• Barbados and other Caribbean Community (CARICOM) member states are being warned by Secretary General of the CARICOM Secretariat, Dr Carla Barnett, of the need to adapt new corporation tax rules to protect their tax base in light of new global changes.
• Barnett said the time had come for the region to review its double taxation regime and prepare to put new corporation tax rules in place in light of the changing global requirements.
• The intra-CARICOM double taxation agreement which predated the revised treaty has been deemed to be non-compliant with member states' commitments concerning the global tax governance agenda which now emphasises the exchange of tax information and tax reform to prevent evasion and avoidance, especially given the challenges emanating from the digitalisation of the global economy.
• That said, Barbados and other CARICOM member states are facing the possibility of the Organisation for Economic Cooperation and Development’s (OECD) two-pillar tax rule, which is being touted as a solution to address tax challenges arising from the digitalisation of economies. Pillar two proposes a 15% minimum global tax rate by 2023.
• Barnett also outlined several areas where she said work was progressing including the development of a regional regulatory framework to make the region a single economic space, a regional reporting system, air and maritime transport, and the free movement process, which she said has already resulted in the removal of hundreds of restrictions on the movement of goods across the region.

(Source: Barbados Today)

• The European Central Bank has raised interest rates by 75 basis points to tackle record inflation, despite fears that the eurozone is already heading into recession because of soaring energy prices. The move, which matches the ECB’s previous biggest increase in borrowing costs, lifts the bank’s benchmark deposit rate from zero to 0.75 per cent — the highest level since 2011.
• It is the second consecutive increase in borrowing costs by the ECB, which raised rates in July for the first time in more than a decade. The rise comes in spite of mounting fears that the currency area will fall into recession in the coming months as surging energy prices — largely the result of Russia’s throttling of key European gas supplies — hit businesses and households throughout the region.
• However, eurozone inflation hit a new high of 9.1 per cent in the year to August, well above the ECB’s 2 per cent target, while the jobless rate fell to a record low of 6.6 per cent in July. The euro also dropped to a 20-year low against the dollar, raising the price of imports, while growth rose by an unexpectedly strong 0.8 per cent in the second quarter. 
• Such developments bolstered the case for the ECB to take more aggressive action to rein in inflation, even if it costs jobs and growth. The last time the ECB raised rates by 0.75 percentage points was a three-week technical adjustment to smooth the euro’s launch in January 1999.
• The ECB said its main refinancing rate for bank liquidity would increase from 0.5 per cent to 1.25 per cent. The rate on its marginal lending facility for overnight loans to banks would rise from 0.75 per cent to 1.5 per cent.

(Source: Financial Times)

• Traders are now seeing a near certainty that the Federal Reserve enacts its third consecutive 0.75 percentage point interest rate increase when it meets later this month. The probability of a three-quarter point hike moved to 82% on Wednesday morning, according to the CME Group’s FedWatch tracker of fed funds futures bets.
• That follows a series of positive economic data and statements from Fed officials indicating that tight policy is likely to persist well into the future. In a pivotal speech on August 26, Fed Chairman Jerome Powell warned that increases will proceed and higher rates likely will stay in place.
• Even as traders ramped up their bets on Fed tightening, stocks were higher shortly after the market opened. A Wall Street Journal report noting the likelihood of a 0.75 percentage point increase coincided with traders pricing in the more aggressive move, and stock futures momentarily slipped.
• “In June a 75 basis point rate hike from the Federal Reserve was seen as a surprising acceleration from the 50bp and 25bp delivered at the two previous meetings. Less than three months later, 75bp has become something of a global norm with both the European Central Bank and Bank of Canada set to raise rates by 75bp,” Citigroup economist Andrew Hollenhorst said in a client note Wednesday.
• “These ‘expeditious’ rate hikes come from a similar logic — in economies where inflation is running well above target, there is little argument against at least returning policy rates and financial conditions to a ‘neutral’ setting if not moving into restrictive territory,” he added.

