• The IMF Executive Board concluded its first review under Jamaica’s Precautionary and Liquidity Line (PLL). The PLL serves as insurance against shocks, with access at about US$611Mn. The authorities continue to treat the PLL as precautionary.
• The IMF Executive Board also concluded the first review under the Resilience and Sustainability Facility (RSF) arrangement, making available about US$255Mn under the RSF. Jamaica’s commitment to macroeconomic stability and strong policy frameworks have allowed the country to navigate a difficult global environment. The authorities have continued to enhance fiscal, financial, and AML/CFT policy frameworks, and are implementing an ambitious climate policy agenda.
• IMF noted that entrenched macroeconomic stability and sound policy frameworks continue to support economic growth, allowing Jamaica to navigate a complex global environment. A large primary fiscal surplus continues to support a strong downward trajectory of public debt, the financial system remains well-capitalized, liquid, and stable, and inflation is converging to the midpoint of the Bank of Jamaica’s target band.

  (Source: IMF)

• Peru lowered its economic growth forecasts for 2023 and 2024 on Tuesday, August 29, amid poor weather, lower private investment in mining, and anti-government protests earlier this year.
• According to Peru's official gazette, the economy ministry now projects that the country's economy will grow by just 1.1% this year, after data indicated a contraction in the economy during the first half of 2023. This is a significant downward revision from a prior estimate of 2.5% growth.
• This figure would mark the slowest annual growth since 2009, excluding coronavirus-dampened 2020. The Peruvian Fiscal Council warned the forecast could still be too optimistic and could see further adjustments. Next year, Peru's economy is expected to grow 3.0%, the ministry added, down from a previous estimate of 3.4%.
• As the world's second-largest copper producer, Peru is feeling the impact of falling copper prices, which have dropped from an average of $400 per pound last year to an estimated $380 this year and are projected to be $360 next year. While the metals mining and production sector is still expected to see a 7% growth this year, private investment—primarily in the mining sector—is anticipated to decline by 4.5%. This decline coincides with a slowdown in both the construction and manufacturing sectors of Peru.
• The ministry also pegged Peru's estimated fiscal deficit for this year at 2.4% of gross domestic product (GDP), up from the 1.7% of GDP recorded last year. Meanwhile, Peru's estimated current account deficit was lowered to 1.6% of GDP, down from the 2.1% of GDP previously expected.
• At a press conference on Tuesday, Finance Minister Alex Contreras pledged that the government is actively working to reverse these negative trends. He emphasized that inflation is on a declining trajectory, with the annual rate expected to ease to 4% by the end of the year. Contreras also noted that international companies, including those from the U.S., have expressed interest in Peru's petrochemical sector.

(Source: Reuters)

• Two-thirds of Latin American startups have laid off staff over the last 18 months, as venture capital funding fell sharply in the region, according to the "Latin America Digital Transformation" report by venture capital fund Atlantico.
• Venture capital funding in Latin America took a significant hit in the second quarter, plunging 65% compared to the same period last year. This decline was more substantial than the global downturn of 49% in venture capital funding for the same quarter.
• As the volume of IPOs recovers globally, venture capitalists and Latin American unicorns (privately held startup companies with a value of over $1Bn.) may return to capital markets. Of the 37 unicorns launched in the region, only seven went public. "We expect at least 10 new companies to list in public markets in 2024," said Julio Vasconcellos, Atlantico managing partner, in a phone interview on Tuesday, August 29.
• Notably, Fintechs are among the fastest-growing startups in the region, with digital payment systems such as the Central Bank of Brazil's PIX scheme helping to increase bank account penetration in the region. About 87% of Chileans and 84% of Brazilians hold bank accounts. Argentina comes next with 72%, although cash continues to be the preferred payment method in Mexico, with only 49% of the population having bank accounts.
• The introduction of a new digital payment system in Mexico, coupled with the proliferation of digital banks, has the potential to revolutionize the country's financial landscape in multiple ways. Enhanced accessibility and affordability could lead to greater financial inclusion, stimulating economic activity through quicker, more secure transactions. This digital shift is likely to not only introduce market competition, thereby compelling traditional banks to improve services, but also provide the Central Bank with more comprehensive data for effective monetary policy, ultimately positioning Mexico as a more competitive player in the global financial market.

