• The Bank of Canada's most favoured measures of core inflation is likely to slow in July for the first time in 10 months as base effects work in their favour, a milestone that could sway the bank to leave rates on hold at its next policy decision.
• In tracking core inflation, the BoC has been particularly focused on the annualized three-month rates of the weighted median and the trimmed mean, which filter out components with extreme price movements and are more timely than the year-over-year rates that are typically observed. The average of those two measures would drop in July below the 3.5% to 4% range it has been stuck in since September, so long as the monthly increases are not too hot - above 0.3%, for example - Reuters calculations show.
• The monthly increases for both measures have been 0.3% or less in seven of the last eight months. The exception was April. Helpfully, its heated readings will drop out of three-month calculations in July. Such an outcome could see the BoC returning to the sidelines at its next interest rate announcement on Sept. 6, said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets.
• Holding rates steady in September would not guarantee the tightening cycle has ended, economists say, noting that monthly increases of 0.2% and less for the preferred core measures would need to become commonplace for inflation to move back to the BoC's 2% target.
• The BoC, which will release minutes from its July meeting on Wednesday, has said it doesn't want to tighten more than is needed. Money markets see a 25% chance of a September hike and are pricing in a 75% chance of a move by the end of the year.

(Source: Reuters)

• AMG Packaging & Paper Limited recorded a net profit of $32.56Mn for the third quarter that ended May 31, 2023. This represents a 19.2% yoy increase in profitability. However, despite this increase, profit for the nine months ending May 2023 decreased by 6.7% to $74.80Mn due to the fall-off in its quarter-one performance.
• Revenue for the quarter was up by 11.7% yoy to $281.02Mn. Similarly, revenues for the nine months increased by 5.9% yoy $781.84Mn.
• Gross profit for the quarter was up 39.7% to $88.57Mn while for the nine months ending May 31, 2023, it's up 17.8%. This was primarily driven by an increase in its property insurance as well as the major servicing of its corrugator.
• Despite this increase, gross margin improved to 31.5% (from 25.2%) and  29.9% (from 26.9%), over the three and nine months periods, respectively as the rate of the sales increase outpaced increases in manufacturing cost.
• Total expenses for the nine months ending May 31, 2023, increased by 25.0% yoy to $131.31Mn. Total expenses for the quarter increased by 20.6% yoy to $43.52Mn. The main contributing factors were the increase in depreciation as well as the cost associated with participating in the Jamaica Manufacturers and Exporters Association (JMEA) EXPO.
• AMG’s stock price has decreased by 13.5% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.51 and currently trades at a P/E of 13.2x which is below the Junior Market Manufacturing Sector Average of 18.8x.
• The company recently pulled back from its plan to produce boxes made from recycled paper because the expected cost savings are anticipated to be slim. Additionally, the company has been challenged with the timely shipment of its raw material and has been closely monitoring the situation so that sales are not affected. As such, the company has around three months’ worth of inventory which should be able to sustain production until the next shipment arrives.

(Source: JSE)

• To finance several development projects as Guyana continues to progress rapidly, the Government of Guyana intends to increase the country’s debt ceiling, a Senior Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh has said.
• Dr Singh, during an interview with the News Room, said that the government has been making significant investments and managing the country’s finances responsibly.
• “Given all of these heavy investment initiatives and also ramping up of social programmes, we have of course been incurring a fiscal deficit, this is publicly known. It’s reflected in our annual budget every year, so you finance the budget deficit by borrowing, and we have been borrowing very prudently,” the minister said.
• With Guyana’s rapidly growing economy, it is pertinent that the country adjusts its debt ceiling.
• Guyana’s fiscal deficit is expected to widen from 2.2% of GDP in 2022 to 3.0% in 2023 given falling global energy prices and the government’s planned 41.4% increase in headline expenditure over the year. However, the country is anticipated to record a surplus (0.1% of GDP) in 2024 due to stabilising oil prices, persistent increases in hydrocarbon production and a lower debt-to-GDP ratio.
• This forecast is heavily hinged on a low debt load. Guyana’s debt-to-GDP ratio stood at just 25.8% in 2022, having fallen from a multi-year peak of 47.4% in 2020. Persistent fiscal surpluses from 2024 onwards imply that this ratio will stabilise in the years ahead, averaging 25.6% between 2023 and 2027.

