• Costa Rica has unlocked a total of around $519Mn for its economic reform programme and a climate and sustainability programme, the International Monetary Fund (IMF) said.
• Around $274Mn went to the economic reform programme, which is one instalment in the more than $1Bn Costa Rica has received from the IMF under the arrangement, the fund said. Another $245Mn goes to the resilience and sustainability arrangement.
• The Central American country met its fiscal targets by large margins, further strengthening debt sustainability, Kenji Okamura, acting chair of the IMF board, said in a statement.
• Additionally, proposed tax reforms, including recently submitted legislation, will make the system more progressive, equitable, efficient, and environmentally friendly. The steady improvement in public debt management is also welcomed.
• "While there is scope for further monetary easing in 2023, policies should remain attentive to risks to the inflation outlook," he added.
• The IMF pegged Costa Rica's real gross domestic product (GDP) growth for this year at 3.0% and 3.2% in 2024.

(Sources: IMF & Reuters)

• June data indicated a sustained upturn in UK service sector output, but the rate of expansion eased to its weakest for three months amid a much softer rise in new orders. In contrast, staffing levels expanded at the fastest pace since last September as improving candidate availability helped to boost recruitment.
• Service providers recorded another sharp increase in their average cost burdens. Rising salary payments offset falling energy and transportation bills. However, the latest overall rise in business expenses was the weakest for just over two years. Prices charged by service companies meanwhile increased at the second-slowest pace since August 2021.
• At 53.7 in June, down from 55.2 in May, the headline seasonally adjusted S&P Global / CIPS UK Services PMI® Business Activity Index signalled a slowdown in service sector output growth to its weakest since March. The latest index reading marked five months of continuous business expansion across the service economy.
• Survey respondents typically noted resilient business and consumer spending, despite pressure on budgets from elevated inflationary pressures. However, there were several reports citing weak demand from clients in the real estate and construction sectors, largely due to rising interest rates.
• Employment numbers increased for the sixth consecutive month in June. The rate of job creation accelerated to its fastest since September 2022. Service providers widely noted that vacancies had become easier to fill. Additional staff recruitment helped to boost business capacity and in turn, resulted in an overall reduction in backlogs of work for the first time since January.

(Source: S&P Global)

• The Chinese service sector showed signs of softening growth in June, according to the latest PMI data. Business activity and new orders both expanded at notably slower rates than seen in May, as some firms reported softer-than-expected market demand. Cost pressures meanwhile remained relatively subdued, with input cost inflation remaining below the series trend, while output charges rose only slightly.
• Despite the softer increase in activity, firms added to their staffing levels at the quickest rate for three months. Recruitment in the sector was supported by a more positive outlook for the year ahead, with overall business confidence picking up for the first time in five months in June.
• At 53.9 in June, the seasonally adjusted headline Caixin China General Services Business Activity Index slipped from 57.1 in May to signal a weaker upturn in service sector activity. Though solid, the rate of growth was the softest seen since the current period of expansion began in January.
• The slower rise in business activity was often linked to softer than anticipated demand conditions. Although total new business continued to expand at the end of the second quarter, the rate of growth moderated to a six-month low and was modest overall. The new export business meanwhile expanded solidly, despite the rate of increase edging down to the softest since January. There were several reports that the sector continued to benefit from a revival in tourism and travel since the easing of pandemic restrictions.

(Source: S&P Global)

