• On December 15,the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Barbados. At the same meeting, the Board also completed the sixth review of Barbados’ economic reform program supported by an arrangement under the Extended Fund Facility (EFF). 
• The completion of the review allows the Barbadian authorities to draw the equivalent of SDR 17 million (about US$24 million), bringing total disbursements to the equivalent of SDR 305 million (about US$425 million). The four-year extended arrangement under the EFF was approved on October 1, 2018, and is for an amount equivalent to SDR 322 million (about US$465 million). 
• Barbados continues its implementation of the comprehensive Economic Recovery and Transformation (BERT) plan aimed at restoring fiscal sustainability, increasing reserves, and unlocking growth potential through structural reforms. 
• The prolonged global coronavirus pandemic, along with the twin natural disaster shocks of volcanic ashfalls from neighboring St. Vincent in April and category 1 hurricane Elsa in July, have added to the challenges faced by the tourism-dependent economy. Reform efforts include enhancing adaptation measures towards increasing vulnerabilities emanating from climate change and natural disasters.

(Source: IMF)

• While the Government can't indicate what the price of cement on the local market would be, Trade Minister Paula Gopee-Scoon yesterday said she believes the increased competition, which will be facilitated from January 2022, would keep prices in check. 
• She was responding to a question in the Senate yesterday from Opposition Senator Wade Mark on what would be the effect on the ultimate price, given Government's measures designed to counter the 15 per cent price increase by Trinidad Cement Ltd (TCL). Citing rising input costs, TCL, on Monday announced that it would increase the ex-factory cost of cement by 15 per cent on Monday, December 20, 2021. 
• Asked by Mark whether Government would seek to incentivize the entry of other players into the local cement market, Gopee-Scoon said the Government would encourage any players to get involved in the manufacture of local cement and would welcome any new entrants into the manufacturing of cement. However, Gopee-Scoon highlighted that there is currently a quota and an import licensing regime in T&T which came into effect in January 2021, under which five companies were registered.

 (Source: Trinidad Express Newspapers)

• The Bank of England on Thursday became the world's first major central bank to raise interest rates since the coronavirus pandemic hammered the global economy, and warned inflation was likely to hit 6% in April - three times its target level. 
• Surprising investors for the second time in six weeks, the BoE said it had to act now, even as the Omicron coronavirus variant sweeps Britain because it saw warning signs in underlying inflation pressures. 
• The nine-member Monetary Policy Committee voted 8-1 to raise Bank Rate to 0.25% from 0.1%, with external member Silvana Tenreyro providing the only dissenting voice. 
• Governor Andrew Bailey said Omicron was already hurting retailers and restaurants but the BoE had felt compelled to stop the recent jump in prices from becoming a longer-term problem.

(Source: Reuters)

•  Developed market (DM) unemployment will continue declining in 2022. However, this will occur at a slower pace than in 2021 owing to weaker growth momentum and the withdrawal of government support. 
• After peaking at 6.8% in 2020, DM aggregate unemployment has declined throughout 2021, largely due to DM governments’ ambitious employment support measures. Fitch expects that aggregate unemployment in developed markets will average 5.8% in 2021, and it will continue edging down to 5.3% in 2022, before reaching its pre-pandemic level of 4.9% in 2023. 
• A less dynamic pace of economic expansion and the expiration of most government-sponsored employment retention schemes will be the main factors behind more moderate employment gains next year.

 (Source: Fitch Solutions)

• With an uptick in cruise arrivals and a positive forecast for stopover visitors, tourism officials and other stakeholders are predicting the best winter season for Jamaica since 2019. 
• In fact, the level of buoyancy currently being displayed throughout the sector is such that the Jamaica Hotel and Tourist Association (JHTA) is projecting an average of 65.0% occupancy for the 2021 winter tourist season. 
• Minister of Tourism, Hon. Edmund Bartlett highlighted the role played by the island’s resilient corridors in creating and maintaining an environment that is both safe for locals and visitors. He also commended the Ministry of Health and Wellness, the Port Authority of Jamaica (PAJ), and the Tourism Product Development Company (TPDCo) for their efforts in ensuring that the health and safety guidelines were in line with international standards. 
• Jamaica Hotel and Tourist Association (JHTA) President, Clifton Reader, noted that during a recent visit to Jamaica by travel agents and tour operators, the hotels received excellent ratings for maintenance of product standards and health and safety protocols. This is expected to translate into increased bookings for the destination. This will not only strengthen the linkages between tourism and other sectors but will also benefit other industries, including farmers and other suppliers. 
• Notwithstanding, due to concerns about the spread of the Omicron coronavirus variant and new travel restrictions, there has been a spike in hotel booking cancellations globally which will threaten the recovery in global tourism. In addition, it has been observed that more persons were choosing domestic travel. This poses a downside risk to the anticipated forecast for the local winter tourism season.

