• Mexico's headline inflation ended 2022 slightly below analysts' expectations, while core inflation finally appeared to have peaked, data from the national statistics agency showed on Monday Jan. 9.
• Annual headline inflation in December reached 7.82%, up moderately from 7.80% in November, but still below the record 8.70% reached in August and September.
• Meanwhile, the core index, which strips out some volatile food and energy prices, hit 8.35% on an annual basis in December, dropping from November's 8.51%, and the first slowdown since its stubborn upwards cycle began. Economists polled by Reuters had expected annual headline inflation to come in at 7.86% and core inflation at 8.36%.
• Inflation has blown past the Bank of Mexico's target rate of 3%, plus or minus one percentage point, prompting it to increase its key lending rate by 650 basis points to 10.50% during the current hiking cycle, which began in June 2021. The central bank is now considering another interest rate hike at its next monetary policy meeting scheduled for Feb. 9, according to the minutes of its last board meeting.
• Jason Tuvey, Senior Emerging Markets Economist at Capital Economists, said that the core index data showed progress, and expected the Bank of Mexico to slow the pace of its rate hikes at the next meeting.

(Source: Reuters)

• Bank of England Chief Economist Huw Pill said on Monday that Britain is at risk of persistent inflationary pressure from a tight labour market, even if natural gas prices stabilise or fall, implying further rate rises may be needed. Pill's speech - the first on monetary policy this year by a BoE official - comes as economists and markets speculate about how near the BoE is to the end of its rate-rising cycle.
• The BoE raised its main interest rate to 3.5% in December, up from 0.1% a year before, and financial markets expect the central bank to raise rates again to 4% at its next policy announcement on Feb. 2. Markets see BoE rates peaking at 4.5% in June, while economists polled by Reuters in December predicted a peak of 4.25% in the second quarter of 2023.
• Inflation has fallen slightly from a 41-year peak of 11.1% in October, and Britain's economy appears to be entering a shallow recession. Pill said Britain was "starting to see labour market indicators turn" as job vacancies fell from record levels and unemployment, which had been at its lowest since the 1970s, edged higher.
• The BoE also forecast headline inflation will fall this year as natural gas prices level off. Natural gas prices in Britain, which spiked in response to Russia's invasion of Ukraine last February, have retreated to around the same level as a year ago, but are several times higher than in early 2021.
• Pill said that even if natural gas prices eased further, that would not guarantee that underlying price pressures would fall enough for inflation to return to its 2% target.

(Source: Reuters

• The World Bank slashed its 2023 growth forecasts on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia's war in Ukraine continues, and the world's major economic engines sputter. The development lender said it now expected global GDP growth of 1.7% in 2023 -- the slowest pace outside the 2009 and 2020 recessions in nearly three decades. In its previous Global Economic Prospects report, in June 2022, the bank had forecast 2023 global growth at 3.0%
• The bank said major slowdowns in advanced economies, including sharp cuts to its forecast for both the United States and the eurozone, could foreshadow a new global recession less than three years after the last one. "Given fragile economic conditions, any new adverse development -- such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions -- could push the global economy into recession," the bank said in a statement accompanying the report.
• The bleak outlook will be especially hard on emerging market and developing economies, the World Bank said, as they struggle with heavy debt burdens, weak currencies and income growth, and slowing business investment that is now forecast at a 3.5% annual growth rate over the next two years -- less than half the pace of the past two decades.
• The World Bank noted that some inflationary pressures started to abate as 2022 drew to a close - with lower energy and commodity prices, but warned that risks of new supply disruptions were high, and elevated core inflation may persist. This could cause central banks to respond by raising policy rates by more than currently expected, worsening the global slowdown.

