• The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia's war in Ukraine, and warning that inflation was now a "clear and present danger" for many countries. 
• The war is expected to further increase inflation, the IMF said in its latest World Economic Outlook, warning that a further tightening of Western sanctions on Russia to target energy exports would cause another major drop in global output. 
• The IMF said other risks to the outlook include a sharper-than-expected deceleration in China prompted by a flare-up of COVID-19 lockdowns. Rising prices for food, energy, and other goods could trigger social unrest, particularly in vulnerable developing countries, the IMF said. 
• Downgrading its forecasts for the second time this year, the global crisis lender said it now projects global growth of 3.6% in both 2022 and 2023, a drop of 0.8 and 0.2 percentage point, respectively, from its January forecast due to the war's direct impacts on Russia and Ukraine and global spillovers. 
• Medium-term global growth is expected to decline to about 3.3% over the medium-term, compared to an average of 4.1% in the period from 2004 to 2013, and growth of 6.1% in 2021.

(Source: Reuters)

•  U.S. homebuilding unexpectedly rose in March, but starts for single-family housing tumbled amid rising mortgage rates. Housing starts increased 0.3% to a seasonally adjusted annual rate of 1.793Mn units last month, the Commerce Department said on Tuesday. Data for February was revised higher to a rate of 1.788Mn units from the previously reported 1.769Mn units. 
• The 30-year fixed-rate mortgage averaged 5.0% during the week ended April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac. Further increases are likely with the Federal Reserve adopting an aggressive monetary policy posture as it battles sky-high inflation. 
• The Fed in March raised its policy interest rate by 25 basis points, the first hike in more than three years. Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio. 
• Rising borrowing costs are combining with higher home prices to reduce housing affordability for first-time buyers. The National Association of Home Builders/Wells Fargo Housing Market index dropped to a seven-month low in April, with builders blaming the “jump in mortgage rates and persistent supply chain disruptions.” 
• Still, record low housing supply should continue to underpin homebuilding this year. There is a record backlog of houses approved for construction that are yet to be started.

(Source: CNBC News)

• Knutsford Express Services Limited (KEX) reported a net profit of $45.40Mn for its nine months ending February 28, 2022, which is a significant turnaround from the $60.64Mn net loss recorded last year. 
• Much of the improvement in KEX’s net profit is attributed to the ongoing global recovery in travel which has led to a strong rebound in revenues. Revenues grew by 69.7% moving from $456.37Mn to $774.41Mn. 
• KEX’s financial performance is expected to improve in line with the recovery in the tourism sector, and the full withdrawal of restrictions on movement which will support domestic travel. 
• However, the current rise in fuel costs is expected to be a significant headwind for KEX as this may have a negative impact on its margins. Despite this, management sees this as an opportunity to increase its ridership as motorists may choose to enjoy the cost savings associated with traveling across the country by utilising KEX’s services. 
• KEX’s stock price has declined by 4.6% since the start of the calendar year. The stock closed Thursday’s trading session at $7.93 and currently trades at a P/B of 5.5x which is above the Junior Market Sector Average of 5.3x.

(Source: Company Financials and NCBCM Research)

• Fitch Solutions will be monitoring February economic activity prints for Argentina, Brazil, and Colombia for an indication of the strength of the region’s economy prior to the economic shock caused by Russia’s invasion of Ukraine on February 24. 
• Growth in these markets steadily slowed over H2 2021 and into 2022, as in much of the rest of Latin America. In January, activity contracted in seasonally-adjusted month-on-month terms in each market, while also slowing sharply in year-on-year terms as base effects became less favourable. 
• Activity in Brazil is expected to be higher in February than in January (-1.9% y-o-y and 0.8% m-o-m). This view reflects high-frequency data which generally showed an improvement in the second month of the year. However, it is forecasted that Brazil will see only 0.7% real GDP growth in 2022, given high inflation and significant political uncertainty. 
• After Mexico’s inflation came in above expectations in the second half of March at 7.62% y-o-y (0.59% m-o-m), reflecting the impact of higher commodity prices, Fitch expects inflation will remain comfortably above 7.00% in the first half of April. However, core inflation, which reached 6.88% in the second half of March, is also likely to continue climbing, adding more pressure on the Banco de México to hike from 6.50% in the months ahead.

(Source: Fitch Solutions)

• Even though the Dominican Republic reported economic growth of more than 12%, cutting the budget and current expenses will be vital to face the rise in inflation, which started this year at 8.5%. 
• The increase in the monetary policy interest rate above the pre-pandemic level was the first measure implemented by the Central Bank of the Dominican Republic (BCRD) to face the increase in inflation. However, while higher inflation was expected to be transitory, a sustained rise in food prices, construction materials, and other goods and services, indicates that it will likely last until the end of the first half of this year. 
• The Dominican Association of Multiple Banks (ABA) has outlined that a significant proportion of small and medium-sized borrowers from productive sectors will not suffer as much from the increase in interest rates since many are covered by monetary stimuli arranged as a result of the pandemic. 
• Notably, after the health crisis broke out in 2020, the government made it easier to grant loans at fixed rates of 8% until July 2023. This will allow the country to overcome the transition to a path of sustained growth with adequate levels of inflation without major traumas.

