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Falling Gas Prices Are Raising Hopes That Inflation Is Slowing, New York Fed Survey Shows Published: 13 September 2022

  • Lower gas prices are raising optimism that inflation is on the decline, according to a survey Monday from the New York Federal Reserve. Respondents to the central bank’s August Survey of Consumer Expectations indicated they expect the annual inflation rate to be 5.7% a year from now. That’s a decline from 6.2% in July and the lowest level since October 2021.
  • Three-year inflation expectations dropped to 2.8% in August from 3.2% the previous month. That was tied for the lowest level for that measure since November 2020.
  • The lowered outlook came amid a tumble in gasoline prices from more than $5 a gallon earlier in the summer, a nominal record high. The current national average is about $3.71 a gallon, still well above the price from a year ago, but about a 26-cent decline from the same point in August.
  • Those numbers come as the Fed is using a series of aggressive interest rate hikes to battle inflation that is still running close to a more than 40-year high. The central bank is widely expected to approve a third consecutive 0.75 percentage point increase when it meets again next week.

(Source: CNBC)

Increased Imports To Widen Jamaica's Current Account Deficit, Despite Strength In Tourism Sector   Published: 09 September 2022


  • Fitch Solutions forecasts that Jamaica’s current account deficit will grow to 4.2% of GDP in 2022, before shrinking to 2.8% in 2023. Jamaica recorded a current account deficit of USD333.0Bn in Q122, up from USD50.6Bn in Q121, as a wide goods trade deficit offset a recovery in services exports and strong remittance inflows.
  • In the year through March 2022, goods imports have already grown 48.0%, strongly outpacing the 5.0% contraction in exports. Import growth thus far in 2022 has been driven by fuels, consumer goods, and food, all of which have become increasingly expensive due to elevated global commodity prices and supply chain disruptions, which particularly affect an island economy like Jamaica.
  • Fitch expects the goods trade deficit will remain elevated through 2022, due to weaker mining exports and high import costs which will lead to import growth of 33.0% y-o-y. 
  • Moving into 2023, it is expected that further recovery in the service industry, lower commodity prices and robust remittances will narrow the overall deficit.

(Source: Fitch Solutions)

Growth in Domestic Crop Production   Published: 09 September 2022


  • Preliminary estimates for the second quarter of 2022 (April-June), show domestic crop production growing to 219,667 tonnes, an increase of 7.4% over the corresponding quarter of 2021. This is also an increase over the January to March quarter of 2022, by 3.6%.
  • The main crop groups showing increases in the quarter were yams, which grew by 16.5%, plantains by 11.7%, cereals (sweet and regular corn) 11%, vegetables by 10.3%, and potatoes 4.8%.
  • The top contributors to production remain the central parishes, with St. Elizabeth contributing 40,889.5 tonnes to the total national production volume, followed by 31,870.3 tonnes from Trelawny.
  • The Ministry of Agriculture and Fisheries is undergoing a national campaign to improve Jamaica’s access to sufficient quantities of affordable, nutritious, safe and fresh local produce. The aim is to reduce the country’s food imports, provide jobs, build livelihoods and make a significant contribution to the country’s gross domestic product (GDP).

(Source: JIS)

Peru Launches Economic Package Amid Worries Of Slowing Growth Published: 09 September 2022

  • Peru's finance ministry on Thursday unveiled an economic package it says can help lift the economy at times of a global slowdown and falling copper prices, which are key to the country's economy.
  • Finance Minister Kurt Burneo said the measures could boost gross domestic product growth by 0.6% this year and by 0.8% in 2023.
  • The announcement comes just weeks after Peru's finance ministry announced economic growth projections that exceeded analysts’ consensus. The ministry expects GDP growth of 3.3% this year, while analysts polled by Refinitiv forecast 2.6%. While the sovereign is expected to grow, economic and fiscal performance will be impacted by the fall in copper prices.  Peru is the world's Number 2 copper producer and falling prices of the red metal are hitting tax coffers after record revenue in 2021.
  • The cost of the incentive package, much of which still needs to be approved by Congress, totals 3 billion soles, Burneo said. The package includes incentives for private investors, including in mining exploration, as well as heavier public spending.
  • Peruvian President Pedro Castillo came to office last year with a far-left platform that spooked investors and sent the country's sol currency to record lows. However, he has since moderated his stance and picked moderates for the key finance ministry in a bid to maintain trust with investors.

(Source: Reuters)

Guyana Oil Producers Ramp Up Exports To Thirsty European Refiners   Published: 09 September 2022


  • Oil producers in Guyana are boosting exports to European buyers seeking alternatives to Russian crude, according to vessel monitoring data.
  • Government bans on Russian oil since the invasion of Ukraine have spurred demand for alternative crudes, and Guyanese oil fits refiners from Britain to Italy better than rival Latin American grades do.
  • So far this year, 49% of Guyana's total oil exports have headed for Europe, up from 16% in 2021. Cargoes to Europe averaged 110,000 bpd from January through early September, according to Refinitiv Eikon tanker tracking data, more than the entire daily volume shipped to all destinations in 2021.
  • On Thursday, Hess CEO John Hess told investors that Guyana wants "to move forward as expeditiously as possible." A development plan for the consortium's fifth project, Uaru, will be submitted for government approval later this year, he said.
  • Guyana is now producing two crudes: a medium to light sweet oil called Liza, and an even lighter grade called Unity Gold. By 2027, the Exxon-led consortium, which only in 2019 inaugurated output, expects to pump 1.2Mn bpd. Guyana is expected to schedule an auction of oil and gas soon.
  • The increased demand for the country’s oil will continue to benefit the country’s revenue stream and contribute to overall economic growth.

