• The Panama Canal's water levels have not recovered enough as the end of the rainy season approaches and limits on daily transit and vessel draft will stay in place for the rest of the year and throughout 2024, the waterway's authority said on Tuesday, September 5.
• The restrictions, implemented earlier this year to conserve water amid prolonged drought, triggered a backlog of ships waiting to pass the key global waterway, which handles an estimated 5% of world trade, contributing to more expensive freight costs ahead of the approaching Christmas season.
• The bottleneck at the canal connecting the Pacific and Atlantic Oceans has eased about 20% since last week, but waiting times to transit the waterway doubled last month from July in some vessel categories, while many ship owners have opted for alternate routes to avoid costly delivery delays.
• The authority that manages the canal added in a statement that this week's ship traffic represents a "normal" level for this season. It noted that a month before the end of its 2023 fiscal year, the canal's total vessel crossings already totalled nearly 800 more than what the canal authority's budget had forecast.
• The additional vessel crossings, which contribute to a total of more than 13,000 transits so far during the fiscal year, show strong demand by vessel owners. But insufficient rainfall continues to negatively impact Gatun Lake, which feeds the canal, lowering its water level to 24.2 meters (79.7 feet), versus 26.6 meters (87.41 feet) for September in recent years.
• Experts have warned about maritime trade disruptions ahead of what is shaping up to be an even drier period next year. They argue that a potential early start to Panama's dry season and hotter-than-average temperatures could increase evaporation and result in near-record low water levels by April.
• The enduring restrictions at the Panama Canal, one of the world's most strategic waterways, hint at broader implications for global commerce, potentially resulting in elevated costs and delivery times. For sectors heavily reliant on this route, such as retail and manufacturing, disruptions might translate to supply chain complications and inflated operational costs. Yet, alternate maritime routes and shipping solutions could gain traction, offering opportunities for regions and businesses positioned to leverage these alternatives. On a macro level, the Panama Canal's challenges underscore the broader economic and infrastructural impacts of climate change, emphasizing the urgency for sustainable solutions and adaptive measures in the global trade ecosystem.

(Source: Reuters)

• Credit projections within the financial sector are experiencing an approximate 16% increase, indicating significant activity in productive sectors despite the relatively low economic growth observed in the country in 2023.
• The rising trend in financing has led Rosanna Ruiz, the executive president of the Dominican Association of Multiple Banks (ABA), to suggest that the country might return to its potential economic growth range of 4.5% to 5.5% sooner than anticipated, spanning the remainder of the year and into 2024.
• Ruiz, in discussions with journalists specializing in economics, emphasized that the Central Bank’s estimates are on target. However, she highlighted credit behaviour as a key indicator reflecting the progress in various economic sectors, including MSMEs, construction, and real estate.
• Julio Lozano, Director of Economic Studies at ABA, discussed the behaviour of credits and mentioned that the Bank Credit Expectations Index (IEC) reached 55.1 in the second quarter of the year, indicating positive statistics for loan demand in the financial sector.
• Although economic activity grew by 2.9% year-on-year in July, with an accumulated growth of 1.4% in the first seven months, the government revised its growth outlook for 2023 downward. The revision lowered the projected growth rate from 4.25% to 3%, attributing the adjustment to economic uncertainty on both the international and local fronts.
• During discussions, Ruiz also emphasized the need for comprehensive tax reforms in the country, explaining that simpler and lower tax structures can help reduce tax evasion and encourage formal economic activity. She expressed the ABA’s opposition to a general rule proposed by the General Directorate of Internal Taxes (DGII), which designates certain entities as withholding and collection agents for various taxes, citing potential negative impacts on formality and incentives.

