• Peru's finance ministry on Thursday unveiled an economic package it says can help lift the economy at times of a global slowdown and falling copper prices, which are key to the country's economy.
• Finance Minister Kurt Burneo said the measures could boost gross domestic product growth by 0.6% this year and by 0.8% in 2023.
• The announcement comes just weeks after Peru's finance ministry announced economic growth projections that exceeded analysts’ consensus. The ministry expects GDP growth of 3.3% this year, while analysts polled by Refinitiv forecast 2.6%. While the sovereign is expected to grow, economic and fiscal performance will be impacted by the fall in copper prices.  Peru is the world's Number 2 copper producer and falling prices of the red metal are hitting tax coffers after record revenue in 2021.
• The cost of the incentive package, much of which still needs to be approved by Congress, totals 3 billion soles, Burneo said. The package includes incentives for private investors, including in mining exploration, as well as heavier public spending.
• Peruvian President Pedro Castillo came to office last year with a far-left platform that spooked investors and sent the country's sol currency to record lows. However, he has since moderated his stance and picked moderates for the key finance ministry in a bid to maintain trust with investors.

(Source: Reuters)

• Oil producers in Guyana are boosting exports to European buyers seeking alternatives to Russian crude, according to vessel monitoring data.
• Government bans on Russian oil since the invasion of Ukraine have spurred demand for alternative crudes, and Guyanese oil fits refiners from Britain to Italy better than rival Latin American grades do.
• So far this year, 49% of Guyana's total oil exports have headed for Europe, up from 16% in 2021. Cargoes to Europe averaged 110,000 bpd from January through early September, according to Refinitiv Eikon tanker tracking data, more than the entire daily volume shipped to all destinations in 2021.
• On Thursday, Hess CEO John Hess told investors that Guyana wants "to move forward as expeditiously as possible." A development plan for the consortium's fifth project, Uaru, will be submitted for government approval later this year, he said.
• Guyana is now producing two crudes: a medium to light sweet oil called Liza, and an even lighter grade called Unity Gold. By 2027, the Exxon-led consortium, which only in 2019 inaugurated output, expects to pump 1.2Mn bpd. Guyana is expected to schedule an auction of oil and gas soon.
• The increased demand for the country’s oil will continue to benefit the country’s revenue stream and contribute to overall economic growth.

(Source: Reuters)

• Inflation in Canada is increasingly broad-based and risks are becoming entrenched, a senior Bank of Canada official said on Thursday, warning of "bumps along the way" in the fight against raging price increases.
• Senior Deputy Governor Carolyn Rogers, speaking the day after the central bank increased its policy rate to a 14-year high of 3.25%, said Governing Council had discussed "the ongoing risk that inflation becomes entrenched" ahead of its decision. "The Canadian economy continues to operate in excess demand, despite the recent pullback in housing, and inflationary pressures are increasingly broad-based," Rogers said.
• She reiterated interest rates needed to rise further without specifying how many more increases were to come. "Getting inflation back to 2% will take some time. We also know there could be bumps along the way," she told a business audience in Calgary, Alberta.

(Source: Reuters)

• Companies with the highest credit ratings in the world are engaged in a now-or-never US dollar bond issuance spree to get ahead of a continued spike in borrowing costs and as liquidity in the market is expected to dwindle in the next few months.
• The first working day after a long holiday weekend (Labour Day) saw 19 investment-grade rated companies raise $35.35Bn, the most to price in a single day this year, according to IFR/Refinitiv.
• The 44 tranches of bonds sold by the 19 companies on Tuesday were also the most ever priced in a single day, beating a previous record of 39 tranches sold on September 3, 2019, according to Informa Global Markets data. On Wednesday, seven more companies raised $11.25Bn.
• Liquidity in bond markets has been patchy in recent months as investors cut back on debt investments that were sensitive to rising interest rates as a result of a hawkish stance by the Federal Reserve to combat runaway inflation.
• Year-to-date returns on investment-grade bond investments are down 15.2%, alongside a rise in U.S. Treasury yields as interest rates have risen and economic growth slowed.
• Companies are trying to get ahead of what they expect to be a tough road ahead in terms of borrowing costs. Already, the year-to-date 2022 new issue coupon levels for investment-grade companies have risen to 4%, the highest level since 2018, according to a CreditSights research note.

(Source: Reuters)

• Victoria Mutual (VM) Pensions Management Limited has partnered with the Jamaica Manufacturers and Exporters Association (JMEA) to provide special pension solutions to JMEA member companies and their employees.
• The offer includes an approved retirement scheme portfolio – the Jamaica Manufacturers and Exporters Retirement Account (JMEARA), specifically tailored for JMEA members.
• This portfolio comprises a balanced allocation of Jamaican and US dollar-denoted equities and fixed-income securities, as well as real estate. The partnership also seeks to address the critical needs of member companies and their employees relating to capital, loans, investments, insurance, and savings, through a bundled offer from across VM Support Business Units.
• Consequently, this new partnership is expected to bring added business activity to the VM Group, which is expected to support its earnings growth in the coming quarters.

