• British banks agreed in June to give homeowners who miss mortgage payments a one-year grace period before foreclosing and to protect the credit scores of borrowers who change loan terms, as the government sought to ease the strain of rising interest rates.
• The new measures also allow borrowers to potentially change the terms of a mortgage - for example, to pay only interest, or to extend the repayment period - for up to six months without the lender undertaking fresh credit checks, in a move that could pose risks for banks in the longer run.
• Some of the measures announced by the government appeared to replicate policies banks have in place. The finance ministry statement said the newly agreed "mortgage charter" with banks offer tailored support to people struggling with repayments.
• Changes to Britain's mortgage market relative to interest rate changes have a less immediate impact on homeowners than they did in the past. This is because about 85% of mortgage holders are on fixed-rate deals, up from under 30% in the early 2000s.
• Most of those fixed rates only last for up to five years, unfortunately. Around 800,000 mortgages will need to be refinanced in the second half of this year, followed by a further 1.6 million in 2024, out of a total of around 9 million residential mortgages, industry body UK Finance said.

(Source: Reuters)

• Global factory activity slumped in June, business surveys showed on Monday, as sluggish demand in China and in Europe clouded the outlook for exporters. Across the Eurozone, manufacturing contracted faster than initially thought, as persistent policy tightening by the European Central Bank squeezed finances, and in Britain, the pace of decline steepened as optimism faded. Later on Monday, US ISM Manufacturing Purchasing Managers Index (PMI) data came in lower than expected (actual 46 vs. expected 46.9).
• "There are no real signs we are going to get any rebound in the manufacturing sector this year. On the whole we are still talking about a negative assessment," said Rory Fennessy, European economist at Oxford Economics on the eurozone release.
• Compiled by S&P Global, Hamburg Commercial Bank’s final eurozone manufacturing Purchasing Managers' Index (PMI) fell to 43.4 from May's 44.8. This is the lowest it has been since the COVID pandemic was cementing its grip on the world, below a preliminary reading and further from the 50 mark separating growth from contraction.
• The S&P Global/CIPS UK Manufacturing PMI also fell to 46.5 from 47.1 in May, its lowest reading this year and one of the weakest since the 2008-09 financial crisis.
• China's Caixin/S&P Global Manufacturing PMI eased to 50.5 in June from 50.9 in May, the private survey showed. This figure, combined with Friday's (June 30) official survey on China’s factory activity shows a steady decline in the manufacturing sector in China and it adds evidence to the fact the world's No. 2 economy lost steam in the second quarter.
• The impact is being felt in Japan where the final au Jibun Bank PMI fell to 49.8 in June, returning to a contraction after expanding in May for the first time in seven months. New orders from overseas customers decreased at the fastest rate in four months reflecting feeble demand from China. South Korea's PMI fell to 47.8 in June, extending its downturn to a record 12th consecutive month on weak demand in Asia and Europe. Factory activity also contracted in Taiwan, Vietnam and Malaysia, the PMI surveys showed.
• Asia is heavily reliant on the strength of China's economy, which saw growth rebound in the first quarter but subsequently fell short of expectations. The fate of Asia's economy, including China's, will have a huge impact on the rest of the world with aggressive monetary tightening also expected to weigh on U.S. and European growth.

(Source: Reuters)

• The Monetary Policy Committee (MPC), at its meetings on 27 and 28 June 2023, unanimously agreed to maintain the policy interest rate (the rate offered to deposit-taking institutions (DTIs) on overnight placements with Bank of Jamaica) at 7.0 per cent.
• The decisions were based on the MPC’s view that recent developments, including significantly reduced inflation over the past several months, were generally positive but the risks to the inflation outlook remained.
• Jamaica’s annual headline inflation rate at May 2023 of 6.1 per cent was just above the Bank’s target range but significantly lower than the 10.9 per cent at May 2022. Core inflation (which excludes food and fuel prices from the Consumer Price Index) at May 2023 of 4.2 per cent was also well below the outturn of 9.7 per cent at May 2022. The MPC’s decisions were therefore intended to ensure that Jamaica’s inflation rate continues to trend toward the target range of 4.0 to 6.0 per cent.
• Notably, the MPC’s decisions were based on a few key factors. The key external drivers of headline inflation such as grains, fuel and shipping prices, continued to decline and inflation expectations trended downward, such that the United States (US) Federal Reserve Board (Fed) paused its monetary tightening in June 2023 but suggested that interest rates could increase further.
• The MPC noted that the incoming data was generally positive but pointed out that the uptick in inflation above the target range is likely to continue for June and during the September 2023 quarter. This uptick is expected to be driven by recent increases in telephone and internet rates, the national minimum wage, seasonally higher agricultural prices as well as pending increases in other regulated prices such as transport.
• Consistent with global consensus forecasts for a further fall in certain commodity prices as well as the Bank’s overall monetary policy stance, and in the absence of new shocks, inflation is expected to decelerate to the Bank’s inflation target range of 4.0 to 6.0 per cent by the December 2023 quarter.
• In reviewing the impact of its previous monetary policy decisions, the MPC continues to see, in addition to a general lowering of inflation, a relatively strong, lagged pass-through of its policy rate to interest rates in the domestic money and capital markets and in the term rates offered on deposits by DTIs. The date of the next policy decision announcement is 18 August 2023.