• Elite Diagnostic Limited recorded a net profit of $6.09Mn for the quarter that ended March 31, 2023. This represents a 78.4% yoy decrease in profitability. Furthermore, for the nine months ended March 2023, net profit tumbled to $4.56Mn from $34.89Mn in 2022. Despite the higher revenues, profit declined because of increased expenses over the period under review. 
• Revenue for the quarter was up by 25.6% yoy to $202.21Mn. This was driven by revenue-generating machines being back in service, allowing them to increase work hours to clear the backlogs. Similarly, revenue for the nine months increased by 25.9% yoy to $565.76Mn
• Direct costs for the quarter and the nine months ending March 2023 were up 54.7% to $66.7Mn and 24.9% to $175.19Mn, respectively. This was due to the additional maintenance repair cost that was incurred for some machines that were out of operation since Q2.
• Administrative expenses were up 29.4% yoy to $77.92Mn for the quarter, while for the nine months, it was up 35.6%, owing to higher operating expenses from the extended shifts to clear backlogs.
• Additionally, depreciation was up 87.4% to $40.18Mn and 53.3% to $116.76Mn for the quarter and the nine months respectively.
• Elite’s stock price has decreased by 30.2% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.20 and currently trades at a P/E of 44.0x which is above the Junior Market Health Sector Average of 15.7x.
• Going forward the company highlighted that it will implement a different strategy to ensure that the machines are brought back into service more quickly to minimize the reduction in projected daily revenues. Additionally, the installation of solar equipment at its Liguanea branch and subsequently at its Drax Hall branch is being coordinated to reduce its operating expenses in coming quarters.

(Source: JSE)

• The Bank of Jamaica has reported that overall credit conditions tightened during the March 2023 quarter relative to the previous quarter.
• Responses to the central bank's Quarterly Credit Conditions Survey showed consumers were experiencing higher interest rates and more stringent credit terms. This indicates the pass-through effect of early tightening regimes by the BOJ.
• The Bank's data also showed that the flow of new loans to the private sector declined by 12.7% in real terms as at April 2023.
• The BOJ expects this reality to further push down inflation in the coming months.
• The central bank says credit terms are expected to again tighten for the June 2023 and September 2023 quarters given responses from the survey. However, a marginal deceleration in the pace of tightening is expected towards the end of the year.

(Sources: RJR News and BOJ)

• Mexico brought in close to $5.7Bn in remittances in May, central bank data showed, breaking a monthly record that analysts cautioned was softened by the recent strength of the peso versus the dollar.
• While Mexico records remittances in dollars, as most of the funds come from the United States, "a strong peso hurts remittances," said Goldman Sachs analyst Alberto Ramos.
• Mexico's "super peso" is among the top-performing currencies this year, appreciating more than 13% against the U.S. dollar from May 2022 to May 2023. With a stronger local currency, recipients of funds from abroad receive fewer pesos when they sell the dollars they were sent.
• Given the peso's appreciation against the dollar, when measured in local currency, remittances declined 2.2% year-on-year, Ramos said.
• Nonetheless, Mexican President Andres Manuel Lopez Obrador has touted the economic boost remittances, which largely come from the United States, have brought to the country.
• Last year, remittances to Mexico from abroad hit a record high of $58.5Bn, making Mexico the second highest remittance-receiving country, just behind India.
• Despite the blow from the "super peso," the dollar amount of remittances sent in May rose almost 11% year-on-year.

(Source: Reuters)

• Fitch Solutions has revised its Short-Term Political Risk Index (STPRI) score for Guyana from 57.4 to 59.9 out of 100.
• The revision is based on both softening price growth and the successful completion of the local government elections (held on June 12, 2023), which bode well for the ‘policy continuity’ and ‘social stability’ components of the index.
• The successful completion of the local government elections and falling inflation suggest a broadly improving political environment in Guyana.
• Granted, the local government elections are far less consequential compared to the presidential elections. Nevertheless, the elections took place in an orderly fashion and, unlike the March 2020 snap general elections, the results were not disputed and protests did not emerge, boosting confidence in the market’s democratic processes.
• Additionally, the latest monthly data shows inflation decelerating to 3.3% y-o-y in April and 3.0% in May, down from 6.4% in January due to falling food prices. This, coupled with the government’s expansionary 2023 budget will improve household purchasing power, which in turn will bode well for social stability.
• Despite the upward revision to the STPRI score, Guyana’s score is still somewhat low in part due to a poor security environment and persistent ethnic tensions.