(Source: Dominican Today)

• The number of Americans seeking jobless benefits for the first time fell unexpectedly last week to the lowest level since February, pointing to a U.S. job market that remains relatively tight even as other recent data indicate it has begun to soften.
• Initial claims for state unemployment benefits fell 13,000 to 216,000 in the week ended Sept. 2 from a revised 229,000 in the prior week, the Labor Department said on Thursday. That was the lowest since the same level was touched in the week ended Feb. 11 and it marked the fourth straight weekly decline. Economists polled by Reuters had forecast new claims would rise to 234,000 in the latest week.
• Meanwhile, the rolls of those continuing to receive jobless benefits beyond the first week fell by 40,000 to 1.679 million in the week ended Aug. 26 from a revised 1.719 million a week earlier. That was the lowest since the same level was hit in the week ended July 15.
• Last week, the Labor Department said job growth picked up in August, although employment gains reported in the previous two months were revised sharply lower in an indication that labour market conditions were loosening. The unemployment rate rose unexpectedly to 3.8% from 3.5%, but that was driven by an increase in the labour force participation rate to the highest in more than three years.
• Nonfarm productivity - measuring hourly output per worker - increased at a 3.5% annualized rate in the period from April through June - the highest since the third quarter of 2020 - versus a -1.2% reading in the first three months of the year. Second-quarter productivity had initially been estimated at 3.7%.
• The report also showed labour costs, a key focus of the Federal Reserve as it battles to bring inflation back down to its 2% target, rose at a 2.2% annualized rate, a somewhat faster pace than the 1.6% rate initially reported. Nonetheless, the advance was still the slowest since the fourth quarter of 2022.

(Source: Reuters)

•  Bank of Canada Governor Tiff Macklem on Thursday said interest rates may not be high enough to bring inflation back down to target, sending a hawkish message after holding borrowing costs at a 22-year high a day earlier.
• On Wednesday, the Bank of Canada (BoC) kept its key rate at 5%, noting the economy had entered a period of weaker growth, but said it could hike again should price pressures persist. Inflation has remained above the bank's 2% target for 27 months.
• In a speech to the chamber of commerce in Calgary, Alberta, Macklem said one possible reason for inflation staying above target was that it might be taking longer for rates to work, but the other possibility "is that monetary policy is not yet restrictive enough to restore price stability".
• The central bank hiked rates by a quarter point in both June and July in a bid to tame stubbornly high inflation. However, Macklem said that now "there is little downward momentum to underlying inflation".
• Canada's gross domestic product unexpectedly shrank an annualized 0.2% in the second quarter, a sign the economy could have already entered a recession as higher rates sink in. But inflation accelerated in July to 3.3% and core measures remained at about 3.5%.

(Source: Reuters)

• Finance Minister Dr. Nigel Clarke states that Jamaica has made significant strides in fulfilling most of the Financial Action Task Force (FATF) requirements. However, there remain three crucial areas to address before removal from the FATF grey list.
• The three outstanding matters are to operationalise risk-based supervision of beneficial ownership by the Companies Act, of lawyers by the General Legal Counsel, and of trust and corporate service providers by the Financial Services Commission.
• In a discussion with Radio Jamaica's Business Reporter Javaughn Keyes, Dr. Clarke expressed confidence in meeting the October deadline. Dr. Clarke emphasized that upon fulfilling these three conditions, Jamaica will formally request removal from the FATF grey list.
• The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. It sets international standards that aim to prevent these illegal activities and the harm they cause to society. Countries which fall on the grey list are subject to increased monitoring, as the entity deems them as needing to address certain gaps in their terrorist financing and money laundering regimes.
• Achieving removal from the FATF grey list will elevate Jamaica's international financial reputation, potentially boosting foreign investments. This move indicates a robust commitment to fighting financial crimes, streamlining international transactions, and fostering a safer financial environment. Adhering to FATF's standards will also position Jamaica in line with global best practices, reducing external scrutiny and enhancing trade relations.