(Source: Reuters)

Bank Of Canada: Inflationary Pressures Are Becoming More Broad-Based Published: 09 September 2022

  • Inflation in Canada is increasingly broad-based and risks are becoming entrenched, a senior Bank of Canada official said on Thursday, warning of "bumps along the way" in the fight against raging price increases.
  • Senior Deputy Governor Carolyn Rogers, speaking the day after the central bank increased its policy rate to a 14-year high of 3.25%, said Governing Council had discussed "the ongoing risk that inflation becomes entrenched" ahead of its decision. "The Canadian economy continues to operate in excess demand, despite the recent pullback in housing, and inflationary pressures are increasingly broad-based," Rogers said.
  • She reiterated interest rates needed to rise further without specifying how many more increases were to come. "Getting inflation back to 2% will take some time. We also know there could be bumps along the way," she told a business audience in Calgary, Alberta.

(Source: Reuters)

Bond Issuance Spree As U.S. Companies Rush Before More Rate Hikes Published: 09 September 2022

  • Companies with the highest credit ratings in the world are engaged in a now-or-never US dollar bond issuance spree to get ahead of a continued spike in borrowing costs and as liquidity in the market is expected to dwindle in the next few months.
  • The first working day after a long holiday weekend (Labour Day) saw 19 investment-grade rated companies raise $35.35Bn, the most to price in a single day this year, according to IFR/Refinitiv.
  • The 44 tranches of bonds sold by the 19 companies on Tuesday were also the most ever priced in a single day, beating a previous record of 39 tranches sold on September 3, 2019, according to Informa Global Markets data. On Wednesday, seven more companies raised $11.25Bn.
  • Liquidity in bond markets has been patchy in recent months as investors cut back on debt investments that were sensitive to rising interest rates as a result of a hawkish stance by the Federal Reserve to combat runaway inflation.
  • Year-to-date returns on investment-grade bond investments are down 15.2%, alongside a rise in U.S. Treasury yields as interest rates have risen and economic growth slowed.
  • Companies are trying to get ahead of what they expect to be a tough road ahead in terms of borrowing costs. Already, the year-to-date 2022 new issue coupon levels for investment-grade companies have risen to 4%, the highest level since 2018, according to a CreditSights research note.

(Source: Reuters)

VM Group Partners with JMEA to Provide Pension Solutions for Member Companies Published: 08 September 2022

  • Victoria Mutual (VM) Pensions Management Limited has partnered with the Jamaica Manufacturers and Exporters Association (JMEA) to provide special pension solutions to JMEA member companies and their employees.
  • The offer includes an approved retirement scheme portfolio – the Jamaica Manufacturers and Exporters Retirement Account (JMEARA), specifically tailored for JMEA members.
  • This portfolio comprises a balanced allocation of Jamaican and US dollar-denoted equities and fixed-income securities, as well as real estate. The partnership also seeks to address the critical needs of member companies and their employees relating to capital, loans, investments, insurance, and savings, through a bundled offer from across VM Support Business Units.
  • Consequently, this new partnership is expected to bring added business activity to the VM Group, which is expected to support its earnings growth in the coming quarters.

(Source: JSE)


Jamaica’s Private and Government Consumption to Remain Key Components of Economic Activity Published: 08 September 2022

  • Household spending in Jamaica will remain, by far, the largest component of economic activity, on the back of high remittance inflows and rising employment. Fitch forecasts that annual growth will average 1.8% from 2022 to 2031, and relatively weak investment will ensure that private consumption makes up a greater part of the economy.
  • In the short term, consumption growth will be limited by higher inflation rates. However, social spending programmes and tax reductions for lower-income households will bolster disposable incomes.
  • As the Jamaican government continues to exercise fiscal constraints to reduce debt, Fitch expects that government consumption as a percentage of GDP will decline moderately over the next decade. Government consumption as a percentage of GDP already fell from 16.3% in 2012 to 13.6% in 2019, with further plans to reduce government outlays.

(Source: Fitch Solutions)

Caribbean Manufacturers Encouraged To Develop Intra-Regional Markets Published: 08 September 2022

  • President of the Caribbean Manufacturers Association (CMA), John Robin, is urging increased intra-regional trade to combat the global environment which is affecting the regional manufacturing sector.
  • The president noted that “as it is right now in the Caribbean what we are seeking to do is promote OECS (Organisation of Eastern Caribbean States) and intra-CARICOM trade”
  • According to the President, this would mean “more trading, more selling of our goods into our islands than into North America and Europe where the conditions are more stringent and where we can learn in our local jurisdiction, and after we have learned, we can put in place resources then we can move into the more complex economies.”
  • Robin also noted that there are major challenges as it relates to supply chain logistics. He explained that “a lot of the shipping has become very expensive, and the cost has gone right up every time you import an item, it is much more expensive so as a result, you have to adjust your costs.”
  • Nevertheless, the CMA intends to work together, not as Dominica, but as OECS and as CARICOM to bring a harmonized approach in terms of procurements and how to purchase in bulk, to bring cost-reduction benefits to manufacturers.

(Source: Caribbean News Weekly)