(Source: JIS News)

• Guyana’s fiscal deficit will narrow over the coming quarters, from an estimated 4.7% of GDP in 2021 to 3.5% in 2022, due to booming revenues from the oil sector and stronger economic activity. 
• In 2020, the budget deficit widened to 5.8%, from an average shortfall of 2.3% from 2015-2019, as revenues from the non-oil sector declined and the government enacted countercyclical measures to support household incomes. 
• That being said, rebounding economic activity drove a 21.2% y-o-y increase in total revenues in H121, largely because of a 20.8% increase in tax revenue, which outpaced expenditure growth of 16.5% in the first half of the year.  
• Fitch Solutions expect the Guyanese government will increase public expenditures to finance investment and strengthen public services, which will keep the budget in deficit in the medium term. 
• Public debt is forecast to decrease to 37.5% of GDP in 2022, from an estimated peak of 38.1% in 2021, and continue to fall in the longer term as the government runs smaller deficits and the economy continues to grow robustly. 

(Source: Fitch Solutions)

• Brazil’s economy had a bad start to the fourth quarter, underscoring the risks of an extended recession as policymakers further tighten monetary policy to battle above-target inflation.  
• The central bank’s economic activity index, a proxy for gross domestic product, fell 0.4% in October from the prior month, in line with the median estimate from economists in a Bloomberg survey.  
• September’s reading was revised down to a 0.46% decline. From a year ago, activity plunged 1.48%, more than double the drop estimated by analysts, the bank reported on Wednesday.  
• Latin America’s largest economy is losing momentum in the aftermath of the pandemic, even as businesses reopen and most of the population is vaccinated against Covid-19. With the annual inflation rate at an 18-year high, activity has shown signs of continued malaise, and both industrial production and services posted unexpected drops in October.

(Source: Bloomberg)

• British inflation surged to its highest in more than 10 years in November, jumping to 5.1% and potentially unsettling the Bank of England a day before it announces whether it is raising interest rates for the first time since COVID-19 struck. 
• Price pressure from a broad range of consumer goods and services, especially petrol, clothing, and footwear, lay behind the increase in inflation to its highest since September 2011, the Office for National Statistics (ONS) said. 
• The reading exceeded all forecasts in a Reuters poll of economists, which had pointed to a rise of 4.7% from October's 4.2%. 
• Many economists still expect the BoE to stay on hold again on Thursday, because of the potential impact on the economic growth of rapidly rising cases of the Omicron coronavirus variant, despite the inflation surprise.

(Source: Reuters)

• Financial markets will face a greater set of challenges as the economic cycle matures and new risks emerge. These include much higher uncertainty regarding the trajectory of monetary policy, rich valuations, slowing economic and earnings growth, as well as political risk emanating from the US midterm elections in November 2022.
• US equity markets were notably less volatile in 2021 than in recent years, so even a return to the pre-crisis level of volatility could come as a bit of a shock. 
• Fitch expects the US dollar to remain on the front foot and for commodity prices to ease, which could weigh on emerging market currencies.

 (Source: Fitch Solutions)

• Though 10.1% lower than the corresponding prior-year period, the KLE Group Ltd. continued to report losses for the nine months ended September 2021 ($57.95Mn). The outturn reflects a reduction in expenses (17.5% or $20.70Mn) driven by lower bank service charges, rent and licenses, and permits and a 9.3% increase in the company’s revenue. The revenue growth came on the back of higher income from the food, bar, merchandise, and rental segments of the company. 
• Although the company reported a decline in losses, there was also a decline in other operating income (-71.8%), increase cost of sales (+9.8%), and finance and depreciation cost (+74.7%). Currently, there are still restrictions on the entertainment sector in Jamaica. However, given the recently relaxed curfew hours, KLE should continue to see an improvement in its revenue for the final quarter of the year. 
• KLE’s stock price has appreciated by 71.3% since the start of the year and closed Tuesday’s trading session at $1.97 per share.

(Sources: KLE Financials & NCBCM Research)