• Despite concerns coming out about the new Omicron variant of COVID-19 and worldwide inflation, the Central Bank of Trinidad and Tobago expressed a cautiously optimistic outlook for TT in its monetary policy report for November, issued on Friday. 
• It held its repo rate at 3.5%, where it has been since 2020. In the report, the Central Bank noted that inflation stood at 2.4% in September and excess reserves averaged at about US$7.7Bn in October. It added that natural gas production fell 22.1% in the second quarter of 2021, as compared to the same period last year. 
• The report said the global economy went into recovery mode in the first half of the year, but that recovery has been uneven across countries. The US, China and Europe are now leading the charge in economic recovery. Global crude oil, which suffered from uncertainty and volatility last year, managed to stay afloat between June and October 2021 because of increased demand and a tightened supply over those months. 
• The Omicron variant raised uncertainty in global markets, but despite volatility in the international financial markets, there was still a consensus that the global economy could have better resilience to new variants, especially with vaccinations being administered worldwide.

(Source: Trinidad and Tobago Newsday)

• The Government of Barbados continues to meet all the targets and benchmarks set under the Barbados Economic Recovery and Transformation (BERT) Plan, but the IMF Monitoring Committee has warned that it may not continue unless measures are implemented to effectively manage the COVID-19 pandemic, which has put a damper on the economy. 
• For the period ending September 30, 2021, fiscal and monetary targets were met, including the ceiling on public debt, the floor on net international reserves, the floor on social spending and ceiling on public institution arrears. The structural benchmarks required to be achieved under the EFF by the end of September were also met. 
• “Despite the impact of the COVID-19 pandemic combined with the volcanic ashfall and Hurricane Elsa, the Government of Barbados has continued to achieve all of its performance targets and, in particular, the primary balance of zero percent of GDP and the growth in Net International Reserves to levels well above the programme target,” according to the IMF report.

(Source: Barbados Today )

• With the Federal Reserve likely to accelerate the removal of its unprecedented stimulus, some short-term rates have moved higher and offered money fund managers rare opportunities to generate yield. 
• With few high-quality investments available, money funds are taking advantage of the higher yields on some assets such as commercial paper. 
• For example, the three-month commercial paper rates that financial companies use to fund short-term cash flows, have jumped to 17 basis points, from 11 basis points a month ago. The three-month Libor rate, a market benchmark that is being phased out, has increased to 20 basis points, from 13 basis points in late October, and yields on one-year Treasuries have hit one-and-a-half-year highs, even as shorter-dated yields remain relatively moribund. 
• Tighter funding conditions as banks and investors pare back risk taking for year-end has sent yields of some short-dated assets higher, though in large part the rates have increased as investors price in the likelihood that the Fed will speed up the reduction of its bond purchases and that rate hikes may begin in mid-2022.

(Source: Reuters)

• Household consumption was the main driver of euro zone economic growth in the third quarter, the European Union's statistics office data showed on Tuesday, with a further positive contribution from trade. 
• Eurostat confirmed the euro zone economy expanded 2.2% quarter-on-quarter in the July-September period for a 3.9% year-on-year rise as the economy continued to recover from the deep pandemic-induced recession in 2020. 
• Household consumption contributed 2.1 percentage points to the quarterly growth number with net trade adding another 0.3 points. 
• But government spending added only 0.1 point to the final result and despite the first payouts from the EU's recovery fund for green and digital investment, gross fixed capital formation fell sharply, subtracting 0.2 points from the final figure.

(Source: Reuters)

• The Bank of Jamaica (BoJ) is expected to hike its benchmark interest rate by 75 basis points (bps) to 2.75% by end-2022, as inflation will remain above the BoJ’s target inflation range of 4.0% to 6.0% over the coming months. The bank hiked its policy rate by 50 bps, to 2.00%, in its November meeting, in line with Fitch Solutions’ forecast of a 2.00% policy rate by the end of this year. The BoJ stated that the decision was made primarily to combat rising inflation, which reached 8.5% y-o-y in October. 
• It is expected that relatively elevated prices of agricultural goods and oil will drive average inflation to 5.6% in 2021 and 6.3% in 2022. 
• Although it is expected that prices for agricultural goods will reduce in the coming quarters as the short term shock to agricultural supplies caused by tropical storms Grace and Ida in August subsides, elevated transportation and shipping costs, coupled with supply chain bottlenecks, will continue to fuel inflation through 2022. Inflation expectations are also rising. The BoJ’s October Inflation Expectation Survey shows domestic businesses also expect elevated prices, projecting an 8.2% rise in inflation in the next 12 months, compared to 7.4% in the September 2021 survey. 
• Persistently above-expectation inflation could convince the central bank to increase rates more aggressively in 2022 than currently anticipated. In its public statement following the September 2021 meeting, the BoJ noted that inflation breached its inflation target earlier than expected. Should inflation continue surprising to the upside in the coming months, Fitch would expect the BoJ to respond with a more aggressive set of interest rate hikes than currently forecasted.
• That said, the emergence of the Omicron variant could threaten Jamaica’s economic recovery and pose a downside risk to monetary forecasts. Jamaica’s vaccination rate remains low, with just 23% of the population having received at least one dose as of December 5, while the new Omicron variant is driving rising caseloads elsewhere in the world. Should cases rise in Jamaica, it could lead to the re-imposition of public health restrictions, which could undermine the economic recovery, but stymie inflationary pressures reducing the need for aggressive rate hikes.