(Source: Guyana Chronicle)

• Fitch Solutions has revised its 2023 growth forecast for Costa Rica from 2.9% to 3.2%, and is now projecting growth to slow to 2.5% in 2024.
•  The latest national accounts release shows that real GDP in Q123 performed better than initially expected, growing 4.5% y-o-y. This was underpinned primarily by a strong performance in exports, which grew by 15.8%, while private consumption and fixed investment both grew by 3.0%.
• Fitch’s upward revision is also supported by a strong performance of leading indicators in Q223. Expansions in the Monthly Index of Economic Activity (IMAE) have been accelerating in the last three months, with the latest growth rate coming in at 7.4% y-o-y in May.
• This is likely impacted by the Banco Central de Costa Rica’s (BCCR) dovish monetary policy stance, having already implemented three rate cuts since March 2023 as inflation has cooled sharply.
• The fixed investment will likely accelerate in the months ahead, while private consumption growth will remain fairly robust, further supporting growth in H223 and 2024 and adding to Fitch’s upward revision for 2023.
• That said, the deceleration in headline growth vis-à-vis H123 will be driven by softer export demand induced by the weakening of US growth in 2023 and 2024.
• Costa Rica’s key trading partner is the US, which serves as a destination for half of the market’s goods exports. Costa Rica also relies on the US as a source of tourists. US growth is projected to slow down from 2.1% in 2022 to 1.6% in 2023 and 0.6% in 2024 with a technical recession likely at the start of 2024, implying softer export demand for Costa Rica in the quarters ahead.

 (Source: Fitch Solutions)

• Sales of pre-owned homes dropped 3.3% in June compared with May, running at a seasonally adjusted annualized rate of 4.16 million units, according to the National Association of Realtors. Compared with June of last year, sales were 18.9% lower. That is the slowest sales pace for June since 2009.
• The continued weakness in the housing market is not for lack of demand. It’s all about a critical shortage of supply. There were just 1.08 million homes for sale at the end of June, 13.6% less than in June of 2022. At the current sales pace, that represents a 3.1-month supply. A six-month supply is considered balanced between buyer and seller.
• “There are simply not enough homes for sale,” said Lawrence Yun, chief economist for the Realtors. “The market can easily absorb a doubling of inventory.” That dynamic is keeping pressure on home prices. The median price of an existing home sold in June was $410,200, the second-highest price ever recorded by the Realtors. Last June’s price was the highest but by barely 1%.
• Sales are unlikely to recover anytime soon, as mortgage rates weigh heavy on affordability. The Realtors measure June sales based on closings, so contracts that were likely signed in April and May. Mortgage rates hung in the mid-6 % range during that time and then shot up over 7% at the very end of May. Rates stayed in the 7% range for all of June, as home prices rose.

(Source: CNBC)

• Wheat prices rose sharply Monday following a strike by a Russian drone on a Ukrainian port on the Danube River.
• Moscow’s drones attacked Ukraine’s port infrastructure overnight, targeting the country’s grain stocks, the Ukrainian Army said. One grain silo at the Reni port was hit and substantially damaged, according to geolocated images and video.
• Wheat futures on the Chicago Board of Trade jumped 8.5% to $7.57 a bushel, and corn futures rose 4.7% to $5.52 a bushel.
• Traders are concerned about tightening supply following the collapse of the Black Sea grain deal last week and a string of Russian drone attacks on Ukrainian port infrastructure.
• The deal — originally brokered by Turkey and the United Nations a year ago — had ensured the safe passage of ships carrying grain from Ukrainian ports. So far the pact has allowed for the export of almost 33 million metric tons of food through Ukrainian ports, according to UN data.
• Before the war, Ukraine was the fifth-largest wheat exporter globally, accounting for 10% of exports, according to the Organization for Economic Cooperation and Development.
• The White House said the Black Sea deal had been “critical” to bringing down food prices around the globe, which spiked after Russia invaded Ukraine in February last year. The global food price index compiled by the UN’s Food and Agriculture Organization hit an all-time high in March 2022 but has fallen steadily since then.
• Romanian President Klaus Iohannis said in a tweet Monday that the attacks on the ports in the Danube posed “serious risks to the security in the Black Sea,” adding that it would affect Ukrainian “grain transit and thus the global food security.”

(Source: CNN)

• Kingston Wharves Limited (KWL) has signed a 20-year deal with international club shopping company PriceSmart. The arrangement allows PriceSmart to enter a new lease to occupy a portion of KWL's 300,000-square-foot, Integrated Modular Logistics Complex at Ashenheim Road.
• The first phase of the complex is under construction and set for completion in the first quarter of 2024. PriceSmart will have access to the facility at the end of 2023 to complete its build-out.
• The agreement with PriceSmart represents a guaranteed 10-year lease arrangement, with the option of renewal in two five-year increments.
• Kingston Wharves’ CEO Mark Williams says this represents a strengthening of the company's ability to take on nearshoring opportunities. The completed facility will bring KWL's logistics and warehousing capacity to more than 600,000 square feet.
• With PriceSmart being a global brand, a partnership of this magnitude will establish KWL and by extension Jamaica as a more desirable nearshoring destination. Considering this, it could position KWL to take advantage of logistics opportunities that may arise. The logistics market was valued at about US$9.96Trn in 2022 and is expected to reach about US$14.37Trn by 2028. This has the potential to become a key driver of both top and bottom-line growth for KWL going forward.