(Source: JSE)

• Household spending in Jamaica will remain, by far, the largest component of economic activity, on the back of high remittance inflows and rising employment. Fitch forecasts that annual growth will average 1.8% from 2022 to 2031, and relatively weak investment will ensure that private consumption makes up a greater part of the economy.
• In the short term, consumption growth will be limited by higher inflation rates. However, social spending programmes and tax reductions for lower-income households will bolster disposable incomes.
• As the Jamaican government continues to exercise fiscal constraints to reduce debt, Fitch expects that government consumption as a percentage of GDP will decline moderately over the next decade. Government consumption as a percentage of GDP already fell from 16.3% in 2012 to 13.6% in 2019, with further plans to reduce government outlays.

(Source: Fitch Solutions)

• President of the Caribbean Manufacturers Association (CMA), John Robin, is urging increased intra-regional trade to combat the global environment which is affecting the regional manufacturing sector.
• The president noted that “as it is right now in the Caribbean what we are seeking to do is promote OECS (Organisation of Eastern Caribbean States) and intra-CARICOM trade”
• According to the President, this would mean “more trading, more selling of our goods into our islands than into North America and Europe where the conditions are more stringent and where we can learn in our local jurisdiction, and after we have learned, we can put in place resources then we can move into the more complex economies.”
• Robin also noted that there are major challenges as it relates to supply chain logistics. He explained that “a lot of the shipping has become very expensive, and the cost has gone right up every time you import an item, it is much more expensive so as a result, you have to adjust your costs.”
• Nevertheless, the CMA intends to work together, not as Dominica, but as OECS and as CARICOM to bring a harmonized approach in terms of procurements and how to purchase in bulk, to bring cost-reduction benefits to manufacturers.

(Source: Caribbean News Weekly)

• Barbados and other Caribbean Community (CARICOM) member states are being warned by Secretary General of the CARICOM Secretariat, Dr Carla Barnett, of the need to adapt new corporation tax rules to protect their tax base in light of new global changes.
• Barnett said the time had come for the region to review its double taxation regime and prepare to put new corporation tax rules in place in light of the changing global requirements.
• The intra-CARICOM double taxation agreement which predated the revised treaty has been deemed to be non-compliant with member states' commitments concerning the global tax governance agenda which now emphasises the exchange of tax information and tax reform to prevent evasion and avoidance, especially given the challenges emanating from the digitalisation of the global economy.
• That said, Barbados and other CARICOM member states are facing the possibility of the Organisation for Economic Cooperation and Development’s (OECD) two-pillar tax rule, which is being touted as a solution to address tax challenges arising from the digitalisation of economies. Pillar two proposes a 15% minimum global tax rate by 2023.
• Barnett also outlined several areas where she said work was progressing including the development of a regional regulatory framework to make the region a single economic space, a regional reporting system, air and maritime transport, and the free movement process, which she said has already resulted in the removal of hundreds of restrictions on the movement of goods across the region.

(Source: Barbados Today)

• The European Central Bank has raised interest rates by 75 basis points to tackle record inflation, despite fears that the eurozone is already heading into recession because of soaring energy prices. The move, which matches the ECB’s previous biggest increase in borrowing costs, lifts the bank’s benchmark deposit rate from zero to 0.75 per cent — the highest level since 2011.
• It is the second consecutive increase in borrowing costs by the ECB, which raised rates in July for the first time in more than a decade. The rise comes in spite of mounting fears that the currency area will fall into recession in the coming months as surging energy prices — largely the result of Russia’s throttling of key European gas supplies — hit businesses and households throughout the region.
• However, eurozone inflation hit a new high of 9.1 per cent in the year to August, well above the ECB’s 2 per cent target, while the jobless rate fell to a record low of 6.6 per cent in July. The euro also dropped to a 20-year low against the dollar, raising the price of imports, while growth rose by an unexpectedly strong 0.8 per cent in the second quarter. 
• Such developments bolstered the case for the ECB to take more aggressive action to rein in inflation, even if it costs jobs and growth. The last time the ECB raised rates by 0.75 percentage points was a three-week technical adjustment to smooth the euro’s launch in January 1999.
• The ECB said its main refinancing rate for bank liquidity would increase from 0.5 per cent to 1.25 per cent. The rate on its marginal lending facility for overnight loans to banks would rise from 0.75 per cent to 1.5 per cent.

(Source: Financial Times)

• Traders are now seeing a near certainty that the Federal Reserve enacts its third consecutive 0.75 percentage point interest rate increase when it meets later this month. The probability of a three-quarter point hike moved to 82% on Wednesday morning, according to the CME Group’s FedWatch tracker of fed funds futures bets.
• That follows a series of positive economic data and statements from Fed officials indicating that tight policy is likely to persist well into the future. In a pivotal speech on August 26, Fed Chairman Jerome Powell warned that increases will proceed and higher rates likely will stay in place.
• Even as traders ramped up their bets on Fed tightening, stocks were higher shortly after the market opened. A Wall Street Journal report noting the likelihood of a 0.75 percentage point increase coincided with traders pricing in the more aggressive move, and stock futures momentarily slipped.
• “In June a 75 basis point rate hike from the Federal Reserve was seen as a surprising acceleration from the 50bp and 25bp delivered at the two previous meetings. Less than three months later, 75bp has become something of a global norm with both the European Central Bank and Bank of Canada set to raise rates by 75bp,” Citigroup economist Andrew Hollenhorst said in a client note Wednesday.
• “These ‘expeditious’ rate hikes come from a similar logic — in economies where inflation is running well above target, there is little argument against at least returning policy rates and financial conditions to a ‘neutral’ setting if not moving into restrictive territory,” he added.

(Source: CNBC)