(Source: CNBC)

• Supreme Ventures Limited (SVL) has announced that its mobile gaming platform has been certified by Gaming Laboratories International (GLI).
• The application software platform comprises original technology that is the intellectual property of SVL. This makes SVL one of only two companies in the region to be GLI certified and positions the company and its mobile gaming platform as a service to other operators.
• The mobile gaming platform will allow SVL customers to place wagers on the number of games via a mobile app and web application. This latest technological milestone achieved by the company ensures that its core lottery and gaming businesses are continually developing and evolving.
• This move reaffirms SVL’s continued focus on expansion through innovation to deliver world-class experiences and products to its gamers and retailers in every market that it operates.

(Source: JSE)

• Fitch forecasts real GDP growth for Jamaica will accelerate to 5.2% in 2023, owing partially to a low statistical base from weak growth in 2022. Net exports will be the main growth driver in 2023, adding 2.7pp to headline growth, according to Fitch’s forecasts.
• This will be due to a lower energy import bill, reducing imports in value terms. It will also be a function of a brighter outlook for the tourism sector. Fitch forecasts that tourism receipts will rise to 19.9% of GDP in 2023, as declining inflation in the US and Canada supports real incomes, boosting demand for price-elastic services like tourism.
• Remittances normally account for over 20% of GDP in Jamaica and stand to have an improved year, amid lower inflation and improving labour market conditions in key source markets such as the US, UK and Canada.
• Although Fitch sees fixed investment (0.3pp) and government spending (0.3pp) having a muted impact on growth, amid higher borrowing costs and an elevated government debt load (95.8% of GDP in 2023), it sees private consumption adding 2.0pp to growth. This will reflect lower inflation, supporting real household incomes. Additionally, inflation is forecasted to slow and average at 7.8% in 2023, as global oil prices fall slightly to an average of USD100.00/bbl in 2023 and supply chain disruptions gradually ease.

(Source: Fitch Solutions)

• “Latin America and the Caribbean have seen a significant recovery in employment following the COVID-19 pandemic, but the region’s labour markets face a complex and uncertain future that could be marked in 2022 by rising unemployment, informality and increasing numbers of the working poor”, the International Labour Organization (ILO) said.
• Low economic growth, high inflation and a global crisis aggravated by Russia’s aggression against Ukraine have affected both the quantity and quality of jobs generated in the region and could prolong the impact of the pandemic crisis on labour markets.
• Data from the first quarter of 2022 show an average unemployment rate in the region of 7.9%, an employment rate of 57.2%, and a labour force participation rate of 62.1%. These are almost the same levels as in the first quarter of 2019.
• Another factor of concern is high inflation, which has a significant impact on labour markets. Prices began to increase in 2021; however, the war in Ukraine has affected the availability of food and energy, among other factors, and this directly affects the level of real labour income, warns the ILO.
• Claudia Coenjaerts, acting ILO Regional Director for Latin America and the Caribbean stated that given the current scenario “countries in the region should focus on promoting the creation of more formal jobs, in coordination with active policies, vocational training and sectoral policies, the report says. Advocating for the minimum wage and collective bargaining, within a framework of social dialogue is also essential.”

(Source: Caribbean News Global)

• The Guyanese Ministry of Finance in its Mid-Year Report has revised its full-year inflation estimate up from 4.1% to 5.8%. This represents an increase in expected inflation of 41% from the previous report. In fact, this 5.8% full-year inflation rate is even higher than last year’s inflation rate of 5.7%.
• Although the inflation expectation is now higher, notably the government in its report pointed out that while a 4.9% increase in CPI has been recorded at the end of June, this is lower than the 5.6% increase that was documented at the end of the half-year 2021.
• Although the June rate was lower than last year’s, the increase in expectations was “underpinned by high food and energy prices, with the former increasing by 8.1% and contributing 3.6 percentage points to the inflation rate.” The main drivers in the food category that pushed up the figure were meat, fish and eggs, vegetables and vegetable products as well as cereals and cereal products.
• Consumers are also facing higher energy costs. The Finance Ministry noted that major contributors were operation and personal transport which rose by 27.1%, as well as fuel and power which increased by 9%.
• Notably, the Government responded with a series of measures to ease the burden of growing commodity prices on citizens when it announced the reduction of excise tax on petroleum from 20% to 10% which was further reduced from 10% to zero.
• Additionally, the administration noted that in this year’s Budget it “removed VAT on cement to lower the cost of construction, and announced the reduction of the final tax applied on miners’ incomes from 3.5% to 2.5%, and the removal of the 10% tributers tax.”

