• Fitch Solutions estimates real GDP growth slowing from 5.9% in 2022 to 2.0% in 2023 in Grenada, owing partially to a high statistical base.
• In 2023, despite the impact of base effects, Fitch expects that economic activity was supported by a strong recovery in the tourism sector, as well as easing global commodity prices following a spike in prices caused by Russia’s invasion of Ukraine in February 2022.
• It is also forecasted that real GDP growth will accelerate to 3.0% in 2024, driven mainly by the recovering tourism sector and improving financial conditions for households.
• Furthermore, Grenada will remain among the most politically stable countries in the Caribbean region in the coming years, as reflected by its high score of 80.6 (out of 100) in its Short-Term Political Risk Index.
• The country will continue benefiting from a stable path of political policymaking and policy continuity, while social stability will benefit from the improving economy and tourism sectors.
• Nevertheless, the country’s weak fiscal position and limited ability to attract overseas investment outside the tourism sector will prevent faster rates of GDP growth.

(Source: Fitch Solutions)

• The Brazilian government expects cuts of at least 50 basis points in the central bank's benchmark interest rate over the remaining three meetings this year, aiming to end 2023 with the rate below 12%, Planning Minister Simone Tebet said on Tuesday.
• The Selic rate stands at 13.25% after the central bank embarked on an easing cycle last month with a half-percentage-point reduction, marking the end of nearly a year of holding rates steady to combat high inflation. The next monetary policy decision is scheduled for Sept. 20.
• Policymakers have consistently stressed that the central bank will keep the 50 basis point rate cut pace, with eventual changes contingent on significant shifts in the inflation outlook.
• Tebet also expressed confidence in the process of eliminating the primary budget deficit in 2024, emphasizing that, in addition to the measures already put forth to achieve this goal, Finance Minister Fernando Haddad has other revenues that were not yet factored into the calculations.
• "From next year onwards, the spending control treadmill will move at the same speed as the revenue increase treadmill" to help balance public accounts, Tebet said.
• Brazil’s budget deficit is anticipated to remain wide and only narrow slightly from 7.6% of GDP in 2023 to 6.6% of GDP in 2024. While the government will likely approve reforms to increase tax intakes by end-2023, Fitch believes that modest real GDP growth and structurally high spending will limit its fiscal consolidation

(Sources: Reuters & Fitch Solutions)

• The European Central Bank raised its key interest rate to a record peak on Thursday and signalled this will likely be its final move in a more-than-year-long fight against stubbornly high inflation.
• The central bank for the 20 countries that share the euro also raised its forecasts for inflation, which it now expects to come down more slowly towards its 2% target over the next two years, while cutting its expectations for economic growth.
• That illustrated the dilemma the ECB faced at the meeting, with prices still rising at more than twice its target rate but economic activity struggling under high borrowing costs and a downturn in China. Against this backdrop, the ECB sent a clear message it was probably done raising rates.
• "Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target," the ECB said.
• This was expected to happen more slowly than at the time of the ECB's previous projections in June, with inflation now seen at 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025.
• The upgrade to the 2024 estimate - which had been reported by Reuters earlier - was likely to have played a significant role in discussions as policymakers weighed the risk inflation, currently still above 5%, would get stuck at a high level.
• Once its rate increases end, the ECB is likely to begin a debate on mopping up more of the cash it pumped into the banking system through various bond-buying schemes over the last decade, although no decision on that matter was expected this week.

(Source: Reuters)

• Federal Reserve officials may have to revise higher forecasts of how far they'll have to raise interest rates given the unexpected strength of the U.S. economy and still sturdy levels of underlying inflation, a former U.S. central banker said.
• James Bullard, former president of the St. Louis Fed, has been a prominent hawk at the Fed in recent years in favour of aggressive rate hikes to curb high inflation. He spoke on Wednesday after the release of consumer price index data for August that showed ongoing inflation pressures.
• Overall inflation rose 3.7% from a year ago on higher gasoline prices, while inflation stripped of food and energy items edged a 4.3% year-on-year gain, from 4.7% in July, the Labour Department reported.
• The catch, as Bullard saw it, was the monthly change in the CPI was higher in August than it was in July. Core CPI gained 0.3% versus the prior month's 0.2% increase, while the monthly rise in overall CPI was 0.6% in August, compared to July's 0.2%.
• That development was "a little bit concerning," he said, adding that Fed officials want inflation to ease rather than quicken, and the CPI data "suggested that it's not going to come down as fast as they previously thought." "That might change the sentiment toward a somewhat higher trajectory for the interest rate path than would have otherwise been expected," Bullard said.
• The Fed is widely expected to leave its benchmark overnight interest rate in the current 5.25%-5.50% range at the end of a two-day policy meeting next week. The central bank also will release updated policymaker projections for economic growth, inflation, unemployment and the federal funds rate.