(Source: Reuters)

• The U.S. economy grew at a slightly less brisk pace than initially thought in the second quarter (2.1% vs. forecasted 2.4%) as businesses liquidated inventory, but momentum appears to have picked up early this quarter as a tight labour market underpins consumer spending.
• The report from the Commerce Department on Wednesday also confirmed that inflation pressures moderated last quarter. The economy continues to expand despite 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022.
• "The downgrade to second-quarter GDP growth will be welcomed by Fed officials and reinforces our expectations for a policy pause in September but the door will remain open to further tightening," said Lydia Boussour, a senior economist at EY-Parthenon in New York. "Data point to steady economic momentum into the second half of the year and confirm that a recession isn't on the near-term horizon."
• There were also downward revisions to business spending on equipment and intellectual products. These offset a slight upgrade to consumer spending, which accounts for more than two-thirds of U.S. economic activity. Trade subtracted more from GDP growth than initially estimated.

(Source: Reuters)

• The U.S. economy added more jobs than expected in August, but a rise in the unemployment rate to 3.8% and moderation in wage growth pointed to an easing in labor market conditions, which could bolster expectations that the Federal Reserve will not raise interest rates this month.
• Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for July was revised lower to show 157,000 jobs added instead of the previously reported 187,000.
• The economy needs to create roughly 100,000 jobs per month to keep up with the increase in the working age population.
• Economists polled by Reuters had forecast nonfarm payrolls increasing by 170,000 jobs last month. Striking Hollywood actors and the bankruptcy of a major trucking company had led economists to anticipate slower job growth in August.
• Though demand for labor is slowing, some services businesses like restaurants, bars and hotels remain desperate for workers. Job openings dropped to the lowest level in nearly 2-1/2 years in July, the government reported this week.
• The unemployment rate increased to 3.8% as more people entered the labor force, from 3.5% in July. It remains below the U.S. central bank's latest median estimate of 4.1% by the fourth quarter of this year.

(Source: Reuters)

• Wisynco Group Limited (Wisynco) recorded a net profit of $4.92Bn for the fiscal year ended June 30, 2023, marking a 21.4% increase year-over-year (yoy).
• The company’s revenues surged 24.7% yoy amounting to 48.71Bn. This record-high revenue came despite production challenges and contributed to a gross profit of $16.86Bn, a 27.2% increase over last year’s $13.25Bn. The company also saw an improvement in its gross margin, which stood at 34.6% this fiscal year, compared to 33.9% in the previous year.
• On the expense side, Selling, Distribution & Administrative expenses (SD&A) for the year totaled $10.95Bn or 28.3% more than the $8.53Bn for the corresponding period of the previous year. This was primarily due to expanded business activity and the corresponding increase in variable costs as well as inflationary increases across all expense categories.
• Wisynco stock price has decreased 2.43% since the start of the calendar year. The stock closed Wednesday’s trading session at $17.24 and currently trades at a P/E of 13.2x which is slightly below the Main Market Distribution & Manufacturing Sector Average of 13.4x.
• In terms of future growth, Wisynco has ambitious expansion plans in the pipeline, including the construction of new facilities to enhance production capacity and introduce new product lines. This marks the company's largest capital expansion to date, and it's expected to positively impact revenue streams and operational efficiencies starting from Q2 of the 2024 fiscal year.

(Source: JSE and NCBCM Research)

• The Dominican Republic witnessed a deceleration in its economic activity during the initial half of 2023, achieving a mere cumulative growth rate of 1.2%. This percentage marks a significant drop from the average of 5.6% recorded during the corresponding period last year.
• In the month of June, the Year-on-Year Monthly Indicator of Economic Activity (IMAE) registered a 0.1% increase. Despite this, the government remains optimistic about the near future, attributing the anticipated economic upturn to the Central Bank of the Dominican Republic’s implementation of monetary stimulus measures and increased public investment.
• However, global uncertainties are heightened by the decisions of the United States Federal Reserve regarding its interest rates. Jerome Powell, the president of the Federal Reserve, stated that the central bank will persist with higher rates until inflation is effectively controlled. Nonetheless, he hinted at the possibility of halting the rate hikes in the future.
• In contrast, the Central Bank of the Dominican Republic has maintained its annual monetary policy interest rate at 7.75% for two consecutive months. With domestic inflation within the target range of 4.0% ± 1.0%, the bank acknowledged the influence of implemented monetary and fiscal policies, as well as reduced internal demand pressures, in its latest monetary policy announcement.
• While the Dominican Republic’s economy has been lauded for its dynamism and resilience, the International Monetary Fund (IMF) revised its growth projection for 2023 down to 4%, offering recommendations such as introducing a fiscal responsibility law, broadening the tax base, and reducing exemptions. Similarly, the World Bank trimmed its growth forecast for the country from 4.8% in January to 4.1% in June.
• Considering these forecasts, a consensus suggests that the nation might grow by 3.9% in 2023 and 4.2% in 2024, still positioning it as a standout performer in the region. Overall, Latin America and the Caribbean are projected to witness a growth rate of 1.6% in 2023, with a similar prediction for 2024, given the heightened uncertainties related to global macro-financial conditions.