(Source: Dominican Today)

• The World Bank lowered its annual global growth forecast for 2022 on Monday by nearly a full percentage point, down from 4.1% to 3.2%, citing the impact that Russia’s invasion of Ukraine is having on the world economy. 
• World Bank President David Malpass told reporters on a conference call that the largest single factor in the reduced growth forecast was a projected economic contraction of 4.1% across Europe and Central Asia, according to Reuters. 
• Other factors behind the slowdown in growth from January’s forecast include higher food and fuel costs being borne by consumers in developed economies across the world, said Malpass. 
• The World Bank is “preparing for a continued crisis response, given the multiple crises,” Malpass told reporters. “Over the next few weeks, I expect to discuss with our board, a new 15-month crisis response envelope of around $170 billion to cover April 2022 through June 2023.” 
• This Ukraine crisis financing package is even larger than the one the World Bank organized for Covid-19 relief, which topped out at $160 billion

(Source: CNBC News)

• China's economy slowed in March as consumption, real estate and exports were hit hard, taking the shine off faster-than-expected first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs and the Ukraine war. 
• The biggest near-term challenge for Beijing is the tough new coronavirus rules at a time of heightened geopolitical risks, which have intensified supply and commodity cost pressures, leaving Chinese authorities walking a tight rope as they try to stimulate growth without endangering price stability. 
• Gross domestic product (GDP) expanded by 4.8% in the first quarter from a year earlier, data from the National Bureau of Statistics showed on Monday, beating analysts' expectations for a 4.4% gain and picking up from 4.0% in the fourth quarter. 
• A surprisingly strong start in the first two months of the year improved the headline figures, with GDP up 1.3% in January-March in quarter-on-quarter terms, compared with expectations for a 0.6% rise and a revised 1.5% gain in the previous quarter. 
• Analysts say April data will likely be worse, with lockdowns in commercial centre Shanghai and elsewhere dragging on, prompting some to warn of rising recession risks.

(Source: Reuters)

• Mayberry Jamaican Equities Limited (MJE) reported a net profit of  $944.40Mn for its first quarter ended March 31, 2022, which represents a significant improvement from the net loss of $631.08Mn in the same period last year. This performance mainly resulted from a recovery in the net gains on investments in associates, net foreign exchange gains as well as an increase in dividend income. 
• With the local financial market experiencing improved buoyancy with the tempering of COVID- 19 fears and related government restrictions, as well as corporates posting improved financial results in several sectors, there were improvements in the performance of stocks in the MJE portfolio. 
• The company currently holds equities in 34 companies listed on the Main and Junior Markets of the Jamaica Stock Exchange (JSE). There was a favourable turnaround in stock prices for most of the securities in the portfolio, specifically in its top 10 stocks. 
• Further recovery is expected in the stock market in 2022, which should help to fuel additional gains on MJE’s portfolio. Listed companies are set to benefit from increased demand and business activity stemming from the full withdrawal of lockdown measures, especially within the tourism and entertainment sectors. Further, growth in the tourism sector should have spillover effects on the agriculture and manufacturing sectors.  However, commodity price shocks, and their impact on corporate input costs, consumer prices, and profit margins, are major downside risks to this outlook. The rising interest rate environment and its effect on borrowing, investments and stock valuations will also present downside risks. 
• MJE’s stock price has increased by 5.5% since the start of the calendar year. The stock closed Wednesday’s trading session at $9.50 which is 43.2% below its net asset value of $13.60 (as at March 31, 2022).

(Source: Company Financials and NCBCM Research)

• Given the recent increases in the price of petroleum products, the Government of Saint Lucia (GOSL) has increased its subsidy on 20lbs cylinders of cooking gas from $16.13 to $22.10 per cylinder, an increase of 37%. This has allowed a 20lb cylinder of cooking gas to be sold for just under $40, at $39.81. 
• However, users of 100lbs cylinders are unable to benefit from a similar subsidy because they are deemed to be in a higher income bracket and, therefore, more likely to afford the unadjusted market price. 
• Notably, the situation is a little different with gasoline and diesel, each attracting an excise tax of 80 cents and 88 cents per gallon respectively since the last fuel price adjustment, which took place on Monday 11th April. The total excise tax expected to be collected from the two products matches the subsidy provided for cooking gas, at just over $1 million, leaving the government with no tax revenue to collect from petroleum products. 
• With consumers buckling under the pressure of rising food prices and fuel from the current geopolitical crisis, this may be a reasonable policy to adopt for the time being. However, since tax on petroleum products is a significant revenue stream for the government, it is unlikely that this policy will be sustained for very long.

(Source: St Lucia News Online)

• The average interest rate on the most popular U.S. home loan rose to more than 5% last week, the highest level since November 2018, and homebuyers hurried to make purchases before costs rose further, the latest weekly survey from the Mortgage Bankers Association (MBA) showed on Wednesday. 
• The average contract rate on a 30-year fixed-rate mortgage increased to 5.13% in the week ended April 8 from 4.90% a week earlier. It is up more than 1.5 percentage points since the start of the year as the Federal Reserve has begun to tighten financial conditions to cool demand in the economy amid high inflation. 
• Fed policymakers now anticipate a series of swift interest rate hikes until the end of this year at least as they seek to bring down inflation, after they raised the benchmark overnight lending rate last month for the first time in three years. Investors see the Fed bringing its federal funds rate to 2.5%-2.75% by the end of 2022, up from the current target range of between 0.25% and 0.5%. 
• Officials are also expected to start culling the central bank's portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities as early as next month, a stash of assets that had also helped keep consumer borrowing costs - for mortgages in particular - low throughout the COVID-19 pandemic. 
• The rise in borrowing costs, which has dampened demand for mortgage applications overall since the start of the year, caused a small bump in activity last week as homebuyers rushed to lock in rates before they move even higher.

(Source: Reuters)