  (Source: RJR News)

• To encourage consistency in the benefits from Jamaica’s tourism sector, the Minister of Tourism, Hon. Edmund Bartlett, emphasized the importance of a greater share for the nation's farmers.
• Highlighting their pivotal role as a reliable source market for hotels, Minister Bartlett said the aim going forward is to create new avenues of collaboration. This approach will allow farmers to capitalize on available opportunities and enhance their earnings.
• While addressing farmers, business representatives, and other stakeholders in Ulster Spring, Trelawny, on September 2 — an event that saw the presentation of fifty 650-gallon water tanks to farmers — Minister Bartlett emphasized the undeniable contributions of local farmers to the tourism sector.
• Despite challenges from COVID-19, the Jamaican tourism industry has seen impressive growth over the years, welcoming millions of visitors each year. This boom has significantly elevated the demand for locally sourced agricultural products like fruits, vegetables, and spices.
• In the meantime, farmers are urged to take a closer look at the Agricultural Linkages Exchange (ALEX) programme, which serves as a platform for connecting local farmers with buyers from the tourism sector, enabling direct trade and fostering mutually beneficial partnerships. Through this programme, he said, farmers can gain access to a wider market, while hotels can source fresh, local produce sustainably.
• Mr. Bartlett highlighted that the Tourism Ministry is committed to working closely with farmers and providing the necessary support to ensure their success, noting that investments in infrastructure, technology, and market access will form the cornerstone of these efforts, empowering farmers to maximise their potential in the tourism value chain.
• The emphasis on stronger farmer-tourism sector collaboration promises a win-win situation: it bolsters the nation's agricultural sustainability, ensures tourists experience authentic Jamaican produce, and translates to economic growth by keeping revenues within the country, further enriching both sectors.

(Source: JIS News)

• Mexican inflation is anticipated to have slowed in August for the seventh straight month, with the closely watched core index expected to return to 2021 levels, a Reuters poll showed on Tuesday, September 5, 2023.
• Inflation levels, however, are expected to remain above the Bank of Mexico's target range, boosting bets that the central bank will continue to hold its key interest rate at the current level to tame rising prices. The median forecast of 10 analysts surveyed was for annual headline inflation to ease to 4.61% in August, which would be the lowest rate since February 2021. 
• Headline inflation surged to a record 8.7% last year due to elevated food and energy prices stemming from geopolitical conflict. Meanwhile, annual core inflation is forecast to have slowed to 6.12%, which would mark its lowest level since December 2021. The closely watched core price index is considered a better gauge of price trends given that it strips out some volatile food and energy prices. 
• The Bank of Mexico, which has a target range for inflation of 3% plus or minus one percentage point, last month voted to keep its benchmark interest rate steady at a historic high of 11.25%, with board members suggesting it will stay at that level for an extended period of time to bring inflation to target. "The discussion of whether we are going to reduce the interest rate is not on the table yet," Bank of Mexico Governor Victoria Rodriguez said during a presentation last month.
• In August alone, consumer prices likely rose 0.52% compared to July, while core inflation is forecast to have risen 0.30%, according to the poll. 
• Mexico's national statistics agency (INEGI) is expected to publish consumer price index data for August on Thursday.

(Source: Reuters)