(Source: Reuters)

• The Jamaican economy grew by 5.9% during Q3 2022 compared to the same 2021 period. This was primarily due to increases in both the Services and Goods Producing Industries of 6.0% and 5.6%, respectively. The performance reflected the continued recovery of the economy from the impact of the COVID-19 pandemic.
• Growth was recorded in all Services Industries with the Hotels & Restaurants (35.3%), Other Services (13.1%), Transport, Storage & Communication (5.9%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (5.3%) sub-industries leading the pack.
• The expansion in the Hotels & Restaurants industry resulted from increased activities in hotels & other short-stay accommodations, restaurants, bars, and canteens, including from foreign nationals, which increased by 49.2% during the period.
• The increase in the Goods Producing Industries was largely due to higher output levels in Agriculture, Forestry & Fishing (17.0%), and Manufacturing (9.5%). However, the Mining & Quarrying and Construction industries declined by 27.6% and 3.1% respectively. The Agriculture, Forestry & Fishing industry benefited from the continuation of programmes initiated by the Government such as the Production Incentive Programme, aimed specifically at optimizing productivity.
• Meanwhile, the Planning Institute of Jamaica (PIOJ) is projecting a growth of between 2.5% and 3.5% for the October to December quarter, and between 4% and 5% for the full calendar year. Growth is projected to be between 3.5% to 4.5% for the fiscal year ending March 2023.

(Source: STATIN)

• Brazil's newly sworn-in President Luiz Inacio Lula da Silva signed a decree on Sunday, Jan. 1, extending for 60 days an exemption for fuels from federal taxes, a measure passed by his predecessor aimed at lowering their cost.
• The exemption from federal taxes on fuel represents a revenue waiver of 52.9 billion reais per year, and Economy Minister Fernando Haddad had said that it would not be extended, creating a division in the new cabinet.
• Earlier on Sunday, Senator Jean-Paul Prates, who is expected to be named chief executive of state-run oil company Petrobras, told reporters that an extension of the exemption would go ahead and last 60 days.
• Prates said the exemption could be resumed by the new government in a "much more comfortable" way. He has said that one option under study was an extension for six months or until the end of the year for tax exemptions on diesel and liquefied petroleum gas.
• The extension of the tax exemption on fuels should ease inflation pressures for consumers and businesses but could lower revenues collected by the government if the gap is not filled by other taxes. 

(Source: Reuters)

• Fitch forecasts real GDP growth in Trinidad and Tobago (T&T) will slow to 1.9% in 2023 from an estimated 5.8% in 2022. Growth in 2023 will be driven primarily by private consumption, as well as a continued expansion of hydrocarbon exports.
• However, private consumption will grow at a slower rate than in 2022 due to a reduction in price subsidies as government fiscal consolidation efforts continue. Additionally, oil and gas prices will moderate from the highs seen in 2022 – though they will remain elevated by historic standards – while tourist arrivals growth cools, contributing to the slower growth rate.
• Higher oil and gas production will fuel continued export growth in 2023 and the years thereafter. While Fitch expects growth in the hydrocarbons sector will not return to the levels seen in 2022, due to easing oil and gas prices, it is expected that hydrocarbon production and exports will continue contributing to GDP growth moving forward.
• However, the tourism sector is not expected to drive significant services export growth in 2023, as the post-pandemic tourism rebound will likely continue to lose steam. As of September 2022, arrivals continued to lag behind other Caribbean markets, having only returned to 76.0% of September 2019 levels. Arrivals will see only minimal growth in the coming quarters as key tourism source markets, such as the US (1.8% in 2022 to 0.3% in 2023) and Canada (2.8% to 1.3%), experience slower GDP growth.
• Risks to the growth forecasts remain slightly to the downside. While Fitch expects that hydrocarbon production and exports will be a major key driver of GDP growth in 2023, there is a risk that energy prices will fall more dramatically than expected due to the global economic slowdown anticipated next year.

