• The Barbados government is already seeking to put measures in place to cushion any likely fallout from the war that has broken out in Ukraine with Russia, which could have implications for the cost of fuel and food, the supply of food and result in disruptions in the supply chain globally. 
• Prime Minister Mottley noted that hat Barbados’ reserves stood at over $3 billion, representing about 37 weeks of import cover, giving the country adequate buffers to deal with increased prices at least for a period. 
• Currently, the country has embarked on efforts undertaken by the Ministry of Agriculture, Food and Nutritional Security to boost food production in the country to ensure Barbados is in a better position to feed its citizens amidst the crisis which had led to increases in food prices. 
• The Russia-Ukraine conflict is expected to have adverse effects on the local economy through higher inflation and surges in oil and prices of other commodities such as wheat and corn. This will inadvertently, lead to higher electricity and gas prices for both consumers and producers alike.

 (Source: Barbados Today)

• Chief Executive Officer (CEO) of the Guyana Sugar Corporation (GuySuCo), Sasenarine Singh revealed that the government is planning to build a new packaging plant at Albion along with the expansion of one at Blairmont for 2022. 
• The project is aimed at Guyana being able to sell sugar at a higher value and to ensure the country has enough capacity to produce packaged sugar products to meet the demands of the new international market. 
• The government has already made headway in opening new markets with GuySuCo successfully opening markets in Jamaica and Grenada. The company was also able to secure sugar sales for the first time to Germany. This new venture will lead to an increase in government revenues, exports, expansion of the sugar sector and overall economic growth.  

(Source: Kaieteur News)

• The United States on Monday imposed sanctions on Russia's central bank and other sources of wealth, dealing a crushing blow to the country's economy and further punishing Moscow over its invasion of Ukraine. 
• The measures, blocking Americans from engaging in any transactions involving Russia's central bank, finance ministry or national wealth fund, are likely to push Russian inflation higher, cripple its purchasing power and drive down investments, U.S. officials said on Monday as the new measures took effect. 
• The actions included a carve-out for energy payments. Last week Washington imposed several rounds of sanctions, including against Russian President Vladimir Putin and major banks, after Russia's forces invaded Ukraine in the biggest assault on a European state since World War Two. 
• A senior U.S. administration official has said that their objective is to make sure that the Russian economy goes backwards if President Putin decides to continue to go forward with an invasion in Ukraine and that they have the tools to continue to do that. 
• Washington and its allies said on Saturday they would take action against the central bank and bar some of Russia's banks from the SWIFT international payments system, a list officials said was still being finalized with EU partners. Russia's central bank more than doubled its key policy rate on Monday and introduced some capital controls, but its governor said sanctions had stopped it from selling foreign currency to prop up the rouble.

(Source: Reuters)

• Russia has closed its airspace to airlines from 36 countries, including all 27 members of the European Union, in response to Ukraine-related sanctions targeting its aviation sector. 
• Some of the banned countries had already been identified, while others were named by the aviation authority Rosaviatsia for the first time on Monday, following the punitive measures imposed over Russia's invasion of Ukraine. 
• The flight bans are expected to hurt airlines that fly over the world's biggest country to get from Europe to Asia. They are likely to force them to find new routes.  Rosaviatsia has said that flights from those countries could in exceptional circumstances be authorised if they secure special clearance from Russia's aviation authority or foreign ministry.

(Source: Reuters)

• Fitch Solutions expects political risk in Jamaica to remain elevated in 2022, offering potential headwinds to Jamaica’s economic recovery. Fitch has adjusted down the country’s score in its Short-Term Political Risk Index (STPRI) from 72.3 to 71.7, to reflect increasing inflation and elevated levels of violent crime, which it believes the government has few tools to address. 
• While the country’s STPRI score is still buoyed to a certain extent by an easy policymaking environment, with the ruling the Jamaican Labour Party (JLP) benefitting from a sizeable majority in the House of Representatives, the downward adjustment places the country 14th out of 23 countries in the Caribbean region. 
• Elevated inflation will weigh on sentiment and increase the risk of popular unrest. Inflation has continued to climb in recent months, reaching 9.1% y-o-y (0.8% m-o-m) as of end-2021, while utility prices rose 12.6%, dampening households’ ability to pay for necessities such as food, transportation and utilities like electricity and water. 
• In response to the high prices, the President of the Transport Operators Development Sustainable Services, Egerton Newman, announced on February 2 that his organisation of private transportation operators are ready to take to the streets in protest of spiralling fuel prices if the government does not act. 
• While Fitch expects that inflation will ease in H222, price growth will remain elevated by historic standards this year. Inflation is expected to average 6.0% in 2022 compared to 5.8% in 2021 and 3.6% in the five years before the Covid-19 crisis. This is likely to weigh on household sentiment, even as unemployment falls and remittances remain fairly robust.