(Source: Reuters)

• General Accident Insurance Company Jamaica Limited has successfully applied for the graduation of its listed ordinary shares to the Main Market of the Jamaica Stock Exchange (JSE).
• Effective September 27, 2023, the Company’s issued securities that are listed on the Junior Market platform of the JSE will be listed on the Main Market of the JSE and will continue to trade on that platform.
• Since being listed on the Junior Market over ten years ago, the Company has grown its gross written premium almost seven-fold. In addition to its market leadership in Jamaica, the Company has established a regional presence in Barbados and Trinidad. The Directors of General Accident believe the successful application reflects its growth, increasing scope and ability to comply with the applicable governance standards for companies listed on the Main Market.
• The Company’s shares were listed on the Junior Market on September 21, 2011. Consequently, under the Income Tax Act, the Company benefitted from a full exemption from income tax on its profits for the first five years, and a 50% exemption from income tax for the following five years, which ended on September 21, 2021. Therefore, its effective corporate income tax rate will not be adversely impacted by the graduation.
• This means that the company may now be able to return to the market to raise more capital to take advantage of more investment opportunities, without being restricted by the current $500Mn share capital rule that is imposed on junior market stocks.

(Source:  JSE)

• Peru is clinging to its spot as the world's No. 2 copper producer and supplier, with a bounce in mining activity helping the Andean country stay just ahead this year of rival producer Democratic Republic of Congo (DRC), which is hot on its heels.
• The South American nation has seen output of the red metal rise some 20% in the first half of 2023, government data show, though that's been tempered by red tape and flagging mining investment after a period of political turmoil and protest.
• Peru produced 2.45 million metric tons of copper in 2022. DRC copper output meanwhile, just behind Peru at 2.40 million metric tons last year climbed 3% in the first quarter, the latest central bank data show, keeping it a close third place. Chile remains by far the top global producer and exporter.
• The data suggest the DRC could soon topple Peru from its second spot, especially with mining investment in Peru estimated by authorities to drop 16% this year and 7% next year given that the absence of world-class projects has led to the nation being unable to attract new large investments.
• Additionally, Ivan Merino, former mining minister in the government of ousted former President Pedro Castillo in 2021, said the lack of "predictability" in Peru and regular protests was scaring away or delaying investment. "If you do not have social stability, the viability of projects is going to be difficult; not impossible, but difficult," he said.
• Gonzalo Tamayo, former Peruvian mining minister in 2016-2017, added that Peru needed to take action to spur new investment - or risk being overtaken by rival producers.

(Source: Reuters)

• The International Monetary Fund (IMF) has commended the Government of Guyana for its anti-corruption efforts and steps to strengthen its governance framework.
• In a report documenting the conclusions of its Article IV Consultation with local authorities, the IMF said: “Staff commended the authorities’ progress in strengthening AML/CFT, governance, anti-corruption frameworks, and support further advances in their effective implementation.”
• The authorities have continuously engaged with the Caribbean Financial Action Task Force (CFATF) to prepare for the scheduled fourth round of mutual evaluation currently underway and are further strengthening the AML/CFT framework.
• Guyana has approved a National Policy and Strategy for Combating Money Laundering, and Terrorism Financing, which addresses the risks identified in its 2021 National Risk Assessment and introduced in parliament legislative amendments to the AML/CFT Act.
• Several pillars of the anti-corruption framework have been further strengthened, including the Integrity and Public Procurement Commissions and the National Procurement and Tender Administration Board. The efforts of the Integrity Commission led to a significant increase in the number of timely asset declarations of public officials.
• Outside of this, the IMF noted that; the Guyanese economy continues to grow very rapidly, supported by the government’s modernization plans, including the unparalleled oil sector expansion. Following record real GDP growth in 2022 (62.3%), the highest in the world, real GDP is expected to continue to grow extremely fast in 2023 by approximately 38%.
• This growth will be bolstered by oil production along with growth in the non-oil sector supported by the implementation of a fast-paced public investment programme focused on providing transportation, housing, and flood management infrastructure, and raising human capital. 