(Source: Fitch Solutions)

• The U.K. is the only country among the Group of Seven wealthy nations where inflation is still rising, according to data from the Organization for Economic Cooperation and Development. The Paris-based organization said Tuesday that year-on-year inflation in the G7 fell to 4.6% in May, down from 5.4% in April, reaching its lowest level since Sept. 2021.
• The downward trend was observed across most advanced economies in May, with annualized inflation trending lower in the U.S. Canada, France, Germany, Italy and Japan. Britain, however, was found to be an outlier.
• U.K. consumer prices across all items rose to 7.9% in May when compared to the previous year, the OECD said, up slightly from 7.8% in April.
• Last month, the Bank of England hiked interest rates by 50 basis points to 5%, a larger increase than many expected. The BOE’s 13th consecutive rate rise takes the base rate to the highest level since 2008.
• The move, which exacerbated fears of a mortgage catastrophe, marked a divergence from other major central banks that have been able to either slow or pause interest rate hikes. The OECD in early June forecasted that the U.K. will post annual headline inflation of 6.9% this year, the highest level among all advanced economies.

(Source: CNBC)

• Major industry players at the Energy Asia conference held in Kuala Lumpur this week stated that oil and gas will continue to be leading sources of energy for decades to come on the back of a lagging energy transition.
• “Energy transition is going to take a lot longer, it’s going to cost a lot more money and need new technologies that don’t even exist today,” said John Hess, CEO of U.S. oil company Hess Corporation. “When it comes to clean energy, the world needs to invest $4 trillion a year — and it’s nowhere close,” Hess continued.
• “Liquids are projected to remain the world’s leading energy source in 2050, even as demand growth slows beyond 2025,” Erin McGrath, ExxonMobil’s public and government affairs senior advisor, told CNBC.
• “Overall, demand for liquids is expected to rise by about 15 million barrels per day by 2050. Almost all the growth will come from the emerging markets of Asia, Africa, the Middle East and Latin America.”          
• In an e-mail exchange Tuesday, the largest U.S. oil producer ExxonMobil reiterated the same sentiment on oil demand. The company expects oil to remain the largest primary source of energy for at least two more decades given its vital place in the commercial transportation and chemical industry.

(Source: CNBC)

• Total value added at constant prices for the Jamaican economy increased by 4.2 per cent in the first quarter of 2023 when compared to the first quarter of 2022. This was attributed to growth in the Services and Goods Producing Industries of 5.4 per cent and 1.0 per cent, respectively. The performance of the economy reflected the sustained recovery from the impact of the COVID-19 pandemic. This outturn was significantly higher than the 2.7% preliminary estimate put forward by the PIOJ.
• The increase in the Services Industries was due to improved performance in all industries, except for the Producers of Government Services which declined by 0.3 per cent. Growth was recorded for Hotels & Restaurants (29.7 per cent), Other Services (13.0 per cent), Transport, Storage & Communication (7.1 per cent), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (2.8 per cent), Real Estate, Renting & Business Activities (2.3 per cent), Finance & Insurance Services (1.9 per cent) and Electricity & Water Supply (0.7 per cent). The performance of the Hotels & Restaurants industry was positively impacted by a 45.5 per cent growth in foreign national arrivals to the island.
• Within the Goods Producing Industries, higher output levels were recorded for Mining & Quarrying (114.7 per cent) and Manufacturing (3.6 per cent). However, there were declines in Agriculture, Forestry & Fishing and Construction of 6.9 per cent and 4.2 per cent, respectively. The growth in the Mining & Quarrying industry was due to increased output from the JAMALCO plant which was closed in the comparable period of 2022.
• When compared to the fourth quarter of 2022, the total value added for the economy grew by 1.0 per cent. This was the result of a 1.5 per cent increase in the Services Industries and a 0.6 per cent fall in the Goods Producing Industries. The economy grew by 4.7 per cent for the fiscal year 2022/2023 compared to fiscal year 2021/2022.
• Meanwhile, the PIOJ estimates that the economy will grow within the range of 2.0 per cent to 3.0 per cent for the June 2023 quarter relative to the June 2022 quarter. The growth projection for FY2023/24 is within the range of 1.0 per cent to 3.0 per cent. All industries are projected to record growth, albeit at slower rates, as base effects wane.
• The downside risk to the projections include increased factory downtime, particularly in Mining and Quarrying industries, weather-related shocks that could affect agriculture, an intensification of geopolitical conflicts leading to a deterioration of supply side conditions and a lower than anticipated external demand for Jamaican goods and services as a result of slower than expected growth in the economies of Jamaica’s main trading partners.

(Source: STATIN)