(Source: BOJ) 

• Finance Minister Dr. Nigel Clarke says Jamaica only has three more steps to complete before meeting the Financial Action Task Force (FATF) requirements for removal from the grey list. Speaking during a radio interview on Wednesday, Dr. Clarke said progress is being made to meet the October deadline. 
• He highlighted that the three outstanding matters are to operationalise risk-based supervision of beneficial ownership by the Companies Act; of lawyers by the General Legal Counsel; and of trust and corporate service providers by the Financial Services Commission.
• He noted that once that risk-based supervision is demonstrably operationalised by those three regulatory bodies, Jamaica will then be able to apply for an on-site examination where FATF will come to Jamaica and verify for themselves that these actions have indeed been taken, the operationalization is indeed in effect, and then if that on-site is successful, Jamaica will be able to be removed from this grey list.
• Countries which fall on the grey list are subject to increased monitoring, as the entity deems them as needing to address certain gaps in their terrorist financing and money laundering regimes.
• If Jamaica does not meet the October deadline, further enhanced restrictions could be put in place for financial transactions and business relations being conducted on the island.

(Source: RJR News)

• The International Monetary Fund (IMF) says the Caribbean needs more than US$100Bn in investments for climate resilience and adaptation. The sum is equal to about one-third of the region's annual economic output.
• The Caribbean is the most exposed region to climate-related natural disasters. Moreover, with electricity largely generated using fossil fuels, energy prices in the Caribbean are among the highest in the world, highlighting the need for investment in lower-cost and lower-carbon energy production.
• In a publication this week, the multi-lateral agency ranked the Caribbean region as the most vulnerable to natural disasters.
• The region is estimated to have realized an average cost of loss and damage due to natural disasters, at about 2.5% of gross domestic product for the period 1980 to 2020, and is ranked just ahead of the Pacific region, with the average estimate of losses being just above 2% of GDP for the same period.
• The IMF says the Caribbean continues to experience a shortfall in climate financing, with the current level of private climate funding being woefully inadequate. It says there is progress, however, with several initiatives, including the issuance of blue bonds, combined with debt-nature swaps for debt service reduction, which opens fiscal space for nature conservation investments.
• With Caribbean countries having only been approved for about US$800Mn from climate funds such as the Green Climate Fund, Global Environment Fund, and Adaptation Fund, the IMF says much more support is needed.

(Sources: IMF & RJR News)

• Brazil's central bank joined on Thursday, June 29, a wave of recent upward revisions for the country's economic growth this year, guided by a solid first quarter boosted by the agriculture sector.
• In its quarterly inflation report, the central bank forecasts a 2.0% expansion in gross domestic product (GDP) for 2023, up from the 1.2% estimate in March.
• The figure came slightly below the 2.18% growth expected by private economists in a weekly survey conducted by the bank and remains weaker than last year's 2.9% GDP expansion.
• "The revision mainly reflects positive surprises in some industrial and service sector activities in the first quarter, in addition to improved forecasts for agriculture," said the report.
• The central bank emphasized that the outlook ahead points to an economic slowdown as the cumulative effects of domestic monetary policy and the influence of global growth deceleration take hold.
• Following last week's decision to maintain interest rates at a cycle-high of 13.75% for the seventh consecutive policy meeting, the central bank reinforced in the report that its future actions would be data-dependent, focusing on inflation dynamics and expectations.
• The minutes from the decision indicated that most policymakers see the possibility of a "parsimonious" rate cut at the next meeting in August, contingent upon consolidating a more benign inflation scenario.