(Source: Fitch Solutions)

• Fitch forecasts that Peruvian real GDP growth will slow to 3.1% in 2022, from 13.3% in 2021, due to weaker domestic demand. In 2021, Peru was the fastest-growing among Latin America’s large economies as real GDP exceeded 2019 levels in every expenditure component except for exports. In Q4 2021, the economy grew 3.2% y-o-y. 
• Stringent lockdown measures in 2020 depressed private consumption and headline growth, but household incomes and spending surged in 2021 as the government maintained stimulus measures, a steady vaccination campaign allowed policymakers to loosen restrictions and Peruvians felt more confident in the broader recovery. 
• In 2022, private consumption is expected to be the main driver of growth; however, Fitch expects it will increase 3.3% this year, down from an 11.7% expansion in 2021. Notably, the country’s growth forecast was also revised down by the agency, from 3.6% previously. The revision is a result of elevated inflation and rising borrowing costs for households and businesses causing private consumption and investment growth to weaken over the coming quarters. 
• Growth will average 3.2% from 2023-2026 amid sustained private consumption and export growth, several downside risks to Fitch’s growth forecasts stems from the Russia-Ukraine hostilities and the potential for Chinese growth to underperform.

 (Source: Fitch Solutions)

• At the end of 2021, Grenada’s public debt increased by EC$113.2Mn. This 5.7% increase moved the debt from EC$1,988.5Mn to EC$2,101.6Mn. 
• New borrowing as a result of the Covid-19 pandemic, oversubscriptions allowed on the Regional Governments’ Securities Market (RGSM), disbursements on new and existing loans and a new Government- guaranteed loan contracted by a State-owned enterprise were the main drivers of the increase. 
• By the end of 2021, the total stock of debt was 70.6% of Gross Domestic Product, which comprised of the Central Government’s external and domestic debt and to a lesser extent domestic Government- guaranteed debt. External and domestic debts were 77.9% and 22.1% respectively of total public debt, at the end of 2021. 
• As a small open economy, Grenada’s economic recovery is dependent on a strong recovery of the tourism industry, timely and sufficient debt relief measures and growth inducement strategies.

 (Source: Grenada NOW & NCBCM Research)

• The Investors piled into U.S. government debt on Thursday, pushing Treasury yields sharply lower after Russia invaded Ukraine in the biggest attack by one country against another in Europe since World War Two. 
• Ukraine reported columns of troops pouring across its borders from Russia and Belarus, and landing on its coast from the Black and Azov seas, as missiles rained down on Ukrainian cities. World stock markets fell as the news pushed investors into safe havens such as U.S. Treasuries and gold. The U.S. dollar strengthened more than 1% and oil prices jumped more than 7%. 
• The yield on 10-year Treasury notes fell 8.1 basis points to 1.896% after earlier touching 1.846%. The benchmark note had been on track for its biggest daily drop since late November. A closely watched part of the yield curve measuring the gap between yields on two- and 10-year Treasuries, seen as an indicator of economic expectations, was at 40.4 basis points.

(Source: Reuters)

• The number of Americans filing new claims for unemployment benefits fell slightly more than expected last week, indicating that the labour market recovery was gaining traction. 
• The weekly jobless claims report from the Labour Department on Thursday also showed unemployment rolls shrinking to levels last seen in 1970, underscoring the tightening labour market conditions. There is an acute shortage of workers, with a near-record number of job openings, keeping layoffs minimal. 
• Rubeela Farooqi, chief U.S. economist at High-Frequency Economics in White Plains, New York said that beyond weekly moves, they see the downtrend in filings persisting as virus-related disruptions continue to dissipate and businesses return to more normal operations. Overall, strong demand for labour, amid labour shortages, suggest layoffs will remain low. 
• Initial claims for state unemployment benefits decreased 17,000 to a seasonally adjusted 232,000 for the week ended Feb. 19. That almost revised the prior week's surge, which economists had blamed on week-to-week volatility in the data and the delayed impact of winter storms early in the month. 
• Unadjusted claims tumbled 24,824 to 214,873 last week, led by a sharp decline in Missouri. There were also significant decreases in filings in New York, Ohio, Tennessee, Florida and New Jersey. That offset a large increase in Michigan. With 10.9Mn job openings at the end of December, claims are likely to fall back below 200,000 in the coming weeks. They were last below this level in early December.

(Source: Reuters)

• Cabinet has approved a 28.5% increase in the national minimum wage, effective April 1, 2022. Minister of Labour and Social Security, Hon. Karl Samuda, says this will see the rate moving from $7,000 to $9,000 per 40-hour workweek. The minimum wage for industrial security guards will move from $9,700 to $10,500 per 40-hour workweek, along with accompanying allowances. 
• Jamaica’s economic recovery has been a major contributing factor to the minimum wage increase. Minister Samuda highlighted that the minimum wage could see a further increase however that would depend on the pace at which the Jamaican market recovers. 
• Given the pace of inflation, raising the minimum wage is important to ensure that minimum wage earners can maintain a basic standard of living by providing a more appropriate income level to cope with the increased cost of living. However, the increase will likely result in higher operating expenses for companies, which could in turn raise prices of goods and services to cover increased labour costs. This could further fuel inflation.

(Sources: JIS and NCBCM Research)