• Bank of Canada Governor Tiff Macklem said on Wednesday that there was uncertainty about how quickly inflation would come back down due to the unique nature of the COVID-19 pandemic, which has helped to drive up prices. 
• He reiterated that interest rates would have to start going up this year to tackle inflation, which is currently 4.8%, more than double the central bank's 2.0% target. With labour markets tightening and evidence of capacity pressures increasing, rate rises are essential. 
• The bank said last week the economy no longer needed help to deal with the effects of the COVID-19 pandemic, but kept rates steady at a record low 0.25%. The Governor expressed confidence that inflation will come down, further stating that it will peak at about 5.0% in the first half of 2022 before starting to decrease.

(Source: Reuters)

• Jamaica will see 4.2% real GDP growth in 2022, up from an estimated 4.1% in 2021, as a stronger tourism rebound will drive services exports and private consumption, according to forecasts from Fitch Solutions. 
• It had revised its 2021 estimate from 4.6% previously, as a spike in COVID-19 cases in the summer led to lockdowns that slowed the recovery in tourism, holding total visitor arrivals to only 32.3% of 2019 levels in the year through October. 
• Nevertheless, it is estimated that private consumption saw solid growth, supported by a record spike in remittances to US$3.4Bn (24.6% of GDP) and US$24.0Mn (0.2% of GDP) in stimulus spending from the government CARE programme, which disbursed one-off cash transfers to vulnerable members of the population in the final months of 2021. 
• Going forward, exports are expected to grow by 10.1% in 2022 as declining cases of COVID-19 in key source markets will support tourism inflows to Jamaica, though the pace will slow from an estimated 16.8% in 2021 due to less favourable base effects.

(Source: Fitch Solutions)

• United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) in their annual report reveals that extreme poverty in the region has risen significantly due to the coronavirus pandemic. 
• The health crisis is still ongoing, and Latin America and the Caribbean is the world’s most vulnerable region in this pandemic,” said ECLAC, adding that, as a result of the prolonged health and social crisis stemming from the COVID-19 pandemic, the extreme poverty rate in the region has risen from 13.1% of the population in 2020 to 13.8% in 2021. 
• According to ECLAC, poverty would have been greater in 2020 if regional countries had not implemented measures such as emergency cash transfers. However, despite the economic recovery experienced in 2021, the estimated relative and absolute levels of poverty and extreme poverty have remained above those recorded in 2019, which reflects the ongoing social crisis. 
• The global COVID-19 pandemic has had severe negative impacts on the global economy, especially low income groups. The economic damage on these low income groups will persist as governments struggle to effectively deal with the coronavirus. 

(Source: ECLAC)

• The Dominican Republic Central Bank increased its monetary policy interest rate by 50 basis points, from 4.50% to 5.00% per year. This resulted in the rate of the permanent liquidity expansion facility (1-day Repos) increasing from 5.00% to 5.50% per year and the interest-bearing deposit rate (Overnight) rising from 4.00% to 4.50% per year. 
• This decision is based on an exhaustive evaluation of the behaviour of the world economy, the greater persistence of inflationary pressures and the perspectives of international financial conditions. 
• The country’s price dynamics continue to be affected by external shocks that are more permanent than expected, associated with higher prices for oil and other important raw materials for local production, as well as the increase in the global cost of transporting containers and other disruptions in supply chains. 
• Average consumer prices rose to 7.8% in 2021 from 3.8% in 2020. Therefore, in an attempt to curtail the impact of inflationary pressures on its economy, DomRep has taken a stance similar to that being employed by other regional and international central banks by increasing their policy rate. In a bid to fight the historic surge in inflation, further increases in the policy rates is expected.

(Source: Dominican Republic Central Bank)

• A measure of U.S. manufacturing activity fell to a 14-month low in January amid an outbreak of COVID-19 cases, supporting the view that economic growth lost steam at the start of the year. 
• Institute for Supply Management’s (ISM) index of national factory activity dropped to a reading of 57.6 last month, the lowest since November 2020, from 58.8 in December. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index would drop to 57.5. 
• Makers of chemical products reported massive interruptions to their production due to supplier COVID-19 problems limiting their manufacturing of key raw materials like steel cans and chemicals. Similar sentiments were echoed by their counterparts in the fabricated metal products industry. Transportation equipment manufacturers complained that transportation, labour and inflation issues continue to hamper their supply chain and ability to service their customers and machinery manufacturers said they were constrained by transportation restrictions and a lack of supplier manpower. 
• However, makers of nonmetallic mineral products are seeing light at the end of the tunnel, reporting that the supply chain crunch may be loosening a bit.

