• Panamanian real GDP growth is expected to slow to 4.2% in 2023 after an estimated 7.0% expansion in 2022. While growth will hold up in the country in the early part of the year due to strong demand for canal-related services and a booming construction sector, these tailwinds will begin to fade later this year as global economic activity continues to cool. Growth will also be lower in 2023 due to less favourable base effects, a weakening outlook for the tourism sector, and possible disruptions in the copper industry.
• Private consumption’s contribution to overall GDP is anticipated to be 2.3 percentage points (pp) in 2023, down from 3.8pp in 2022. Still, it is expected that private consumption will remain upbeat as Panama is a dollarized economy, which, combined with government subsidies on vital goods, has helped inflation remain low relative to other economies in the region.
• Importantly, according to the World Tourism Council, arrivals to Panama fell in Q3 2022 compared to the same period in 2019, the first quarterly decrease since the start of the pandemic. However, Fitch still expects services related to the Panama Canal to remain robust. 
• Risks to growth are weighted to the downside. Panama’s dispute with First Quantum Minerals is bound to impact exports, but if the dispute is not resolved soon, production and exports will be severely hampered for a much longer period.
• Additionally, the Agency remains concerned that a downturn in the US and other key tourism markets that is more severe than currently forecasted will adversely affect growth in H2 2023, lowering service exports further and also weighing on employment and private consumption.

(Source: Fitch Solutions)

• U.S. Treasury Secretary Janet Yellen activated another extraordinary cash management measure on Tuesday to avoid breaching the federal debt limit, suspending daily reinvestments in a large government retirement fund that holds Treasury debt, the department said.
• In a letter notifying Congress of the move to access the Government Securities Investment Fund (G Fund), Yellen did not alter a projected early June deadline for when the Treasury may no longer be able to pay the nation's bills without an increase in the $31.4 trillion statutory borrowing limit.
• The G-Fund manoeuvre is one of the largest tools the Treasury can employ to reclaim borrowing capacity under the debt ceiling. Yellen last week suspended reinvestments in two other retirement and health benefit funds as the government nominally reached the debt ceiling.
• Normally the money market-like retirement fund reinvests its entire balance daily into special-issue Treasury securities that count against the debt limit. Halting the reinvestments allows more normal Treasury bills, notes, and bonds to be issued.
• But the Treasury is required by law to replenish the fund and any lost earnings once a debt limit impasse ends. Federal retirees and employees would be unaffected by this action. "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," Yellen wrote, repeating a regular line in her letters to lawmakers.

(Source: Reuters)

• The Bank of Canada on Wednesday hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank fighting global inflation to say it would likely hold off on further increases for now.
• The 25-basis-point rise matched analysts' expectations. The bank has lifted rates at a record pace of 425 basis points in 10 months to tame inflation, which peaked at 8.1% and slowed to 6.3% in December, still more than three times the 2% target.
• "We are turning the corner on inflation," Bank of Canada Governor Tiff Macklem told reporters. "We are still a long way from our target, but recent developments have reinforced our confidence that inflation is coming down."
• Canada's approach has until now matched that of the U.S. Federal Reserve, which ratcheted up its own target policy rate by 4.25 percentage points over the last year. The Fed is set to slow the pace of its hikes at a Jan. 31-Feb. 1 policy meeting and signal its battle against inflation is far from over.

(Source: Reuters)

• Knutsford Express Services Limited (KEX) Limited recorded a net profit of $58.8Mn for the second quarter that ended November 30, 2022. This represents a 2665.9% increase in profitability when compared to the $2.1Mn recorded over a similar period in 2021.
• This added to the positive Q1 results influencing a 965.5% increase in the bottom line for the first six months.
• Revenue for the quarter was up by 65.4% yoy to $398Mn. Similarly, the YTD showed a 71.8% increase in revenues for the company. This was driven by increased local and international travel, and its courier services. Additionally, one of its key initiatives, The Knutsford Centre in Drax Hall is now creating rental income to supplement its core business.
• Despite a 38.3% increase in administrative expenses for H1 - owing to the strong revenues - operating profit skyrocketed to $187.57Mn from $20.87Mn, representing a 798.6% increase.
• KEX’s stock price has increased by 40.5% since the start of the calendar year. The stock closed Monday’s trading session at $12.49 and currently trades at a P/E of 25.5x which is above the Junior Market Other Sector Average of 21.6x.
• Given further improvements in tourism that are expected this year, we expect that the company should continue experiencing improved top and bottom-line growth in the coming quarters. However, one risk to the outlook is the possibility of a global recession that could depress travel and weigh on the company’s performance in the near term.

(Sources: JSE and NCBCM Research)

• Inflation in Peru will likely end January at a rate between 8.8% and 8.9% on an annual basis, the country's minister of economy said on Monday, as protests and road blockades push up food prices.
• However, he expects the impact to be temporary due to economic stimulus measures the government is proposing for regions roiled by protests.
• Peru has been embroiled in political turmoil since December, with anti-government protests blocking roads and clashes with security forces leading to the death of dozens of people. In December, Peru registered monthly inflation at 0.79%, ending the year at 8.46%, the highest annual measurement in the last 26 years.
• Despite the high rate in January, the country's central bank expects a decreasing trend in year-on-year inflation in March, and a return to the inflation target range of between 1% and 3% by the end of 2023.