(Source: Reuters)

• Q1 real GDP growth was revised up from 1.4% to 2.0% on stronger consumer spending and net exports. Q2 growth is also tracking close to 2%. The Fed is attempting to slow an economy with considerable momentum and recent data (including lower jobless claims released simultaneously with GDP revisions) suggest policy may not yet be sufficiently restrictive to do so.
• The revision was largely due to stronger services spending which was revised up from 2.5% to 3.2%. Also contributing to the upward revisions were stronger exports and weaker imports. Real final private domestic demand is now up a remarkable 3.2% QoQ annualized in Q1, the strongest reading since the immediate reopening period in early 2022.
• Consistent at around 2%, real GDP growth together with a pace of job gains around 300k/mth and a resurgent housing sector does not point toward a near-term recession. Consumer spending is proving to be much more consistently robust than contemplated in most forecasts, including Citi’s. Services spending in particular continues to run at a very strong rate and that does not seem to be slowing over the summer.
• The strength in consumer spending is particularly notable, given that consumers have run through roughly half of the estimated ~10% of nominal GDP in “excess savings.” Higher interest rates seem to be having little moderating effect on consumer spending. Even housing activity has picked back up despite mortgage rates that moved up from 3% to between 6% and 7%.

(Source: Citi Research)

• Kingston Properties has said it is looking to monetize more assets in a bid to streamline operations. CEO Kevin Richards said in addition to other projects already exited, the company is looking to sell property in New Kingston, a deal it hopes will be concluded shortly.
• He noted that the company has already monetized condos it had in Florida and is looking to do the same with others.
• It was further highlighted that the company will be shifting its strategy towards a more dynamic one which would mean a reduction in its holding period. Typically, the company holds property for 5 to 7 years, however, there are some that the company will hold for a shorter period.
• The company is also considering more construction opportunities based on current market trends. Currently, demand mainly exists in the warehousing and flex space (a combination of warehouse and office spaces), and as such the company is looking for those opportunities in Jamaica, the Cayman Islands, and as far away as Europe.

(Source: RJR News)

• With 42% of the expenditure of a visitor being on food, Tourism Minister, Hon Edmund Bartlett, is inviting local investors to build the capacity of Jamaica for it to become “a real strong foodie destination”.
• The Minister made the call in an interview with JIS News at an event dubbed ‘Come Back to Craving’, held at the Devon House Mansion in Kingston on June 21, where a group of local and international journalists were treated to a unique gastronomy experience.
• He noted that Devon House was designated as the Gastronomy Centre of Jamaica and the Caribbean, and as a result, the Ministry of Tourism has been developing a Gastronomy Policy.
• Currently, gastronomy is a huge driver of the Jamaican tourism experience and the country has the potential to bring a new element of tourism demography into the destination.
• Minister Bartlett highlighted that the Jamaican story is strong and compelling, and as more people are brought to the destination, they will create consumption patterns that are new and varied, and Jamaica has the capabilities to present the food types that will respond to these different consumption patterns. This would allow the country to appeal to a new tourist demography and ultimately increase arrivals.  

(Source: JIS)

• An index evaluating Latin American countries' ability to weed out corruption showed most countries moving backwards, according to the ranking released on Tuesday, June 27.
• The 2023 Capacity to Combat Corruption (CCC) Index, published jointly by Americas Society/Council of the Americas (AS/COA)) and Control Risks, covers 15 countries, which together represent 96% of Latin America’s GDP, pointed to a decline in the region's average score for the first time since 2020.
• Looking at 14 variables, including the independence of judicial institutions and the strength of investigative journalism, the CCC Index "relies on extensive data and a proprietary survey conducted among leading anti-corruption experts" to score and rank countries on a 0-10 scale.
• Notably, two of the 15 countries, Guatemala (2.86) and Venezuela (1.46), saw significant declines in their scores in 2023, and one country, Panama (5.39), saw a material improvement. Guatemala and Mexico (5.39) are the only two countries whose overall scores have decreased every year since the Index was released in 2019.
• Latin America's largest economy, Brazil (4.83), ranked 8th, with its score improving by 1.5% from 2022. The region's second-largest economy, Mexico, ranked 12th, showing "pronounced downgrades" in the civil society and media categories as Mexican journalists face "the world's highest rate of violence against reporters outside Ukraine," the report said.
• Uruguay (6.99) ranked first again, but registered a consecutive year of decline, a sign "that no country is immune from either stagnation or regression in the fight against corruption," the index said.

(Source: Reuters & AS/COA)