• Travelers are seeking more affordable destinations in 2023, with personal finance experts advising budgeting and planning according to a recent report by Squaremouth Travel Insurance Company.
• The Dominican Republic ranks fifth among these destinations with an average travel cost of $4,497. While the cost is rising, the country has seen a 14% increase in tourist arrivals from January to July compared to the same period last year.
• Being the most affordable was Colombia (US$3,344) and Mexico (US$3,878). 
• According to the Global Travel Agency, Puerto Rico is currently the cheapest Caribbean island to visit (followed by Bermuda at number 4) costing $3,907 on average. The Bahamas is only 3.5% pricier than the Dominican Republic at $4,658. Jamaica and Aruba followed with costs of $4,698 and $4,917, respectively.
• While Asia is a favoured destination for backpackers, visiting Vietnam and the Philippines averages $5,181 and $5,330, respectively. Expensive destinations have also seen attention, with 21,000 people spending over $133 million on these trips, averaging $11,000.
• Africa emerges as the most expensive continent for tourism. Visiting Congo costs $32,400 per person, compared to Botswana’s $17,753. Other destinations like Antarctica, Zimbabwe, Tanzania, and Kenya also surpass the average $4,000 cost of visiting the Dominican Republic. Additionally, travellers are purchasing travel insurance for an average of $717 to ensure safe journeys.
• The rise in tourism to budget-friendly destinations like the Dominican Republic and Colombia offers significant benefits. Increased tourist arrivals boost local economies, create jobs, and spur infrastructure development. Moreover, this growth elevates their global tourism profile, fostering cultural exchange and attracting potential foreign investments.

(Source: Squaremouth Travel Insurance & CariCris)

• U.S. economic growth was modest amid a cooling labour market and slowing inflation pressures in July and August, a Federal Reserve report published on Wednesday showed, buttressing expectations that the central bank was either done or close to being done, with interest rate increases.
• The U.S. central bank is widely expected to leave its benchmark overnight interest rate in the current 5.25%-5.50% range at the end of its Sept. 19-20 policy meeting, while leaving open the door to a final quarter-percentage-point hike before the end of the year.
• Data since the last Fed rate hike six weeks ago has tended to support that view, with the economy adding an average of 150,000 jobs per month over the last three months, down sharply from the prior three months. Inflation, as gauged by the Fed's preferred measure, was 3.3% in July, down from 7% last summer.
• That's why even a hawkish policymaker like Fed Governor Christopher Waller was able to say that the central bank has time to take in new data before it decides whether it has to raise rates again, or can hold them at current levels.
• Still, prices continue to rise faster than the Fed's 2% goal, employers are adding many more than the monthly 100,000 jobs needed to meet population growth, and economic output appears to be far outpacing the less-than-2% annual growth rate Fed officials say is sustainable in the long run.
• The New York Fed district said migrants were putting strains on the local safety net. The report said "housing affordability, homelessness, and food insecurity continued to challenge communities" in the San Francisco Fed district, adding that "temporary housing shelters and food banks saw increased demand in recent weeks, especially from older adults."
• The report noted that housing remains an issue and that the supply for single-family homes "remained constrained." Home building was picking up, the Fed said, but building affordable properties is being strained by high financing costs and rising insurance premiums.

(Source: Reuters)

• Analysts see Brent crude climbing to levels last seen in the first months of the Ukraine war after Saudi Arabia and Russia extended production cuts. Brent crude oil was trading on Wednesday morning at around $90 a barrel for the second straight day and is up 25% since June thanks to the prospect of more production cuts by leading oil exporters.
• The surge is sending ripples through the global stock and bond markets. The prospect of higher prices at the pump and throughout manufacturing may spur diplomatic efforts to increase supply and tamp down any inflationary effects on the global economy.
• Saudi Arabia and Russia are behind the price increase. The two said on Tuesday that they would extend their oil production cuts — equivalent to a combined 1.3 million barrels a day — through year-end. The duration of the cuts surprised market watchers, as did Saudi Arabia’s hint that it may make even deeper cuts in the coming months.
• There are wild cards to consider. China’s sputtering economy could sap demand for oil, keeping prices down. Costlier oil could also affect interest rates. “Higher oil prices will only increase the likelihood of more fiscal tightening, especially in the U.S., to curtail inflation,” León said.
• Global leaders may seek relief from sanctioned oil exporters. Iran’s oil exports have surged since Saudi Arabia began cutting its production this summer, and Bloomberg reported last week that Tehran and Washington have held back-channel talks to keep crude flowing to make up for supply reductions elsewhere. Venezuela, another exporter under sanctions, has reportedly turned to Beijing to help it revive production.

(Source: NY Times)