• The U.S. federal government's total public debt has reached $34 trillion for the first time, the U.S. Treasury Department reported on Tuesday as members of Congress gear up for another series of federal funding battles in the coming weeks.
• The debt that counts toward the federal debt ceiling rose to $33.89 trillion on Friday from $33.794 trillion on Thursday. This "debt subject to limit" category excludes the unamortized discount on Treasury bills and zero coupon bonds, debt issued by the Federal Financing Bank, and guaranteed debt of certain other agencies.
• The milestone comes shortly after the federal debt topped $33 trillion in September amid rising federal deficits fueled by falling tax revenues and rising federal expenditures.
• Congress returns to Washington next week to tackle Jan. 19 and Feb. 2 deadlines for settling government spending through September, amid Republican demands to reduce fiscal 2024 discretionary spending below caps agreed in June. Lawmakers also hope to pass emergency aid for Ukraine and Israel, possibly with unrelated U.S. border security provisions attached.
• Failure to approve the one-dozen fiscal 2024 spending bills would plunge Washington agencies into shutdown mode. However, reaching a compromise could become more difficult with the November presidential and congressional elections coming quickly into focus.
• Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a fiscal watchdog group, called the $34 trillion federal debt figure "a truly depressing achievement," attributing it to political leaders' unwillingness to make difficult fiscal choices.

(Source: Reuters)

• During the third quarter of 2023, total value added at constant prices for the Jamaican economy grew by 2.1% when compared to Q3 2022. This reflected growth in both the Services and Goods Producing Industries of 2.1%.
• Improved performances were recorded for Transport, Storage & Communication (6.0%), Hotels & Restaurants (6.7%), Other Services (4.5%), Finance & Insurance Services (1.5%), Electricity & Water Supply (6.7%), Real Estate, Renting & Business Activities (0.9%) and Wholesale & Retail Trade; Repairs: Installation of Machinery & Equipment (0.3%). However, the Services Industry’s outturn was tempered by a decline in Producers of Government Services, which was down by 0.9%.
• Within the Goods Producing Industries, there was higher output levels in Mining & Quarrying (103.1%), Manufacturing (2.1%), and Construction (0.7%). However, the Agriculture, Forestry & Fishing industry continued to be impacted by dry conditions during most of that quarter, which result in a 9.3% decline in its value added.
• Total value added at constant prices grew by 1.2% compared to the second quarter of 2023. This was also impacted by the performance of both the Services and Goods Producing Industries. The Services Industries grew by 0.7% and the Goods Producing Industries by 2.6%.
• The 2.1% growth over the quarter was 0.2% higher than the Planning Institute of Jamaica’s (PIOJ) estimate of real value added of 1.9%, released a few weeks ago. Furthermore, PIOJ noted that the performance of the local economy is expected to be generally positive for the October to December quarter, with key sectors, including tourism, leading the outturn.
• For October to December 2023, the economy is projected to grow within the range of 1.0% to 2.0%, resulting in calendar year growth (January to December 2023) within the range of 2.0% to 3.0%. For Fiscal Year 2023/24, the projection is for growth within the range of 1.0% to 2.0%.

 (Sources: STATIN & PIOJ)

• Prime Minister Andrew Holness has announced an extension of the toll-free period for the May Pen to Williamsfield leg (Phase 1C) of the East-West Highway, now through March 31, 2024. This extension grants the public an additional three months of toll-free travel on this new segment of the highway.
• This decision is intended to provide more time for ongoing negotiations between TransJamaican Highway Limited (TJH) and the National Road Operating and Constructing Company Limited (NROCC). These discussions focus on finalising the concession for Phase 1C, for which TJH, the current operator of the Kingston to May Pen segment of the East-West Highway, holds a right of first refusal.
• Prime Minister Holness highlighted the significant benefits of the May Pen to Williamsfield Highway, noting the reduced travel times and lower vehicular wear and tear for motorists. Looking ahead, the Government plans to further extend the highway to bypass Spur Tree within the next five years, continuing its commitment to improving Jamaica’s road infrastructure.
• As these developments progress, Prime Minister Holness emphasized the importance of responsible driving and urged all motorists to prioritize safety on the roads.

