• Latin America is increasingly seen as an attractive market for mergers and acquisitions (M&A), with the ongoing U.S.-China trade spat helping to whet investor appetite for opportunities in the region, a KPMG survey of executives showed on Monday.
• The survey of nearly 400 executives across 14 countries globally showed technology, financial services and energy sectors leading the way and Mexico overtaking regional heavyweight Brazil for the top spot in M&A activity.
• "Opportunities already outweigh challenges," said Gerardo Rojas, head of KPMG's Advisory Practice in Mexico and Central America. "The risks investors see in Latin America are outweighed by the desire to get out of Asia, particularly China, due to their trade war with the United States."
• Nearly half of the executives who took part in the study said there had never been a better time for M&A opportunities in the region, even as risks still abound.
• Notwithstanding, investors are closely monitoring regional geopolitical and economic risks and could get spooked if they see a breakdown in the rule of law, governments nationalizing private firms or a lack of incentives for foreign investment, Rojas said.
• Driven in part by its proximity to the U.S. and a nearshoring boom, Mexico was considered an attractive place to conduct business by 79% of the participants; followed by Brazil by 69% and Costa Rica by 54%, respectively. Additionally, mining powerhouses Chile and Peru could see investments in manufacturing rise.
• These investment possibilities bode well for the nations in terms of economic growth and foreign direct investments as the economies are still emerging from COVID and other global tensions.

(Source: Reuters)

• Inflation has been persistent but is projected to decline gradually as demand weakens and commodity prices moderate, provided longer-term inflation expectations remain anchored. Projections for many countries have been revised down over the forecast horizon, with upgrades primarily due to stronger-than-expected data at the beginning of 2023 more than offset by downgrades thereafter.
• After growing 3.1% last year, the global economy is set to slow substantially in 2023, to 2.1%, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4%. Tight global financial conditions and subdued external demand are expected to weigh especially on growth across emerging markets and developing economies (EMDEs).
• Global growth could be weaker than anticipated in the event of more widespread banking sector stress, or if more persistent inflation pressures prompt tighter-than-expected monetary policy. Weak growth prospects and heightened risks in the near term compound a long-term slowdown in potential growth, which has been exacerbated by the overlapping shocks of the pandemic, the Russian Federation’s invasion of Ukraine, and the sharp tightening of global financial conditions.
• The rapid rise in interest rates in the United States poses a significant challenge to EMDEs. As a result of this, especially adverse financial market effects in EMDEs followed, including a higher likelihood of experiencing a financial crisis. The effects also appear to be more pronounced in EMDEs with greater economic vulnerabilities.
• The findings suggest that major central banks can alleviate adverse spillovers through proper communication that clarifies their reaction functions. They also highlight that EMDEs need to adjust macroeconomic and financial policies to mitigate the negative impact of rising global and U.S. interest rates.

(Source: The World Bank)

• UBS completed its emergency takeover of embattled local rival Credit Suisse on Monday, forging a Swiss banking and wealth management giant with a $1.6 trillion balance sheet.
• Marking the closing of the biggest banking deal since the 2008 financial crisis, UBS Chief Executive Sergio Ermotti and Chairman Colm Kelleher said despite challenges there were "many opportunities" for clients, staff, shareholders and Switzerland.
• The combined group will oversee $5 trillion of assets, giving UBS a leading position in key markets it would otherwise have needed years to grow in size and reach. The merger also ends Credit Suisse's 167 years of independence.
• Having peaked at more than 82 Swiss francs in 2007, the price of Credit Suisse shares has been eroded by scandals and losses in recent years and closed at 0.82 francs on Monday.
• UBS agreed on March 19 to buy Credit Suisse for a knockdown price of 3 billion Swiss francs and up to five billion francs in assumed losses in a rescue orchestrated by Swiss authorities with Switzerland's second-largest bank on the edge of collapse.
• On Friday, UBS finalised an agreement on the conditions of a 9 billion Swiss franc public backstop for losses from winding down parts of Credit Suisse's business. UBS sealed the takeover in less than three months, a tight timetable given its scale and complexity, in a race to provide greater certainty for both clients and employees. The deal, however, exposed two myths - namely, that Switzerland is a steady, predictable investment destination and that banks' problems would no longer hit taxpayers.

