• British employers hired a record number of staff last month and labour shortages deepened - increasing the chance that the Bank of England will raise interest rates again next month - but pay was squeezed by rapidly rising inflation. Tuesday’s data suggests the surge in cases of the Omicron variant of coronavirus in December did little to dent the resilience of Britain’s job market. 
• The figures are also unlikely to ease the BoE’s concern that a rising inflation tide will be slow to ebb. Concerns about possible labour shortages and pay pressures over the medium term was a major reason why the BoE raised interest rates last month for the first time since the start of the pandemic. 
• Financial markets see an 85% chance that the BoE will raise rates again on Feb. 3 after its next meeting, and 10-year government borrowing costs rose to a three-month high after the data release. 
• Employers added a record 184,000 staff to their payrolls in December, while the headline unemployment rate for the three months to November - which includes both self-employed and employed workers - dropped to 4.1%, its lowest since June 2020. That being said, some economists had doubts about the payrolls data, which often see big downward revisions. November’s record reading of 257,000 was revised to 162,000 new hires on Tuesday.

(Source: Reuters)

• Consumer Prices rose by 0.8% in December 2021 according to Monday’s release from the Statistical Institute of Jamaica. A 4.7% increase in the index for the Housing, Water, Electricity, Gas and Other Fuels division due to higher rates for electricity was the main driver. In fact, Electricity, Gas and Other Fuels rose by 11.9%. 
• The point-to-point inflation rate for the period December 2020 – December 2021, was 7.3%, down from 7.8% in November. This was mainly influenced by increases in Food and Non-Alcoholic Beverages (4.9%), Housing, Water, Electricity, Gas and Other Fuels (11.7%), and Transport (13.9%). 
• For the fiscal year-to-date, the rate of inflation was 8.6%, while the inflation for the 2021 calendar year was 9.1%, significantly higher than the 5.2% increase in consumer prices in 2020. 
• Given that the inflation outturn continues to exceed the Bank of Jamaica’s 4.00% - 6.00% inflation rate target, we anticipate further rate increases in the coming months as the BOJ attempts to guide the inflation rate back within the target range and to manage inflation expectations.

(Sources: Statin and NCBCM Research)

• Following a record financial year, where SRF unlocked J$1.81Bn in net profits from its real estate investment assets, the Company generated a net loss of J$99.95Mn for Q1 FY 2021-22 (three months ending November 2021) versus net profits of $25.24Mn in Q1 FY 2020-21. 
• Negative net investment income of J$87.35Mn (J$32.86Mn in 2021), a decline in fair value gains on financial instruments and net foreign exchange losses of J$23.46Mn (relative to gains of J$43.20Mn in Q1 FY 2021-2021) were the main drivers of the drop in earnings. 
• This was further exacerbated by a 52.4% increase in interest expenses to J$37.56Mn and a 159.9% rise in total operating expenses to J$87.35Mn in Q1 FY 2021-22. 
• SRF remains focused on executing its strategy of unlocking value in real estate assets, using flexible capital to increase shareholder value. The company recently announced that it had secured financing for and had begun construction of the J$3.70Bn 9 storey One Belmont commercial tower on Belmont Road. It also increased its investments to income earning real estate investment notes (“REINs”) to J$1.58Bn, from J$941.76Mn, purchased an investment property at 26 Seaview Avenue, Kingston 10 and advanced the process to unlock value for its strategic beachfront investment property in Mammee Bay, St Ann. These investments should support an improvement in the company’s bottom-line over time.

(Sources: Company Financials & NCBCM Research)

• At the December 22, 2021, meeting of the European Commission College of Commissioners, the Commission concluded that “The Bahamas had addressed the strategic deficiencies previously identified in its AML/CFT regime”. The country has made significant steps to tackle uncertainties surrounding money laundering and terrorism financing. Accordingly, the Commission decided to remove the sovereign from the EU’s AML Blacklist. 
• This favorable outcome after many months of engagement is a welcomed one, and comes almost 12 months after the Financial Action Task Force (FATF) delisted The Bahamas on the 18th of December 2020 from its List of Jurisdictions Under Increased Monitoring (FATF’s Grey List). 
• This action by the FATF will cause banks and other financial and tax firms to scrutinize less closely their clients who have dealings or investments, with or in The Bahamas as the country now poses less threats to the financial system of the European Union. This new development should also allow the country to attract new foreign direct investment. 
• The Bahamas will continue to work with the European Union and all international partners as it seeks to maintain its AML/CFT/CFP regime on par with international agreed measures, which safeguard the global financial system.

(Sources: Eye Witness News & NCBCM Research)

• The monthly economic activity prints in Brazil, Colombia and Peru will be closely monitored over the next week to gauge the pace of the cooling in economic activity in the months ahead, says Fitch. 
• Throughout 2021, Peru and Colombia have posted strong recoveries from the COVID-19 shock, due to elevated consumption spending, which has driven retail sales and looser public health restrictions which has supported growth of manufacturing and industrial production. These factors contributed to monthly economic activity growth rates of 4.6% and 9.3% in October, for Peru and Colombia, respectively. 
• However, Peru’s September monthly economic activity grew 9.7%, signaling that the economy has entered a period of cooling for the month of October following strong growth. Brazil has also seen its economic activity decelerate, as elevated inflation and reduced stimulus measures have diminished purchasing power. 
• In the final economic activity prints of 2021, and into 2022, Fitch expects economic growth to cool across the region. This will be driven by base effects becoming less favourable, supply chain bottlenecks slowing production levels, high inflation and rising interest rates both at home and abroad. Overall, growth is expected to return closer to pre-pandemic trend levels in Latin America and much of the world in 2022.