(Source: RJR)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, on Tuesday (July 18), tabled the Second Supplementary Estimates for fiscal year 2023/24 in the House of Representatives. The primary objective of the Estimates is to reallocate to individual heads the required funds to enable payment of the compensation adjustments during the fiscal year.
• In December 2022, the Government commenced implementing the Public Sector Compensation Restructure, which is still underway. Dr. Clarke informed that given the effective implementation date of April 1, 2022, and the fact that discussions with some unions continued into the current fiscal year, it was not possible to incorporate these adjustments at the beginning of the 2023/24 fiscal year to facilitate payment of the second-year compensation restructure amounts.
• Due to this, an estimated amount for the second-year payments was captured in the Contingency funds of the Ministry of Finance and the Public Service. He further indicated that several entities are also being allocated one-off grants or additional subventions, to enable them to meet the compensation restructure payments.
• Clarke noted that the Second Supplementary Estimates, therefore provides for the transfer of $14.8 billion from the contingency allocation under the Ministry of Finance and the Public Service to several ministries, departments and agencies (MDA) Heads for the compensation of employees. The Estimates also provide for the addition of $8.9 billion to recurrent programmes, primarily to facilitate other compensation restructuring payments.
• Under recurrent programmes, the Second Supplementary Estimates also reflect the $2.7 billion in value of equipment, including taxes paid on that equipment donated by the People’s Republic of China. It also reflects $5.6 billion in loans to public bodies comprising working capital support of $5 billion to Petrojam and $600 million to the Sugar Company of Jamaica Holdings Limited.
• As a result of this, the Central Government spend for fiscal year 2023/24 is, therefore, now estimated at $1.036 trillion, up from $1.021 trillion. If revenue estimates should remain unchanged, then there could be a downward revision to the fiscal and primary balances for FY 2023/24.

(Source: JIS)

• Fitch Solutions maintains its forecast that Panamanian real GDP growth will slow from 10.8% in 2023 to 5.0% this year, but flags that downside risks to this projection are rising at the margin.
• The Q422 national accounts have yet to be released, though the February print of the monthly economic activity was released in mid-June. Growth remained robust at 9.0%, supported by the strength in construction linked to a ramp-up in public investment, ongoing recovery in the tourism industry and resilience in consumer-facing services.
• This helped to compensate for weakness in the mining sector linked to a since-resolved dispute between the government and the operators of the important Cobre Panamá copper mine which drove an 11.6% y-o-y decline in exports in Q123 in value terms.
• Furthermore, domestic demand should continue to drive growth this year, supported by loose fiscal policy ahead of next year’s elections and easing inflation.
• On the flip side, ongoing drought – which may be exacerbated by the El Niño weather phenomenon (a warming of the ocean surface, or above-average sea surface temperatures, in the central and eastern tropical Pacific Ocean.) – represents the single largest downside threat to Fitch’s forecast.
• The drought has already led to the introduction of some restrictions on the weight of ships that can pass through the canal, which accounts for roughly 20% of Panama’s service exports per the OECD (Organization for Economic Cooperation and Development). Ships move through the Panama Canal via a lock system, which uses water from several freshwater reservoirs to float the massive cargo vessels overland. Drought affects the water levels of these reservoirs and by extension ships traversing the key global trade route.
• Persistent drought could also create some energy challenges, given that hydroelectricity accounts for roughly 70% of the country’s electricity needs.

(Source: Fitch Solutions)

• A plan to deliver internet connections to low-income Caribbean households has been unveiled as part of a private-public partnership between leading telecoms operator C&W Communications and some Caribbean countries.
• Termed JUMP, the initiative aims to help bridge the digital divide and foster greater digital inclusion in a region that still has less than 65% broadband penetration with 27 million users from a total combined population of 44 million, C&W Communications said in a statement.
• In partnership with local governments, the company, which is the operator of Flow, Flow Business, C&W Business and BTC, will provide qualifying households with a subsidised high-speed internet connection, a free laptop computer and relevant training for individuals and families.
• So far, C&W Communications and the governments of Barbados, Grenada, Jamaica, St Lucia, and The Bahamas have committed to JUMP and more than 2,700 households have already been connected.
• According to the C&W CEO, Inge Smidts, the aim is to eliminate barriers and to ensure that every individual and family, despite their financial situation, can benefit from the digital world.
• “We believe this investment will change lives, unlock the potential of economies, and truly enable progress. Our core social mission is to connect everyone to the digital world, regardless of their income or where they live, and we are committed to harnessing our resources and capabilities to narrow the digital divide,” she said.

(Source: Trinidad Express Newspaper)