(Sources: Guyana Chronicle & IMF)

• U.S. consumer prices increased by the most in 14 months in August as the cost of gasoline surged, but the annual rise in underlying inflation was the smallest in nearly two years, likely giving the Federal Reserve cover to leave interest rates unchanged next Wednesday.
• The mixed report from the Labour Department on Wednesday was published a week before the Fed's policy meeting and followed data this month showing an easing in labour market conditions in August. Economists, however, believe officials at the U.S. central bank will continue to signal an additional rate hike this year given the stickiness in services inflation.
• Gasoline prices, which jumped 10.6% in August after climbing 0.2% in July, accounted for more than half of the increase in the CPI. Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.
• Some economists believe inflation risks are tilted to the upside in the near term, citing rising insurance costs, especially for motor vehicles. Health insurance costs in the CPI report are expected to rise from October through next spring after the Labour Department's Bureau of Labour Statistics, which compiles the report, recently announced changes to its methodology for measuring these costs.

(Source: Reuters)

• The International Monetary Fund (IMF) on Wednesday said that the global debt as a share of economic output fell significantly in 2022 for the second year in a row, but the decline may be ending as post-COVID growth picks up pace.
• The IMF said in an update to its Global Debt Database that the world's total debt-to-GDP ratio fell last year to 238% from 248% in 2021 and 258% in 2020. However, the decline for the past two years, driven by strong growth and stronger-than-expected inflation, has recouped only about two-thirds of the COVID-induced spike in global debt. The ratio remains well above the 2019 level of 238% of GDP.
• China has played a central role in increasing global debt in recent decades as borrowing outpaced economic growth, and its debt burden has defied the moderating trend, growing to 272% of GDP in 2022 from 265% in 2021. Those levels are similar to the United States, which saw its total debt-to-GDP ratio fall to 274% in 2022 from 284% in 2021, according to the IMF report.
• The world has been on a debt "rollercoaster" for three years, but debt is likely to rise again over the medium term, and the IMF urged governments to adopt strategies to help reduce debt vulnerabilities -- both in public debt, household debt and non-financial corporate debt.

(Source: Reuters)

• Jamaica is on course to welcome 3.88 million visitors for 2023, comprising 2.74 million stopover arrivals and 1.13 million cruise passengers, with estimated earnings of US$4.2 billion.
• Director of Tourism, Donovan White highlighted that those numbers are expected to grow to 4.59 million visitors and US$4.3 billion in earnings in 2024 and in 2025, the industry is projected to welcome five million visitors with corresponding earnings of over US$5 billion.
• Jamaica welcomed 2.77 million visitors between January and August, with tourism earnings reaching US$2.9 billion for the eight months.
• The arrival figure represents a 32% increase compared to the same period last year, when the island welcomed 2.09 million visitors, and is just 5.5% shy of the record 2.93 million in arrivals for January to August 2019. The remarkable surge in tourist arrivals and increased foreign exchange earnings is a testament to the unwavering dedication and collaborative efforts of Jamaica’s tourism stakeholders. The growth in the sector has been a key driver of economic growth after the COVID-19 pandemic subsided. Further, the projections suggest that the government is on track to earn more revenues from tourism as the industry continues to make a sizable contribution to growth in the coming years.
• Jamaica Product Exchange (JAPEX) is the premier trade event of the Jamaica Hotel and Tourist Association (JHTA), slated for September 11 to 13. The discussions will provide the Government and members of the JHTA with valuable information and insight to make strategic decisions aimed at further boosting the local tourism sector.

(Source:  JIS)