• The Banco Central de Costa Rica (BCCR) will maintain a dovish monetary policy stance in 2021, aided by low domestic inflation and sustained global central bank dovishness.
• In addition, the government’s limited fiscal capacity will leave monetary policy as the primary driver for Costa Rica’s economic recovery in the coming quarters.
• Fitch Solutions forecasts the BCCR will hold its benchmark interest rate at 0.75% through end-2021, and expect inflation will average 1.8% y-o-y in 2021.

(Source: Fitch Solutions)

• Oil hit a nine-month high on Thursday after government data showed a fall in U.S. crude stockpiles last week, while progress towards a U.S. fiscal stimulus deal and strong Asian demand also buoyed prices.
• Brent crude futures rose 45 cents, or 0.9%, to $51.53 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 46 cents, or nearly 1%, to $48.28 a barrel. Both benchmarks hit their highest since early March.
• U.S crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said, more than analysts' expectations of a 1.9-million-barrel drop.
• Also boosting oil prices, U.S. lawmakers edged closer to an agreement on a $900Bn virus-relief spending package on Wednesday with top Democrats and Republicans sounding more positive than they have in months about getting something done.

(Source: Reuters)

• The United States is hopeful of sealing a mini-trade deal with the United Kingdom to reduce tariffs, President Donald Trump's trade chief, Robert Lighthizer, told the BBC.
• Lighthizer said he was hopeful for a deal that could see punitive tariffs on Scottish whisky lowered.
• He also suggested the UK would need to go further than last week's announcement breaking with the EU's support of European planemaker Airbus.
• Britain will suspend retaliatory tariffs imposed on U.S. goods as part of a dispute over aircraft subsidies from Jan. 1, the first step to diverging from European Union trade policy.

(Source: Reuters)

• The Producer Price Index for the Mining and Quarrying industry increased by 3.8% while the index for the manufacturing industry decreased by 0.3% for October 2020.
• The movement in the index for the Mining and Quarrying industry was influenced mainly by a 4.0% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The main contributor to the decline in the index for the Manufacturing industry was the major group, ‘Refined Petroleum Products’ which fell by 4.3%. However, increases in the index for the major groups, ‘Food, Beverages & Tobacco’ (0.7%) and ‘Chemicals and Chemical Products’ (0.1%) tempered the decline of the index for the industry.
• The point-to-point index declined by 2.6% for the Mining & Quarrying industry and increased by 0.9% for the Manufacturing industry.

(Source: STATIN)

• BOJ’s October 2020 survey indicated expected inflation of 6.3% for the calendar year 2020, which is higher than the October 2020 CPI outturn of 5.0%. The expected inflation 12 months ahead decreased to 6.7% relative to the previous survey outturn of 7.0%.
• The perception of inflation control declined slightly in the October 2020 survey relative to the September 2020 survey.
• The majority of respondents continued to believe that the Bank’s policy rate will remain the same over the next three months.
• The Present Business Conditions Index reflected a lower level of optimism while the Future Business Conditions Index illustrated a sharp increase in optimism compared to the previous survey.

(Source: BOJ)

• Fitch Solutions has revised its forecast for Panama’s real GDP growth to -13.2% and 7.9% y-o-y in 2020 and 2021, from -8.9% and 4.8% previously, as severe mobility restrictions caused the region’s deepest contraction in Q220.
• While the government has begun to phase out many public health restrictions, limited fiscal support suggests a sluggish recovery over the coming quarters.
• Over the medium-term, however, the agency maintains an upbeat growth forecast for Panama, as a robust private sector, supportive international trade trends, and major infrastructure investments will drive sustained growth.

(Source: Fitch Solutions)

• Rebounding exports following the economic shock of the COVID-19 pandemic will help to narrow Colombia’s current account deficit in 2021 and the years thereafter. 
• That said, Fitch Solutions expects that the country's current account shortfalls will persist over the coming years amid a subdued outlook for oil production and prices, combined with renewed demand for imports.
• It has revised its 2020 and 2021 current account deficit forecasts to 4.0% of GDP and 3.9% respectively, from 4.4% and 4.0% previously, as remittance inflows have surprised to the upside in recent months. 

(Source: Fitch Solutions)

• The outlook for the global economy is improving despite a second wave of coronavirus outbreaks in many countries as vaccines emerge and a Chinese-led recovery takes hold, the OECD said on Tuesday.
• The global economy will grow 4.2% next year and ease to 3.7% in 2022, after shrinking 4.2% this year, the Organization for Economic Cooperation and Development said in its latest Economic Outlook.
• After the second wave of infections hit Europe and the United States, the Paris-based policy forum trimmed its forecasts from September, when it expected a global contraction of 4.5% before a 5% recovery in 2021. It did not have a 2022 forecast at the time.

(Source: Reuters)

• Oil prices were broadly steady on Tuesday as investors awaited direction from OPEC and its allies after the producers postponed a formal meeting to decide whether to lift output from January.
• Brent crude was down 1 cent at $47.87 a barrel and West Texas Intermediate was down 9 cents at $45.25.
• Both contracts have surged around 27% in November, pushed up by hopes that COVID-19 vaccines would boost the global economy and fuel demand, and aided by expectations that oil producers would keep a tight rein on output amid a new wave of the virus.

(Source: Reuters)

• According to the BOJ, the financial sector has generally remained well-capitalized despite the on-going impact of the COVID-19 pandemic and its dampening effect on the earning capacity of financial institutions.
• Entities continue to hold capital positions well in excess of the prudential minimum and there has been a broad shift away from risky investments towards less risky assets.
• Risk exposure indicators for deposit-taking institutions (DTIs) and Security Dealers (SDs) showed mixed results. In addition to a deterioration in foreign exchange risk across both sectors, there was some weakening in the household credit risk measure for the DTIs. There was, however, an improvement in interest rate risk exposure of the sector.
• Composite indicators of macro-financial conditions deteriorated. However, the micro-based measure of financial stability was broadly stable and continued to reflect a healthy banking system.

(Source: BOJ)