(Source: Reuters)

• Jamaica's expenditure on imports was valued at US$592.3Mn for January 2023, an increase of 12.2% compared to the US$528.0Mn spent during the first month of 2022. The increased spending was due mainly to higher imports of “Consumer Goods” which moved up by 21.0%, “Fuels and Lubricants” up by 15.2%, and “Capital Goods (excl. Motor Cars)” up by 21.0%.
• For the period, earnings from total exports were valued at US$185.9Mn, an increase of 52.3% when compared to the US$122.0Mn earned in January 2022. The increase in exports was due primarily to a 128.6% increase in the export of “Crude Materials (excl. Fuels)” valued at US$53.6Mn. Domestic exports in the review period amounted to US$141.0Mn, 30.7% above the US$107.9Mn recorded in January 2022. This growth was due primarily to higher exports from the Mining and Quarrying industry following the reopening of the Jamalco plant in 2022.
• The five main trading partners for January 2023 were the United States of America (USA), China, Japan, Trinidad and Tobago, and Turkey. Expenditure on imports from these countries increased by 19.1% to US$403.4Mn. This increase was due mainly to the higher imports of fuel from the USA.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, the Russian Federation, Iceland and Latvia. Exports to these countries increased by 101.3% to US$152.0Mn mainly due to higher exports of crude materials to the Russian Federation and fuel to Puerto Rico.

(Source: STATIN)

• iCreate Limited has announced that it will no longer be proceeding with its previously announced intention to acquire Ideas Execution Limited.
• On February 3 of this year, the digital media and edu-tech firm announced that it planned to acquire 100% ownership of the branding and trade marketing company, Ideas Execution Limited.
• iCreate’s CEO Tyrone Wilson had indicated that the acquisition fits into the company's merger and acquisition strategy. However, in the same announcement noting its change in plans, iCreate said it remains committed to its growth strategy and will continue to explore opportunities for expansion in the future.

(Source: JSE)

• Figures from the Panama Tourism Authority (ATP) indicate that between January and March of this year, the entry of 786,854 visitors was reported, a figure that represents an increase of 84% compared to the data for 2022, or 360,110 additional people.
• Much of the 84% increase in the flow of visitors was the product of a greater arrival of cruise passengers to the country, a total of 188,114 travellers.
• The number of tourists, which are travellers who stay more than 24 hours in a destination, also rose. Up to March, 521,107 persons were counted, an increase of 57% compared to the movement of 2022. The number of travellers who enter the country, but stay less than 24 hours, closed the first quarter with an increase of 14%.
• Ovidio Díaz, president of the National Chamber of Tourism of Panama (Camtur), described activity during the first quarter as "good", but warned that the difference will be "drastic" when the numbers for the second quarter are known.
• Historically, the high season for Panamanian tourism ends in March or early April, and then a drop in the flow of travellers is reported at the start of the rainy season in the country. Diaz warned that it is time to work on the stabilization of the sector to reduce the gap that occurs between the changes in season and for this, he indicates that it is necessary to continue strengthening international promotion.
• Notwithstanding, between January and March, tourist spending by visitors, excluding the price of air tickets, reached $1.479 billion up 32% compared to 2022. There are anticipations that revenue volumes should exceed pre-pandemic volumes by the end of 2023.

(Source: Newsroom Panama)

• Mexico's annual inflation rate slowed in May for a fourth consecutive month to 5.84%, data from the National Institute of Statistics and Geography (INEGI) showed, beating forecasts and continuing a downward trend spurred by a long cycle of rate hikes.
• Headline inflation came in below a forecast of 5.90% and is now at its lowest since August 2021 (8.70%).
• Nonetheless, analysts say future drops in inflation may now be trickier, prompting a delay in rate cuts.
• Jason Tuvey, Deputy Chief Emerging Markets Economist at Capital Economics, expects headline inflation to fall further over the coming months. However, the strong labour market and rapid wage growth mean that inflation is likely to stay higher than most anticipate over the next couple of years. As a result, while the tightening cycle has ended, rate cuts are likely to come later and be more gradual than most anticipate.
• Banxico, as the Mexican central bank is known locally, kept the benchmark interest rate stable at 11.25% last month for the first time in nearly two years, but warned that the rate needed to stay at this level for an "extended period."
• Banxico does not expect inflation to reach its target rate of 3%, plus or minus a percentage point, until late 2024.