(Source: Kaieteur News)

• Oil prices fell on Tuesday as concern returned about the prospect of more interest rate hikes and COVID-19 lockdowns weakening fuel demand, reversing a two-day rally on OPEC+'s first output target cut since 2020.
• Brent crude settled at $92.83 a barrel, losing $2.91, or 3%. U.S. West Texas Intermediate (WTI) fell from Monday's trading to settle at $86.88 a barrel, up 1 cent from Friday's close.
• The U.S. benchmark had been trading since Sunday without settlement due to the Labour Day holiday. WTI prices are down more than 2% from the usual time of settlement on Monday, Refinitiv Eikon data show.
• "The OPEC+ news is now in the market and the focus has temporarily shifted to economic and inflationary concerns amongst which the two relevant factors are the extended COVID lockdowns in China and Thursday's ECB rate decision," said Tamas Varga of oil broker PVM.
• China has eased some COVID-19 curbs but extended lockdowns in Chengdu, which added to worries that high inflation and interest rate hikes will hit oil demand. The European Central Bank is widely expected to lift rates sharply when it meets on Thursday.
• A stronger U.S. dollar, which was up about 0.6% on better-than-expected U.S. services industry data, also put pressure on oil prices. The reading on services sector activity fed into expectations that the Federal Reserve will keep raising interest rates, which could trigger a recession and bring down fuel demand.

(Source: Reuters)

• On September 7^th the Bank of Canada increased its target for the overnight rate to 3.25%, with the Bank Rate at 3.50% and the deposit rate at 3.25%. The Bank is also continuing its policy of quantitative tightening.
• The global and Canadian economies are evolving broadly in line with the Bank’s July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices.
• The Canadian economy also continues to operate in excess demand and labour markets remain tight. Canada’s GDP grew by 3.3% in the second quarter. While this was somewhat weaker than the Bank had projected, indicators of domestic demand were very strong – consumption grew by about 9.5% and business investment was up by close to 12%. With higher mortgage rates, the housing market is pulling back as anticipated, following unsustainable growth during the pandemic.
• Considering the aforementioned, the Bank continues to expect the economy to moderate in the second half of this year, as global demand weakens and tighter monetary policy in Canada begins to bring demand more in line with supply.
• Given the inflation outlook, the Governing Council still judges that the policy interest rate will need to rise further. It is using quantitative tightening to complement increases in the policy rate. As the effects of tighter monetary policy work through the economy, it will be assessing how much higher interest rates need to go to return inflation to target.

(Source: Bank of Canada)

• Jamaica and the Republic of Trinidad and Tobago have signed a Memorandum of Understanding (MOU) aimed at providing companies in both countries with a transparent and predictable means of addressing export challenges.
• Prime Minister the Most Hon. Andrew Holness made the disclosure during a joint press conference held in the twin island Republic on Monday (August 29), with his counterpart, Dr. the Hon. Keith Rowley.
• Mr Holness said the MOU follows on activities that started in 2016 when Prime Minister Rowley made an official visit to Jamaica. “As a result of the activities previously started, we were able to create a pathway to deal with trade complaints, and today we signed a Memorandum of Understanding on that cooperation, and that pathway, I believe, has been very useful to both our countries in improving trade relations,” he informed.
• Minister of Foreign Affairs and Foreign Trade, Senator the Hon. Kamina Johnson Smith explained that both countries have been working together for some time to address non-tariff barriers, and this mechanism concretizes the commitment.
• The bilateral agreement will complement the CARICOM Single Market and Economy arrangements. It is expected to improve trade relations between both countries as they collaborate to deal with supply chain issues and export challenges. This should benefit manufacturers and the competitiveness of their products in the Trinidadian markets, and improve the country’s export earnings from the region.

(Source: JIS News)