• The Government will be increasing recurrent expenditure by approximately $25.8 billion for FY 2021-22. This has increased the overall expenditure to $893 billion. However, capital remains at the level of the first supplementary estimates, with some reallocation between projects. 
• Clarke said at the point of the First Supplementary Estimates, there were no final settlements with any of the public-sector bargaining groups. Consequently, the Government’s offer for increases in wages and salaries was captured under the Contingencies activity of the Ministry of Finance and the Public Service. Since then, 31 bargaining groups have settled, which is now the primary reason for the Second Supplementary Estimates this fiscal year. 
• An additional $5 billion to the COVID Allocation of Resources for Employees (CARE) Programme, given the continuing impact of the COVID-19 pandemic, and the costs associated with a Special Employment Programme in December 2021, to assist some of those most vulnerable to the economic impact of the pandemic, were also captured in the Second Supplementary Estimates. 
• Debt-related costs also contributed to the second supplementary estimate. The premium for catastrophe bonds issued earlier in the year was not fully captured on the budget and this is being addressed under the Second Supplementary Estimates. Assistance has also been extended to the National Water Commission and the Central Wastewater Treatment Company to facilitate the repayment of maturing guaranteed debt.
• Furthermore, domestic interest rates have increased, and the currency has depreciated, resulting in increases in the debt service requirements. Other expenses such as additional requirements for the Ministry of National Security, and support to the National Solid Waste Management Authority, are being addressed through the supplementary figures.  

(Source: JIS)

• At a time when the global economy is plagued with a myriad of uncertainties, Guyana remains one of the fastest-growing nations in the world, with an economy that is projected to expand by a massive 49.7 percent this year, according to the latest edition of the World Bank’s “Global Economic Prospects”. 
• The report, issued on Tuesday, indicates a significant improvement from the one released in June 2021, which estimated Guyana’s growth at 23.7 percent. This means that within the last few months, Guyana’s economic potential has doubled, as measured by the country’s Gross Domestic Product (GDP). 
• Based on the World Bank report, Guyana is the only country in Latin America and the Caribbean that is expected to record double-digit growth this year. Coming a close second is St. Lucia, which is expected to record economic growth of 9.6 percent. 
• The January 2022 report now estimates a 2023 growth of some 25 percent for Guyana, as opposed to the previously predicted 23 percent. It is possible that this figure could be revised upwards in the coming months as Exxon Mobil made two additional oil discoveries off the coast of Guyana in January 2022. 
• Meanwhile, economic growth in the wider Caribbean is estimated to reach 7.3 percent this year, and 5.9 percent in 2023. However, this doesn’t necessarily spell good news for the region, since, according to the report, those improvements reflect a large contribution from Guyana. This is due largely to the fact that the majority of Caribbean countries are reliant on their respective tourism industries, which have taken significant hits due to the continuous spread of the novel coronavirus (COVID-19) and the global pandemic it has triggered.

 (Source: Guyana Chronicle)

• The consumer price index, a metric that measures costs across dozens of items, increased 7% in 2021, according to the department’s Bureau of Labor Statistics. On a monthly basis, CPI rose 0.5%. Economists surveyed by Dow Jones had been expecting the gauge to increase 7% on an annual basis and 0.4% from November. The annual move was the fastest increase since June 1982 and comes amid a shortage of goods and workers and on the heels of unprecedented cash flowing through the U.S. economy from Congress and the Federal Reserve. 
• Excluding food and energy prices, core CPI increased 5.5% year over year and 0.6% from the previous month. That compared with estimates of 5.4% and 0.5% respectively. The growth in core inflation was the largest annual growth since February 1991. 
• Shelter costs, which make up nearly one-third of the total rose 0.4% for the month and 4.1% for the year. That was the fastest pace since February 2007. Used vehicle prices, which have been a major component of the inflation increase during the COVID pandemic due to supply chain constraints that have limited new vehicle production, rose another 3.5% in December, bringing the increase from a year ago to 37.3%. 
• Conversely, energy prices mostly declined for the month, falling 0.4% as fuel oil was down 2.4% and gasoline fell 0.5%. Still, the complex as a whole rose 29.3% in the 12 months, including a gain of 49.6% for gasoline. 
• Fed officials are watching the inflation data closely and are widely expected to raise interest rates this year to combat increasing prices and as the jobs picture approaches full employment. Though the central bank uses the personal consumption expenditures price index as its primary inflation measure, policymakers take in a wide range of information in making decisions.