(Source: Reuters)

• U.S. job openings rose unexpectedly in December while quits declined slightly, suggesting that labour demand held steady in the month despite a surge in COVID-19 infections and pandemic-related business disruptions. There were 1.7 jobs for every unemployed worker in December. 
• The number of available positions rose to 10.9Mn from an upwardly revised 10.8Mn in November, the Labour Department’s Job Openings and Labour Turnover Survey, or JOLTS, showed Tuesday. The figure exceeded all estimates in a Bloomberg survey of economists. 
• The quits rate was little changed at 2.9% from a record 3% in the prior month, pointing to a high degree of churn in the labour market. 
• The data show that vacancies remained elevated in December, despite temporary business closures at the end of the month due to the spreading omicron variant. While job openings could decline in January, economists expect the impact to be short-lived with employers looking to increase headcount as consumer demand strengthens in the coming months.

(Source: Bloomberg)

• Prime Minister Holness, says over the coming months the Government will be looking to remove more of the measures that have been instituted to contain the coronavirus (COVID-19) transmission. 
• “Barring any extreme change in circumstances, our approach will be to gradually scale back restrictive measures once we get out of the fourth wave that we are now experiencing. We will not keep the measures longer than is necessary,” Mr. Holness said. 
• It is highly speculated that the Omicron variant, which has been the major driver of the surge in COVID-19 cases both internationally and locally will begin to dissipate in the coming weeks, particularly in developed nations. Locally, Chief Medical Officer (CMO), Dr. Jacquiline Bisasor-McKenzie, highlighted earlier this month that Jamaica could reach the peak week of the fourth wave of the coronavirus (COVID-19) by the end of January/early February. 
• Given the Prime Minister’s statements, it is likely that we will see reduced measures leading into the summer period and beyond barring any extreme changes. This push towards a state of pre-pandemic normalcy will incentivize business activity and aid in Jamaica’s economic recovery.

(Sources: JIS and NCBCM Research)

• Caribbean Cement Company Limited (CCCL) announced the execution of the Services and Intellectual Property Agreements on January 21, 2022, with various subsidiaries of CEMEX according to the terms and conditions approved at its Annual General Meeting of Shareholders held on December 7th, 2021. 
• Under these agreements, CCCL and CEMEX have established a general framework for the corporate services provided by CEMEX to CCCL, as well as the payment of royalties for the use of intellectual property owned by CEMEX and licensed by CCCL, for a fee not exceeding 4% of CCCL’s consolidated net sales. 
• During the year 2022, the annual fee applicable to the Agreements will be equal to 2% of the consolidated net sales of CCCL, while the Company continues the process of integrating the CEMEX business models and know-how into its operations.

 (Source: JSE)

• The approval of a deal between Puerto Rico’s government and its bondholders has cleared the path for the territory to exit bankruptcy, which is expected will boost longer-term growth by freeing public funds and increasing investor confidence. 
• Puerto Rico’s reduced debt obligations will allow the government to increase spending in the coming quarters, and eventually allow it to access international capital markets. Greater fiscal flexibility will allow the territory to invest more funds into education and its relatively poor physical infrastructure, which will likely support longer-term growth. 
• The bankruptcy deal will also bolster investor sentiment. The instability of government finances has deterred fixed investment over recent years, as it created doubt about the quality of public services, social stability, and the future direction of fiscal policy, particularly tax levels. Growth is expected to average 0.7% from Fiscal Year (FY) 2022 to FY2031, on the assumption that the debt deal would be approved. 
• However, fiscal pressures may re-emerge in the years ahead, as the deal still commits the government to significant debt and pension repayments. This could force it to make unpopular spending cuts, which could spark public protests that undermine social stability. 
• Significant debt restructuring can meaningfully impact the growth and overall performance of Puerto Rico’s economy. The government’s fiscal discipline is paramount for the country’s growth potential amidst the bankruptcy concern.

 (Source: Fitch Solutions)

• Guyana is forecasted to achieve a Real Gross Domestic Product (GDP) of 47.5% this year; no other country in the world is currently projected to achieve this rate of growth in 2022. 
• The nation’s non-oil economy is expected to continue registering strong growth, currently projected at 7.7% this year, driven mainly by rebounds in rice production, gold mining, and continued expansion in construction activity and wholesale and retail trade and repairs. 
• Finance Minister, Dr. Ashni explained that real GDP is estimated to have grown by 19.9%, while non-oil GDP is estimated to have grown by 4.6% in 2021, despite the persistence of COVID19 as well as the impact of the floods. Given the current rate of overall growth, Guyana is likely to be amongst the three fastest-growing economies worldwide in 2022. 
• As a new oil and gas producer and the country with the 17th largest oil reserves in the world to date, the Finance Minister said the oil and gas sector promises to be the driver of historically high levels of growth in the Guyanese economy with strong positive spillover into the non-oil economy.

 (Source: Kaieteur News)