(Source: Fitch Solutions)

• Oil prices tumbled 3.5% in volatile trade on Tuesday, pressured by weak demand data from China, a gloomy economic outlook and a stronger U.S. dollar. Brent futures for March delivery fell $3.03 to $82.88 a barrel and U.S. crude fell $2.81 to $77.45 per barrel.
• "There is plenty of reason for concerns here - the China COVID-19 situation and the fear of recession in the foreseeable future is putting pressure on markets," Mizuho analyst Robert Yawger said.
• The Chinese government has raised export quotas for refined oil products in the first batch for 2023. Traders attributed the increase to expectations of poor domestic demand as the world's largest crude importer continues to battle waves of COVID-19 infections. Another concern is that China's factory activity shrank in December as surging infections disrupted production and weighed on demand after Beijing largely removed anti-virus curbs.
• The dollar, meanwhile, was headed for its largest one-day rise in over three months. A stronger dollar can crimp demand for oil, making the dollar-denominated commodity more expensive for holders of other currencies.
• Commerzbank said it expects the global economic outlook to play a "much more important role" in oil price developments than production decisions taken by the Organization of the Petroleum Exporting Countries (OPEC) and its allies. The bank expects signs of economic recovery "in key economic areas" to push Brent back towards $100 a barrel, which it said could happen from the second quarter of the year onwards.
• "The outlook remains highly uncertain, though, which would ensure oil prices remain highly volatile," said Craig Erlam, senior market analyst at OANDA.

(Source: Reuters)

• The COVID omicron XBB.1.5 variant is rapidly becoming dominant in the U.S. because it is highly immune evasive and appears more effective at binding to cells than related subvariants, scientists say.
• 1.5 now represents about 41% of new cases nationwide in the U.S., nearly doubling in prevalence over the past week, according to the data published Friday by the Centers for Disease Control and Prevention.
• Scientists at Columbia University, in a study published last month in the journal Cell, warned that the rise of subvariants such as XBB could “further compromise the efficacy of current COVID-19 vaccines and result in a surge of breakthrough infections as well as re-infections.” The scientists described the resistance of the XBB subvariants to antibodies from vaccination and infection as “alarming.”
• Andrew Pekosz, a virologist at Johns Hopkins University, said XBB.1.5 is different from its family members because it has an additional mutation that makes it bind better to cells. He noted, however, that the boosters appear to be preventing severe disease.

(Source: CNBC)

• For November 2022, output prices for producers in the Mining and Quarrying industry increased by 0.7% while the index for the Manufacturing industry declined by 0.3%.
• The movement in the Mining and Quarrying industry index was mainly attributed to a 0.8% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’. This was due primarily to the depreciation of the Jamaican dollar against the US dollar.
• The main contributors to the decline in the index for the Manufacturing industry were the ‘Refined Petroleum Products’ group, which fell by 1.4%, and ‘Food, Beverages and Tobacco’, which declined by 0.1%. The declines in the groupings were the result of both moderating energy and food prices on the global markets coupled with the likelihood of a recession. This fall was, however, tempered by a 0.1% increase in the index for the major group ‘Rubber & Plastic Products’.
• For the period November 2021 – November 2022, the Mining & Quarrying industry’s index fell by 20.4% while the point-to-point movement for the Manufacturing industry’s index increased by 13.1%. The two major groups contributing to the movement in the Manufacturing industry were ‘Refined Petroleum Products’ (21.0%), and ‘Food, Beverages & Tobacco’ (12.5%). The increase in oil prices and other key commodities due to the Russia-Ukraine war are the primary reasons for the month-over-month increases in both groupings.

(Source: STATIN)

• Brazil posted a $62.3 billion trade surplus in 2022, official data showed on Monday, Jan. 2, 2023, a record in the series that started in 1989. In December, the trade surplus was $4.8 billion, exceeding the $3 billion surplus forecast in a Reuters poll with economists.
• The 2022 result was above the most recent expectations of the Jair Bolsonaro government, which in October had projected a trade surplus of $55.4 billion.
• Total exports for the year also reached a record high of $335 billion, a 19.3% growth, helped by a boost in prices in the agriculture and livestock sector. Imports, meanwhile, jumped 24.3% and were also record-breaking, at $272.7 billion.
• Both ends of the trade flow were affected by a sharp increase in prices, which rose much higher than the volume of commercial transactions: 13.6% on average for exports and 23.4% for imports.
• In December alone, exports grew 14% compared with the previous year, to $26.6 billion. Imports reached $21.9 billion, or 12% above the last month of 2021.

(Source: Reuters