(Source: CNBC News)

• U.S. natural gas futures surged more than 14.0% on Wednesday as temperatures drop and forecasts tell of more winter weather ahead. The contract for February delivery advanced 14.3% to settle at $4.857 per million British thermal units, hitting the highest level since November. 
• The heating demand outlook for the eastern third of the U.S. has strengthened materially for this weekend and for the last week of January, noting that this Saturday could see record natural gas demand due to a cold blast forecast for Friday. The weather has gone from being a non-factor or bearish factor all season to being meaningful, again, for prices and demand. 
• After surging for much of 2021, natural gas prices dropped 36% during the fourth quarter following warm temperatures and as the omicron variant sent jitters through the market. Still, the contract posted a 47% gain for 2021 and is already up nearly 30% for 2022.

(Source: CNBC News)

• Chief Medical Officer (CMO), Dr. Jacquiline Bisasor-McKenzie, said that Jamaica could reach the peak week of the fourth wave of the coronavirus (COVID-19) by the end of January/early February. She said the projections from the Ministry of Health and Wellness are that the country could see as many as 11,500 confirmed cases of COVID-19 during that peak week. 
• “We are seeing right across the world that the Omicron variant is proving to be a more transmissible virus and so the numbers are rapidly increasing in several countries, and we have started to see that here. Based on the projections, using the reproductive number, it could mean that we may take another three weeks or so to get to the peak of this fourth wave based on the present numbers,” she said. 
• As the pandemic drags on for a third calendar year, governments globally are becoming reluctant to pursue lockdown measures given the disruptions to economic activity and the financial impact on businesses and households. This week Spain became the first European country to propose re-evaluating the pandemic using different parameters and is considering to treat the virus similar to the flu as part of efforts to keep its economy open. This is against the background that deaths as a proportion of recorded cases have fallen dramatically.
• Despite the rapid rise in cases, we do not anticipate that this will curtail economic activity to the same extent as it did in 2021, particularly given the stance of the government on discontinuing the use of lockdowns as a means to control the pandemic. This should result in fewer disruptions to commercial activity. This, coupled with the lessons learned over the past two years and increased vaccinations should help to mitigate the adverse effects of the 4^th wave on business and economic activity in 2022.

(Sources: JIS and NCBCM Research)

• Fitch Solutions forecast that growth in the Dominican Republic will slow to 4.8% in 2022, from an estimated 10.8% in 2021, as weaker external demand and tighter monetary conditions constrain economic activity. 
• Nevertheless, the market will remain a regional outperformer, averaging 4.6% annual growth from 2023-2026, as tourism rebounds further and falling unemployment supports consumption. 
• However, the global spread of the Omicron variant of COVID-19 presents downside risks to Fitch’s growth outlook, particularly if travelers in the US and other developed markets are more reluctant to travel to the Dominican Republic. 
• The DR’s economy has rebounded at a faster pace than other Caribbean economies in recent quarters as swift COVID-19 vaccine roll-out, recovering labour market, and robust external demand has bolstered headline growth.

 (Source: Fitch Solutions)

• Mexican President Andrés Manuel López Obrador (AMLO)’s administration has taken actions in recent months that will weaken investor perceptions of the country’s independent economic and political institutions according to Fitch. 
• This will suppress investment in Mexico over the coming years and has led to a further downward revision of the country’s Long-Term Political Risk Index score. In particular, the President’s efforts to nationalise the electricity sector clashes with the electoral body, personnel decisions at the Banco de México, and a decree fast-tracking major infrastructure projects. 
• The overall trend in policy direction, underscored by these developments, will likely suppress investment in Mexico over the remainder of his term. In the near term, Mexico’s economy will remain highly vulnerable to sharp shifts in investor sentiment driven by further changes to the policy. 
• Over the longer term, Fitch expects uncertainty will keep many investors on the sidelines, particularly in the electricity and oil sectors that AMLO has targeted. Despite investor concerns about his agenda, AMLO remains broadly popular, suggesting that he is unlikely to change course through the end of his term in 2024.

