goal this would not be “fatal” for its plans or The Bahamas generally.
• Additionally, with the International Monetary Fund (IMF) projecting that the Government will run a near-$379m deficit for the 2023-2024 fiscal year, he argued the Davis administration’s first goal “almost instantly becomes” beating that benchmark.
• Mr Edwards told this newspaper that while the Government’s $131.1Mn deficit target for the year is “aggressive”, given that this number is just one-third of the IMF’s forecast, there is likely “some wiggle room” provided the ultimate 2023-2024 outcome moves in the right direction.
• “There’s enough for us to be confident, even if 2023-2024 slides a bit further than expected, we will still be on target to eliminate the deficit and move into a surplus,” Mr Edwards told Tribune Business. “That may take a little bit longer, but I don’t think it’s a fatal circumstance.”
• The Government is projecting that it will achieve a $109Mn surplus, where its revenues exceed spending, in the 2024-2025 fiscal year. However, the IMF is still forecasting that The Bahamas will incur a deficit equal to 2% of gross domestic product (GDP) or nearly $290Mn that year, so it remains to be seen who is right.

(Source: The Tribune)

• Strengthening investment, private consumption, and government consumption will fuel Saint Kitts and Nevis' economy to grow by 2.9% in 2023 from an estimated 6.9% expansion in 2022, according to Fitch Solutions.
• Investments are expected to rise by 2.5% in 2023 from an estimated 7.5% expansion in 2022. Government consumption will grow by 0.7% while private consumption will increase by 0.4%, compared to estimated growth of 4.3% and 3.7% in 2022, respectively. Net exports will contract by 3.0% after contracting by 5.3% in 2022.
• Further to this, Saint Kitts and Nevis' real GDP will rise by 2.5% in 2024 as investment, private consumption, and government consumption bolster domestic demand. Investment will increase by 1.7% in 2024, below its 3.3% average growth since 2013. Private consumption will grow by 0.3%, while government consumption will grow by 0.2%. Net exports will contract by 3.1% in 2024.
• That being said, its economy will grow slower than the Caribbean's average of 6.3% over the next decade. Investments will drive the economy's 0.5% average expansion over the next decade.
• Fitch expects investment, which accounted for 28.3% of GDP in 2022, will average 1.2% over the next decade. This will offset contractions in government consumption, private consumption and net exports.

 (Source: Fitch Solutions)

• Consumer prices in the U.S. rose unexpectedly in November, driven by increases in rents, healthcare, and motor vehicle insurance. The decline in gasoline prices was offset by other factors, contributing to a 0.1% increase in the Consumer Price Index (CPI).
• Prices for used cars and trucks rebounded, boosting underlying inflation. The report also highlighted a rise in healthcare costs and services inflation, indicating persistent inflationary pressures. Despite a decline in apparel prices, overall inflation remains above the Federal Reserve's 2% target.
• The unexpected inflation readings, coupled with positive job market data, suggest that the Federal Reserve is unlikely to consider early interest rate cuts in the near future. The Fed is expected to maintain its current policy tightening stance, with rates raised by 525 basis points since March 2022.
• While some economic indicators show a continuation of inflation, there are signs that inflation expectations among consumers are softening. Economists expect cooler inflation readings next year; however, uncertainties remain, impacting market expectations and potential challenges for President Joe Biden's approval ratings and reelection prospects in 2024.

(Source: Reuters)

• Over 100 countries at COP28 in Dubai agreed to triple renewable energy capacity by 2030, a crucial step in meeting the Paris Agreement's climate goals. The target aims to achieve a global renewable energy capacity of at least 11,000 gigawatts in six years, exceeding current projections by over 20%.
• The industry faces obstacles such as permitting, leases, and grid connections, which concerns raised about the feasibility of rapidly increasing solar and wind power deployments.
• Shortages in supplies and labour, rising project costs, and local opposition to large energy projects contribute to the strain in the renewables sector.
• To achieve the 2030 target, a sustained growth rate of 17% annually is required, necessitating more than doubling the annual investment in renewables to over $1.2 trillion by 2030.
• Infrastructure investors have reduced funding due to higher interest rates, highlighting the importance of continued government support and discussions on overcoming barriers in permitting, grid development, and auctions after COP28.

(Source: Reuters)

• JMMB Group Limited is looking into a partnership with the private sector financing arm of the Inter-American Development Bank, IDB Invest.
• In a release, the financial group says the funding partnership being considered could provide financing of up to US$100Mn. This would be used to support JMMB's funding pipeline for micro, small and medium sized enterprises, including women-led initiatives.
• JMMB is also looking to use the money to develop and grow a green loan portfolio in Jamaica. The funding would also support its digitalisation strategy.
• Notably, the actual completion of the transaction is contingent upon various factors, including but not limited to market conditions, authorisations and approvals, and the satisfaction of customary closing conditions.

 (Source: RJR News)

• iCreate Limited (“iCreate”) has announced that a Meeting of the Board of Directors for consideration of the Spin-Off of iCreate’s shares in Visual Vibe.Com Limited (“Visual Vibe”) is scheduled for Tuesday, December 19, 2023, at 11:00 a.m.
• Upon consideration and approval by the Board of Directors, an Extraordinary General Meeting (“EGM”) will be convened for the shareholders to consider and if thought fit, pass the resolution approving the issue or transfer of iCreate’s shares in Visual Vibe to be held by the shareholders of iCreate, pro rata to their existing shareholdings.

(Source: JSE)