(Source: Reuters)

• The dollar inched higher on Monday, trading within narrow ranges, as investors remained cautious ahead of key policy decisions this week from several central banks, led by the Federal Reserve, which is expected to keep interest rates on hold for the first time since January 2022.
• Monetary policy meetings at the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set the tone for the week as markets seek clues from policymakers on the future path of interest rates. U.S. May inflation data will be out on Tuesday as the Fed kicks off its two-day meeting.
• "The greenback is responding to typical 'dollar smile' dynamics, tumbling as growth differentials converge and volatility fears drop across the financial markets," said Karl Schamotta, chief market strategist at Corpay in Toronto. The dollar smile is a theory which refers to scenarios in which the U.S. currency outperforms its peers in two extremely different scenarios: when the U.S. economy is strong and there is optimism in markets, or when the global economy is doing badly and risk appetites are low.
• "With evidence of a modest U.S. economic deceleration steadily accumulating, investors are betting that tomorrow's inflation print is more likely to undershoot expectations than overshoot them, and that is helping to reduce the odds on an aggressively hawkish response from Fed officials on Wednesday," Schamotta added.
• Money markets are leaning toward a pause from the Fed when it announces its rate decision on Wednesday, according to the CME FedWatch tool, expectations that sent world stocks surging to a 13-month high on Friday as risk sentiment improved.

(Source: Reuters)

• Central banks like the Bank of England will find it hard to communicate the end of their rate-tightening cycle and should not sweat over this at the expense of taking steps to bring down inflation, BoE policymaker Catherine Mann said on Monday.
• UK interest rate expectations jumped after April inflation data fell less than expected, and showed bigger rises in food prices, services and some goods than the BoE had expected. Many economists, by contrast, expect the BoE to stop sooner - or if not, to pause to assess the impact of the rapid series of rate rises.
• Mann was a keen supporter of rate rises last year - often voting for bigger increases than other members of the Monetary Policy Committee - but said she drew some comfort from the fact that household inflation expectations were now falling.
• "Inflation expectations, in fact, are on the downswing even as some of these core and services prints have been more robust than we would have hoped for," Mann said. On the hand, she said these expectations were still too high to be consistent with inflation returning to its 2% target, and last month said Britain appeared to have stickier inflation than the United States or the eurozone.
• Economic activity had also continued to grow modestly and in line with expectations, Mann added. "One per cent growth, no matter how you cut it, is not a great rate of growth. It's not a recession, but it's also not the kind of strong growth that we would hope to see," she said.

(Source: Reuters)

• The World Bank has maintained its growth projections for Jamaica. In its latest Global Economic Prospects report for 2023, the World Bank estimates the local economy to grow by 2%
• Its projection for growth in 2024, however, improved by 0.5 percentage points compared with January's forecast. Jamaica's economy is set to grow by 1.7% in 2024, with a marginal decline to 1.5% in 2025.
• However, it is important to note that there are downside risks to this forecast including a possible deeper-than-expected slowdown in the global economy, which could undermine the recovery in tourism and depress remittance inflows. Additionally, the further deterioration in financial market conditions in the US could curtail consumption and derail longer-term growth. Lastly, worsening crime, social unrest, and potential natural disasters could also impair growth.
• The World Bank's forecast for Latin America and the Caribbean sets growth for this year at 5.1%, which is 0.5 percentage points lower than the projection in January. The estimate for 2024 saw a 0.1 percentage point downgrade, set at 5.6%.
• The region's growth should be led by Guyana, with GDP expected to increase by 25.2% this year, and 21.2% in 2025.

(Source: RJR News)