(Source: Dominican Today)

• Chinese investments in Brazil tanked 78% in 2022 compared with the previous year, hitting their lowest in 13 years as funds committed to resource projects plummeted, the Brazil-China Business Council (CEBC) said on Tuesday, August 29.
• China, Brazil's largest trading partner, funnelled $1.3Bn in direct investments into the country last year, the lowest level since 2009, according to a CEBC study. The performance contrasts with overall foreign direct investment (FDI) in Brazil in 2022, which skyrocketed by 95% to $90.6Bn, the highest in a decade.
• Last year, just 28% of announced Chinese projects worth $4.7Bn went ahead, the CEBC said. That compares poorly with 2021, when pledged investments of $5.9Bn were fully realized, bolstered by two oil projects worth nearly $5Bn.
• Nonetheless, that 2021 result established an unfavourable yardstick for comparison, said CEBC research head Tulio Cariello. Some of the projects could have been held up by license approvals, Cariello said, "which may eventually postpone execution." Chinese mining firm Honbridge, for example, announced investments worth $2.1Bn that failed to proceed due to a pending environmental license.
• While China-sourced funds channelled to Brazil witnessed a sharp decline, Chinese investments globally saw a modest uptick of 2.8% over the past year, growing to $116.8 billion. Since then, Leftist President Luiz Inacio Lula da Silva, who travelled to China in April, has been endeavouring to bolster ties with Beijing, but recent economic indicators from the Asian powerhouse have sparked concern that it might be losing its ability to sustain robust growth.

(Source: Reuters)

• U.S. job openings dropped to the lowest level in nearly 2-1/2 years in July as the labour market gradually slowed, bolstering expectations that the Federal Reserve will keep interest rates unchanged next month.
• The Job Openings and Labour Turnover Survey, or JOLTS report, from the Labour Department on Tuesday also showed the number of people quitting their jobs dropped to levels last seen in early 2021, indicating that Americans were becoming less confident in the labour market.
• That was reinforced by a survey from the Conference Board showing consumers' perceptions of the labour market cooled in August. Nevertheless, labour market conditions remain tight, with 1.51 job openings for every unemployed person in July, compared to 1.54 in June. While that was the lowest ratio since September 2021, it is well above the 1.0-1.2 range considered consistent with a jobs market that is not generating too much inflation. Layoffs are very low by historical standards.
• "Although the labour market is still tight, the degree of excess demand is declining and is coming about through companies reducing the number of vacancies rather than increasing layoffs and unemployment," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. "There is plenty here to make the case that not only is the labour market rebalancing but at this point it is doing so without pushing up unemployment." "With reports like this, the Fed can most likely keep rates unchanged in September," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.

(Source: Reuters)

• U.S. regulators on Tuesday unveiled plans to force regional banks to issue debt and bolster their so-called living wills. This comes as steps meant to protect the public in the event of more failures.
• The steps are part of regulators’ response to the regional banking crisis that flared up in March, ultimately claiming three institutions and damaging the earnings power of many others. In July, the agencies released the first salvo of expected changes, a sweeping set of proposals meant to heighten capital requirements and standardize risk models for the industry.
• The requirements will create “moderately higher funding costs” for regional banks, the agencies acknowledged. That could add to the industry’s earnings pressure after all three major ratings agencies have downgraded the credit ratings of some lenders this year.
• All American banks with at least $100 billion in assets would be subject to the new requirements, which resemble rules that apply to the world’s biggest banks.
• Impacted lenders will have to maintain long-term debt levels equal to 3.5% of average total assets or 6% of risk-weighted assets, whichever is higher, according to a fact sheet released Tuesday.

(Source: CNBC)