(Source: Fitch Solutions)

• China’s economy rebounded in 2021 with its best growth in a decade, helped by robust exports, but there are signs that momentum is slowing on weakening consumption and a property downturn, pointing to the need for more policy support. 
• Notably, in a stark policy divergence with other major economies, China’s central bank cut its key interest rate for the first time since April 2020 to help bolster an economy that has lost momentum because of a property slump and repeated virus outbreaks. 
• The People’s Bank of China (PBOC) said it was lowering the interest rate on 700 Bn yuan ($110.19 Bn) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95%. 
• The rate cut is part of Beijing’s efforts to put a floor under growth in a crucial year of leadership transition for the world’s second-largest economy. The biggest challenges to meeting that goal are sporadic outbreaks of the more-infectious Omicron coronavirus variant, and continued falls in property sales reducing housing investment. 
• While inflation is the dominant concern for central bankers in the U.S. and Europe, China’s relatively stable prices mean policy makers have shifted to boosting growth. Official data Monday showed gross domestic product rose 4% last quarter from a year earlier, the weakest since early 2020.

(Sources: Bloomberg & Reuters)

• The global job market will take longer to recover than previously thought, with unemployment set to remain above pre-COVID-19 levels until at least 2023 due to uncertainty about the pandemic's course and duration, the International Labour Organization said in a report on Monday. 
• The U.N. agency estimates the equivalent of around 52 million fewer jobs in 2022 versus pre-COVID levels, which amounts to about double its previous estimate from June 2021. Disruptions are set to continue into 2023 when there will still be around 27 million fewer jobs, it said, warning of a "slow and uncertain" recovery in its World Employment and Social Outlook report for 2022. 
• "The global labour market outlook has deteriorated since the ILO's last projections; a return to pre-pandemic performance is likely to remain elusive for much of the world over the coming years," the report said. The speed of recovery varies across regions, with the European and North American regions showing the most encouraging signs and Southeast Asia and South America lagging behind, according to the report. 
• Still, the projected deficit in working hours this year represents an improvement over the past two years. In 2021, the ILO estimates there were some 125 million fewer jobs than pre-pandemic levels and in 2020, 258 million fewer. Overall, around 207 million people are estimated to be unemployed in 2022. However, the report said that the impact would be significantly greater, since many people have left the labour force and have yet to return.

(Source: Reuters)

• Fitch Solutions estimates that Jamaica’s current account deficit will narrow to 0.2% of GDP in 2022, from an estimated 0.7% in 2021, as a recovery in tourism will drive services export growth in the coming quarters.
•  This is a revision from a surplus of 0.8% previously, as the ongoing spread of COVID-19 hampered the rebound of the tourism sector more than expected. Moving into 2022, it is expected that sustained services export growth and elevated remittances will narrow the current account deficit.  
• The tourism industry is expected to make a stronger recovery in 2022 than in 2021, widening Jamaica’s services trade surplus to USD0.6Bn, from USD0.4Bn, equivalent to 4.2% of GDP. In 2021, the surges in COVID-19 cases globally delayed growth in the sector. It is expected that disruptions in tourism travel will decline in the coming quarters as the current Omicron surge wanes and vaccinations continue to proceed in Jamaica and source markets, accelerating the rebound of the sector.
• It is forecasted that overnight stays will grow 48.7% in 2022, compared to 24.2% in 2021, though the industry will not fully recover to pre-pandemic levels until 2024. US airline operators like American Airlines and JetBlue are planning to increase their flights to Jamaica beginning in June 2022, driving inbound visitor arrivals in H222 in particular. This will support the growth in Jamaica’s services exports in 2022 and therefore the narrowing of the deficit.

(Source: Fitch Solutions)

• Costa Rican growth is expected to slow to 3.3% in 2022, from an estimated 5.9% in 2021, as favourable base effects fade and external demand softens. Costa Rica has rebounded from the COVID-19 pandemic at a faster pace than was initially anticipated, largely due to surging export growth and strengthening domestic activity. As such, Fitch has revised its 2021 growth estimate, from 3.9% previously, implying that the Costa Rican economy fully regained its pre-pandemic size by end-2021. 
• From 2022 onwards, growth will decelerate, bringing it closer to the 3.2% average growth rate from 2015-2019. Costa Rican exports will likely expand at a less vigourous pace as global growth slows, while it is expected that tighter fiscal and monetary policy will temper consumption and investment in the short-to-medium term. 
• Costa Rica’s comprehensive COVID-19 vaccine roll-out will help bolster business and consumer confidence over the coming quarters as the government phases out public health restrictions. As of January 10, 69.9% of the population was fully vaccinated, the highest rate in Central America. In turn, this will also push down unemployment. 
• Nevertheless, households likely made large-scale purchases in 2021 as stores reopened. However, as base effects dissipate and the government implements fiscal consolidation measures in line with its 2021 IMF agreement, consumption will slow in the coming quarters.

 (Source: Fitch Solutions)

• The Central Bank of the Dominican Republic (BCRD) reported on Tuesday that in December 2021, remittances reached US$940.8 million, surpassing that recorded in December 2020 by US$68.5 million. Also, the 2021 remittance figures exceeded 2019 numbers by US$284.1 million, or 43.3 percent. 
• Total inflows in 2021 reached US$10.4 billion, about US$2.2 billion more than the same period in 2020, registering 26.6 percent year-on-year growth, this being the highest level ever reached. 
• “The continuous improvement in economic conditions in the United States is one of the main factors that continues to influence the behaviour of remittances, since 83.2% of December flows came from that country.”

(Source: Dominican Today)