• The U.S. economy contracted again in the second quarter amid aggressive monetary policy tightening from the federal reserve to combat high inflation, which could fan financial market fears that the economy was already in a recession.
• The Bureau of Economic Analysis' advance estimate of Q2 U.S. gross domestic product (GDP) showed a 0.9% annualized decrease in economic growth for the three-month period ended June 30. This was slightly lower than the Federal Reserve Bank of Atlanta’s Q2 GDP estimate of -1.2%.
• This follows from the contraction reported in Q1. During the first quarter, U.S. economic activity unexpectedly contracted for the first time since the second quarter of 2020, when the COVID-19 pandemic upended the global economy. The government's third and final estimate of first-quarter GDP showed a 1.6% annualized drop in economic growth to start 2022.
• The government's preliminary reading on second-quarter GDP — the broadest measure of economic activity — comes one day after Federal Reserve Chair Jerome Powell told reporters at a press conference that he did not believe the economy is in a recession, even as other economic indicators show signs of softening.
• Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.
• The National Bureau of Economic Research (NBER), says a formal recession "is a significant decline in economic activity that is spread across the economy and that lasts more than a few months, normally visible in production, employment, real income, and other indicators."
• Job averaged 456,700 per month in H1 2022, which is generating strong wage gains. Still, the risks of a downturn have increased. Homebuilding and house sales have weakened while business and consumer sentiment have softened in recent months. 

(Source: Yahoo Finance)

• The euro zone's looming gas crisis along with Italy's renewed political troubles will push the bloc into a mild recession by early next year and limit European Central Bank interest rate hikes, JPMorgan has warned.
• The bank's economists cut their economic forecasts, predicting eurozone GDP growth to slow to 0.5% this quarter and then contract 0.5% in both the fourth quarter and the first quarter of next year, representing two consecutive quarters of contraction- the informal definition of a recession.
• "Our new forecasts assume gas prices at 150 euros/MWh," the bank said in a note on Wednesday, July 27, 2022, adding that combined with strains like in Italy, it would add up to a 2% hit to the euro zone GDP.
• It was also added that those higher prices would push up headline inflation by 1.2 percentage points in the near term although it would drop again next year due to the economy's negative reaction.
• "We expect the ECB to deliver another 50 basis points of hikes by year-end," compared to 75 bps expected previously JPMorgan added. "We now expect 25 bp in September and 25bp in October" removing an additional 25bp hike that had been forecasted for December, the U.S. bank said.

(Source: Reuters)

• The Banco Central de Costa Rica (BCCR) is expected to continue its rate hiking cycle at its upcoming meetings, bringing the benchmark rate to 8.50% by end-2022, in an effort to tame a sharp surge in inflation.
• This is an upward revision of the previous forecast of 5.00%. After cutting the policy rate to a low of 0.75% after the outbreak of the COVID-19 pandemic, the BCCR began a rate hiking cycle in December 2021 as inflation began to rise.
• Inflation is expected to moderate in H2 2022 to 7.9% by end-2022, as supply chain disruptions improve and commodity prices come down from recent highs. Nevertheless, given that this remains far above the BCCR’s target range of 2.0% to 4.0%, at 10.1% in June 2022, and the risk that inflation expectations could become increasingly unanchored, notably, the BCCR will continue to respond with further rate hikes. 
• Commodity price growth is expected to ease into 2023 as disruptions that have driven up import prices through H1 2022 ease, interest rate hikes filter through the economy, and base effects become more favourable. That said, the inflation and policy rates are expected to average 6.0% and 7%, respectively, by end-2023.

(Source: Fitch Solutions)

• The Central Statistical Office (CSO) has announced that the inflation rate for the period January to June 2022 over January to June 2021, was 4.5%.
• The general upward movement in the prices of chicken, oil, beef, brown sugar, powdered milk, etc. were the primary drivers for the inflation outturn. However, the full impact of these price increases was offset by the general falloff in the prices of carite; onion; cabbage; carrots; milo; pumpkin; apples; shrimp – fresh; sweet potatoes and parboiled rice.
• Fitch Solutions projects that inflation will close the year at 5.5% in 2022, and 3.8% in 203. Inflation will subside in the medium-to-long term once the economic recovery takes hold, and the Central Bank of Trinidad & Tobago (CBTT) allows the T&T dollar to gradually depreciate.

(Sources: Trinidad and Tobago Guardian & NCBCM Research)

• The Federal Reserve raised its benchmark overnight interest rate by 75 basis points on July 27, 2022 in an effort to cool the most intense breakout of inflation since the 1980s, with "ongoing increases" in borrowing costs still ahead despite evidence of a slowing economy. 
• Coming on top of a 75-basis-point hike last month and smaller moves in May and March, the Fed has raised its policy rate by a total of 225 basis points this year as it battles a 1980s-level breakout of inflation with 1980s-style monetary policy.
• The policy rate is now at the level most Fed officials feel has a neutral economic impact, in effect marking the end of pandemic-era efforts to encourage household and business spending with cheap money. The rate also matches the high point of the central bank's previous tightening cycle from late 2015 to late 2018, a level reached this time in the span of just four months.
• The Fed Chair stated that, “While another unusually large increase could be appropriate at our next meeting, that will depend on the data between now and then.” Forecasts in mid-June showed officials expected to raise rates to about 3.4% this year and 3.8% in 2023.