(Source: JIS)

• Venezuelan President Nicolas Maduro last Thursday said that the deployment of a British warship to waters off the coast of Guyana breaches the "spirit" of an agreement reached between Venezuelan and Guyanese authorities.
• In a statement, Venezuela's Foreign Ministry said the country "reserves all actions, within the framework of the Constitution and International Law, to defend its maritime and territorial integrity."
• Since this, Brazil expressed concern, noting that "The Brazilian government believes that military demonstrations of support for any party must be avoided, so that the ongoing dialogue process can produce results". It urged all parties to "contain themselves" and resume talks.
• That said, Vice President Dr Bharrat Jagdeo highlighted that Guyana has no plans to take any offensive action against Venezuela and that the British Warship visiting the country has been long planned and is part of building a defensive capability in Guyana. 
• Neighbours Venezuela and Guyana agreed earlier this month to avoid using force or increasing tensions in their long-running dispute border dispute over the Esequibo territory.

(Source: Reuters)

• A leading economist has sounded an alarm over what he has described as a significant decline in domestic investment and a stall in the renewable energy thrust that could threaten Barbados’ economic development in the new year.
• Professor of Economics Justin Robinson has suggested that the government find a way to treat these issues as a matter of urgency if it is to effectively manage the national debt. He identified these issues as the primary challenges facing the government in 2023 and likely to persist into 2024.
• Regarding the decline in project financing by local investors, he noted the government’s heavy reliance on borrowing money, deeming it a risky practice. The university academic highlighted the challenge of financing the rollover of government debt, pointing out that the absence of substantial investments by domestic investors requires foreign borrowing to meet financial needs.
•  “Domestic investments was better than the previous year, but the amount of financing that was provided by domestic investors was still small compared to historic trends, which meant that the government again had to substitute, and engage in foreign borrowing to meet its financing needs. So, think of it in two parts: there is a deficit for the year which it has to finance, but then also the debt that is maturing.”
• That being said, the economist commended the government’s management of public finances, which is reflected in solid primary surpluses, reduced deficits, and debt-to-GDP ratios. Despite positive indicators, he noted the scepticism among domestic investors, emphasising the need for a balance between foreign and domestic financing to address concerns about foreign exchange.

(Source: CariCris)

• Higher consumer spending over the holiday season, real wage gains over the last nine months, and a jump in consumer confidence point to a good start for 2024, said Jared Bernstein, chair of the White House Council of Economic Advisers.
• U.S. consumer confidence increased to a five-month high in December, mirroring a nearly 14% increase in the University of Michigan's benchmark Consumer Sentiment Index, its biggest jump in more than three decades. Of note, for most of Biden's term, the Michigan index has reflected widespread pessimism about the economy among households. Still, the new data showed Americans' growing confidence that inflation was finally trending lower.
• Michigan survey director Joanne Hsu noted the upswing in December reversed "all declines from the previous four months. These trends are rooted in substantial improvements in how consumers view the trajectory of inflation."
• Indeed, inflation has eased substantially over the course of 2023. The Labor Department's Consumer Price Index began the year with annual price increases averaging 6.4%. By November, that was down to 3.1%.
• Despite the growing optimism, the Biden administration says it remains alert to geopolitical risks, including Russia's ongoing war in Ukraine, which has the potential to disrupt grain markets and push up inflation again. In the Middle East, Israel predicts its war with Hamas militants will last for months, increasing the risk of regional escalation. In the Red Sea, attacks by Iranian-backed Houthi militants in Yemen have disrupted world trade.