(Source: Fitch Solutions)

• Petroleos Mexicanos, the world’s most indebted oil company, will get a $3.5Bn cash injection from the government as President Andres Manuel Lopez Obrador orders a new business plan for the struggling company. 
• The state-owned producer will use the funds to pay down obligations and also embark on a series of bond buybacks and new issuance to reduce the cost to service its debt. As part of the initiative, Pemex will also overhaul its five-year business plan, according to a statement released by the company on Monday. 
• Lopez Obrador provided a huge chunk of the federal budget to the country, after more than a decade of declines in output and limited investment in new fields. While the announcement appeared to provide some short-term support for the embattled company, analysts are skeptical that it will be enough to revive operations. 
• “It seems to be a continuation of what they have been doing: a direct transfer from the Mexican government, and trying to change the debt from the short and medium to the longer term,” said Alejandra Leon, Latin America upstream director at IHS Markit. “The critical part is whether there are changes in the operation that generate sufficient resources to deal with the debt, and that’s still unknown.” 
• Still investors seemed to be encouraged, with Pemex’s benchmark bonds due in 2031 rising 1.2 cent to 96.5 cents on the dollar, reducing its yield to 6.4%.

(Source: Bloomberg)

• Costa Rica may not be able to access a loan disbursement from the International Monetary Fund (IMF) in December after falling behind on targets agreed to in the deal. 
• Costa Rica's government reached a deal with the IMF for a $1.8Bn credit line in January, agreeing to enact policies that would serve as the basis for the loan. 
• In August, the country received its first disbursement of $297Mn after the Legislative Assembly approved the deal. 
• However, lawmakers in the opposition-controlled body have yet to pass fiscal austerity measures and new taxes proposed by the government to meet the IMF goals, with some saying that the proposals are unconstitutional. 
• Central Bank chief Rodrigo Cubero warned that Costa Rica was at risk of falling out of compliance in the deal, echoing comments from President Carlos Alvarado last week.

(Source: Reuters)

• Bank of England Deputy Governor Ben Broadbent said on Monday that inflation in Britain might "comfortably exceed" 5% in April 2022 and that the country's tight labour market risked becoming a more persistent source of inflation. 
• The BoE, which is trying to steer the economy through its recovery from a pandemic slump, said last month that inflation would hit about 5% in the second quarter of 2022 before falling. 
• Speaking to Leeds University Business School, Broadbent suggested that the forecast would probably have to be raised further above the central bank's 2% target. 
• "The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem (regulator) cap on retail energy prices is next adjusted in April," Broadbent said.

(Source: Reuters)

• Investor morale in the euro zone in December fell to its lowest level since April as renewed restrictions to contain a fourth wave of coronavirus infections clouded the growth outlook, a survey showed on Monday. 
• Sentix's index, which is used to measure investor morale for the euro zone fell to 13.5 from 18.3 the previous month. Analysts on average had expected a December reading of 15.9, according to a Reuters poll. 
• Tightened lockdown measures, especially in Germany and Austria, considerably dampened the assessment of current conditions in the euro zone, said Sentix Managing Director Manfred Huebner. 
• "A slowdown and even a recession no longer seem to be ruled out now. These lockdowns hit the economy harder than before," Huebner said..

(Source: Reuters)

• The city of Montego Bay will on Wednesday (December 1), welcome the Carnival Glory, its first vessel since the resumption of cruise shipping to Jamaica four months ago. The passengers and crew of the mega vessel, a Conquest-class cruise ship operated by Carnival Cruise Line, will be calling on the tourism capital, ensuring that all Jamaican cruise ports would have received at least one ship since the reopening of the sector in August. Ocho Rios, Port Antonio, Falmouth, and Port Royal are the other cruise ports to have received ships. 
• The expected arrival of the Carnival vessel is already reigniting the passion of local stakeholders, especially cruise-dependent entities such as craft traders, transport operators, souvenir shop owners, duty-free merchants, and attractions. 
• Vice President of Cruise Shipping and Marine Operations at the Port Authority of Jamaica (PAJ), William Tatham, noted that they deliver a safe and rewarding cruise passenger experience and have also managed to implement the mechanisms, in partnership with the Ministry of Health and Wellness and also the Ministry of Tourism, to ensure a safe and secure restart of the cruise-shipping sector within the COVID-19 operational context. 
• Since the restart of the cruise industry globally, ships are averaging between 50.0% and 60.0% occupancy and are anticipated to reach 75.0% occupancy during the first quarter of 2022 and full occupancy by the end of the second quarter of 2022. 
• In Jamaica, from August 2021 to November 18, 2021, a total of 50,160 passengers and crew/staff disembarked cruise ships in Jamaican ports. The total number of ‘paying’ passengers (excluding crew) for the period was 29,045. This bodes well for the recovery efforts of the tourism sector.

 (Source: JIS News)