(Source: Reuters)

• A new partnership among Trinidad and Tobago (T&T), Guyana, and the other gas-producing nations in the southern Caribbean region could help meet the region’s energy needs, the Twin Island’s Energy Minister Stuart Young said on Monday.
• According to the Minister, proven reserves offshore Guyana and Suriname, coupled with possible finds offshore Barbados and Grenada, can be integrated into Trinidad’s existing gas production. Young also noted that T&T has been involved in natural gas production for years- making it the most experienced player in the Caribbean.
• Guyana, Suriname, and Brazil are already working towards the development of an energy corridor, while Guyana and Suriname - part of the prolific Guiana basin - are expected to pool natural gas resources.
• The Guyanese President, Dr. Irfaan Ali, reasoned these efforts are not only meant to harness newfound resources but are also being pursued to counter the high prices and fuel shortages experienced during the COVID-19 pandemic and the Ukraine/Russia crisis.
• The president stood by his position that the developing Caribbean nations should be allowed to exploit their oil and gas resources even as much of the globe clamours for less fossil fuel usage.

(Source: Newsroom)

• A key barometer for the health of the economy continues to flash a recession warning sign, indicating a downturn is in store for the US in the near future. A growing number of business leaders agree the US economy is getting worse.
• America is not in an official recession but the Conference Board’s Leading Economic Index declined for the 10th consecutive month, falling in December by 1% to 110.5, according to a report released Monday by the business think tank. Economists were expecting a decline of 0.7%, according to Refinitiv. On average, the index peaks about a year ahead of a recession, according to the Conference Board. The index appears to have peaked in February 2022, the Conference Board noted.
• “There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labour markets, manufacturing, housing construction, and financial markets in the months ahead,” Ataman Ozyildirim, the Conference Board’s senior director of economics, said in a statement. Seven of the index’s 10 components declined in December, and the trajectory of the Leading Economic Index (LEI) continues to signal a recession, according to the report.
• US economic activity has shown signs of slowing in recent months as the Federal Reserve has been raising the interest rate to bring down inflation. Fed officials say they’re seeing progress on inflation but that restrictive monetary policy — and future hikes — will continue to occur.
• The next two-day meeting for the Fed’s rate-setting committee starts January 31. Expectations are for the central bank to raise rates by a quarter point, according to the CME FedWatch tool.

(Source: CNN)

• The possibility of a big COVID-19 rebound in China over the next two or three months is remote, as 80% of people have been infected. The mass movement of people during the ongoing Lunar New Year holiday period may spread the pandemic, boosting infections in some areas. Still, a second COVID wave is unlikely in the near term, Wu Zunyou, chief epidemiologist at the China Center for Disease Control and Prevention, said on the Weibo social media platform.
• Hundreds of millions of Chinese are travelling across the country for holiday reunions that had been suspended under recently eased COVID curbs, raising fears of fresh outbreaks in rural areas less equipped to manage large outbreaks.
• China has passed the peak of COVID patients in fever clinics, emergency rooms and with critical conditions, a National Health Commission official said on Thursday, January 19. Nearly 60,000 people with COVID had died in hospitals as of Jan. 12, roughly a month after China abruptly dismantled its zero-COVID policy, according to government data.
• However, some experts said that figure probably vastly undercounts the full impact, as it excludes those who die at home, and because many doctors have said they are discouraged from citing COVID as a cause of death.

(Source: Reuters)

• Jamaica’s tourism sector continues to rebound strongly from the COVID-19 pandemic-induced economic fallout, generating earnings of US$3.64 billion in 2022. Tourism Minister, Hon. Edmund Bartlett made this disclosure during Tuesday’s (January 10) sitting of the House of Representatives.
• “We ended the year equalling our record-breaking earnings from tourism of US$3.64 billion, and the [2022/23] fiscal year, which I will report on when we make our [2023/24] budget presentation, is going to show US$4.2 billion earnings in tourism, which would be US$500 million more than 2019, which is the best year in our history,” Mr. Bartlett said.
• He highlighted that the 2022/23 winter season has, so far, “started with a bang,” with January’s figures, to date, showing a 463% increase over last year and 29 percentage points growth over 2019.
• As tourism continues to drive Jamaica’s recovery, the improvements in the sector are anticipated to continue positively contributing to both economic growth and job creation in 2023.

(Source: JIS news)

• Jamaica's Net International Reserves (NIR) increased in December. At the end of the month, the NIR was US$3.98 billion.
• This was $128.1 million higher than November’s reserves of $3.85 billion. The reserves at the end of December could cover up to 25 weeks of goods and services imports.
• The concept of Net International Reserves (NIR) is widely used as an indicator of a country’s external vulnerability. It is defined as the difference between reserve assets and reserve liabilities with reserve assets being readily available claims on nonresidents denominated in foreign convertible currencies and reserve liabilities being all foreign exchange liabilities to residents and non-residents.
• With a global recession being anticipated, an improvement in the NIR puts the country in a better position to withstand adverse exogenous shocks. Moreover, the government is also better positioned to service debt-related obligations should adverse economic conditions arise.

(Source: RJR News)