(Source: Reuters.com)

• Russia, Ukraine, the United Nations, and Turkey signed the deal on Friday, July 22, 2022, to reopen three Ukrainian Black Sea ports for grain exports. The deal is valid for 120 days and targets monthly exports of 5 million tonnes of grains.
• Ukraine pressed ahead on Sunday, July 24, 2022, with efforts to restart grain exports from its Black Sea ports under the new deal but warned that deliveries would suffer if a Russian missile strike on Odesa was a sign of more to come.
• Wheat futures on the Chicago Board of Trade rose nearly 4% to $7.86 a bushel on Monday, July 25, 2022, regaining much of the ground lost on July 22, 2022, as prices fell nearly 6% after the pact was announced. Moreover, Chicago corn futures rose 2% to $5.75-3/4 a bushel while soybeans were 0.9% up at $13.28 a bushel. This came as a missile strike on the Ukrainian port of Odesa over the weekend raised doubts about whether it will be possible to implement last week's agreement to open a corridor for grain exports from the war-torn country.
• The Kremlin said on Monday, July 25, 2022, that the missile strike would not affect the export of grain. However, along with the uncertainty about how long it will take to clear the mines, ship owners are skeptic of sailing to Ukraine, regardless of the freight rate as they think their ship will be hit by missiles.
• The decline in shipments from one of the world's biggest grain exporters has helped to fuel food inflation across the globe and U.N. agencies have warned it could lead to starvation and mass migration on an unprecedented scale if exportation is not resumed.

(Source: Investing.com)

• Several private investors have submitted proposals for renewable energy projects in Jamaica for government consideration. Among them is an integrated solar and hydro energy project, which was announced by Prime Minister, the Most Hon. Andrew Holness.
• Minister without Portfolio in the Ministry of Economic Growth and Job Creation, Senator the Hon. Matthew Samuda, speaking during the inaugural digital staging of the CANCarib Climate Smart Opportunities Summit (CCOS), indicated that there are sufficient funding proposals to enable Jamaica to achieve the power-generation target and that an announcement on the proposals could be made within the next 60 days.
• The projects are expected to assist in realizing the Government’s goal of increasing the ratio of energy generated from renewable options for the national power grid to 50% by 2030.
• It would also contribute to a 60% reduction in Jamaica’s carbon dioxide emissions, also being targeted for 2030, in keeping with the country’s Nationally Determined Contributions (NDCs) under the Paris Agreement.

(Source: JIS News)

• The Jamaica Stock Exchange (JSE) will start prepping the market for short-selling stocks by hosting a workshop on the topic on September 22, 2022.
• Global markets have offered shorting for a long time. The JSE now wants to introduce shorting to the local market, but highlights the importance of additional market education and training as the market evolves.
• Short selling is an advanced investment strategy that speculates on the decline in a stock price. Although it is not the typical way to make money on the stock market, investors can learn the reverse strategy to sell first, then buy to close the trade, which opens their investments to a whole different side of the market to bank higher profits.
• The workshop will provide content on: strategy, techniques, tools, and tips to enter a short sell as well as use the market’s volatility, and normal price movements to maximize profits.

(Source: JSE)

• The Guyanese economy will grow 46.0% in 2022, from 19.1% in 2021, driven by expanding oil production that will support greater profits and government revenue receipts.
• In addition to a stronger oil sector, the non-oil economy will continue to recover this year, following the impacts of the pandemic. The government is utilising oil revenues by dispersing them throughout the wider economy, supporting development in the gold mining and agriculture sectors, and enhancing infrastructure development.
• That said, Guyana will be the world’s fastest-growing economy in 2022, and fast rising oil production will retain the country’s status as a regional outperformer in the coming years. Growth is expected to remain strong in 2023 at 8.0%, and average 8.2% from 2024-2031, as exploration in offshore blocks continues and additional oil projects come online, maintaining Guyana’s position as a regional outperformer in the coming years.

(Source: Fitch Solutions)

• The International Monetary Fund cut its global growth outlook for this year and next, warning that the world economy may soon be on the cusp of an outright recession. Global economic expansion will likely slow to 3.2% this year, less than the 3.6% forecast by the fund in April and the 4.4% seen in January.
• The series of interest-rate increases that central banks have unleashed to contain inflation “is expected to bite” in 2023, with global output growth set to slow to 2.9%.  While the crisis lender is still forecasting positive growth, that will do little to quell rising concern of receding expansion or even outright recession in major economies as accelerating price increases eat away at incomes, savings and profits.
• Consumer prices have consistently climbed more quickly than expected, with the fund seeing inflation accelerating even further this year as higher food and energy costs couple with lingering supply-and-demand imbalances. It now projects the global consumer-price gauge to increase 8.3% this year (April’s estimate: 7.4%), which would be the biggest jump since 1996.
• Downside risks include a worsening of the war in Ukraine, escalation of sanctions on Russia, a sharper-than-anticipated slowdown in China, renewed Covid-19 flare-ups and an inflation wave that’s forcing central banks to raise interest rates.

(Source: Bloomberg)