 (Source: Fitch Solutions)

• Federal Reserve Chair Jerome Powell said on Tuesday the economy should weather the current COVID-19 surge with only "short-lived" impacts and was ready for the start of tighter monetary policy. 
• The Fed chief said the central bank was determined to ensure that high inflation did not become entrenched and that far from diminishing job growth, a turn to higher policy interest rates and runoff of its asset holdings was necessary to keep the current economic expansion underway. 
• If prices continue spiking, the Fed could be forced to push through a sharper rise in interest rates this year than the three quarter-percentage-point hikes its policymakers currently anticipate, risking a return to recession. 
• Powell noted that inflation is running very far above target and that the economy no longer needs or wants the very accommodative policies that have been in place. He further noted that with the Fed's benchmark overnight interest rate near zero and nearly $9.0Tn in assets on its books, it is a long road to anything close to restrictive policy, Powell said. 
• Powell has said that in the meantime, Fed actions should not have negative effects on the labour market, noting that focus needs to be placed on getting inflation under control because maximum employment will not be obtained without price stability.

(Source: Reuters)

• U.S. companies ranging from American Eagle to United Airlines are set for a tepid start to the year as the fast-spreading Omicron variant threatens to slow the fragile rebound in growth by exacerbating supply chain problems and labour shortages. 
• The roll-out of COVID-19 vaccines and easing of restrictions last year had promised to be a boon for companies looking to recover from the heavy toll that the pandemic had taken on them. But the fast and relentless surge of Omicron-related infections has once again put sales and profits of companies under pressure. Staffing, customer traffic, and store operating hours have been hampered as the daily infections in the United States touched 1.35 million, the highest in the world. 
• The first sign of its impact on Corporate America is the hit to sales over the recent weeks seen by companies such as American Eagle Outfitters, Abercrombie & Fitch, and Lululemon Athletica. 
• The U.S. travel industry, a sector that has barely been able to get back on its feet, too has been jolted by staff shortages forcing cancellations of flights and cruises during the crucial holiday. American Airlines Group Inc expects cost per available seat mile to be up 13% to 14% compared to pre-pandemic levels, while United Airlines said it was reducing near-term flight schedules as about 3,000 employees have tested positive for COVID-19. 
• However, some companies have stood to benefit. Pharmacy chain CVS Health Corp raised its 2021 profit view on expectations of higher demand for COVID-19 vaccines and over-the-counter testing, while Abbott Laboratories expects sales of its COVID-19 tests to stay strong in the near term.

(Source: Reuters)

• During the press conference held on Sunday, January 9, 2022, the Prime Minister, the Most Hon. Andrew Holness assured the public that the Government will no longer be resorting to lockdowns as part of strategies to contain COVID-19 transmission. 
• This sentiment by the government should relay a positive signal to businesses as the absence of lockdown days means fewer disruptions to business activity.  It also signals to the public that while COVID-19 carries with it risk, broader vaccine availability and continued medical innovation should limit the impact of this and future outbreaks. 
• With that said, each subsequent “wave” is expected to have less of an impact on consumer behaviour, financial markets, and the overall economy, as vaccine access and uptake become more widespread. Furthermore, businesses and households are expected to continue to look for ways to sustain their activities as they adapt to the new normal, given that COVID-19 will not disappear completely anytime soon. 
• It is our view that rising caseloads in 2022 will not curtail economic activity to the same extent as in 2020 or early 2021. The lessons of the past two years have equipped governments and corporations to better manage outbreaks. These lessons, coupled with higher vaccination rates are unlikely to warrant extreme measures, such as complete border closures in 2022.

(Source: JIS and NCBCM Research)