(Source: Reuters)

• China's manufacturing activity shrank for a third straight month in December and weakened more than expected, clouding the outlook for the country's economic recovery and raising the case for fresh stimulus measures in the new year.
• The government has, in recent months, introduced a series of policies to shore up a feeble post-pandemic recovery, which is being held back by a severe property slump, local government debt risks, and soft global demand. But the world's second-largest economy is still struggling to gain traction.
• China's central bank said it would step up policy adjustments to support the economy and promote a rebound in prices amid signs of rising deflationary pressures. Notably, China's consumer prices fell the fastest in three years in November, while factory-gate deflation deepened, weighed by weak domestic demand.
•  Weak external demand also remained a major drag on factory activity, with new export orders index registering 45.8 in December, contracting for the ninth straight month. The sub-index of factory gate prices was at 47.7, contracting for a third straight month, adding to signs of deflation and pressure on business profits.
• The official non-manufacturing purchasing managers' index (PMI), which includes services and construction, rose to 50.4 from 50.2 in November, supported by a recovery in the vast services sector.

(Source: Reuters)

• For November 2023, output prices for producers in the Mining and Quarrying industry increased by 0.4%, while those for the Manufacturing industry declined by 0.7%, according to yesterday’s release from the Statistical Institute of Jamaica (STATIN).
• The rise in the index for the major group ‘Bauxite and Alumina Processing’ accounted for the increase in the index for the Mining and Quarrying industry.
• For the Manufacturing industry, the reduction in the industry’s index was due mainly to a 4.0% decline in the index for ‘Refined Petroleum Products’ as fuel prices on the international market declined amid concerns over the projections for weaker economic growth in 2024. The overall reduction in the industry’s index was tempered by a 0.2% rise in the index for ‘Food, Beverages and Tobacco’.
• With November’s outturn, the index for the Mining & Quarrying industry has risen by 4.7% for the period November 2022 to November 2023.
• Over the same period, the point-to-point index for the Manufacturing industry increased by 2.1%. The major groups ‘Food, Beverages & Tobacco (2.3%)’. ‘Refined Petroleum Products’ (2.6%) and ‘Other Manufacturing n.e.c’ (10.1%) were the primary contributors to the movement. However, these increases were moderated by a decline of 4.3% in the index for the major group ‘Fabricated Metal Products excluding Machinery & Equipment’.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time.

(Source: STATIN)

• The Economic Commission for Latin America and the Caribbean (ECLAC) now estimates a 39.2% increase in Guyana’s economic growth this year, a figure higher than its earlier projection.
• Guyana should see massive economic expansion continue this year, largely due to developments in the country’s nascent oil and gas sector. The 39.2% growth rate forecast is the highest in the region. In April 2023, ECLAC estimated that Guyana’s 2023 growth rate would be about 37.2%. This new forecast is therefore higher by 2 percentage points. For 2024, ECLAC forecasts a 28.9% growth rate for Guyana.
• That being said, sans Guyana, Latin America and the Caribbean (LAC) region remains on a “low-growth path.” The LAC region should only experience a 2.2% growth in real Gross Domestic Product (GDP). Notably, if that 2.2% figure is disaggregated by sub-regions, the Caribbean, excluding Guyana, should record an increase of 3.4% (compared to 6.4% in 2022).
• If Guyana’s growth is factored into the Caribbean’s overall growth rate, the region should see a 9.4% GDP increase this year.
• Meanwhile, South America is forecast to register an increase of 1.5% (compared to 3.8% in 2022), while Central America and Mexico should record a 3.5% growth rate (compared to 4.1% in 2022). Furthermore, the ECLAC noted that the slow regional growth should be accompanied by a slowdown in job creation.  

(Sources: CariCris & ECLAC -Preliminary Overview of the Economies of Latin America and the Caribbean)

• Mexican and U.S. officials agreed to keep border crossings open, Mexican President Andres Manuel Lopez Obrador said on Thursday, December 28, following a visit by U.S. Secretary of State Antony Blinken that focused on securing Mexico's help to stem record-high migration.
• The United States earlier this month temporarily shuttered several crossings, including two key rail bridges, to redeploy enforcement resources elsewhere across the border amid soaring migrant numbers, a pivotal issue in next year's U.S. elections.
• Lopez Obrador said Wednesday's meetings with the U.S. delegation, which included Blinken and Homeland Security Secretary Alejandro Mayorkas, were "direct," and he praised the Biden administration's relationship with Mexico.
• Lopez Obrador earlier this month said he would help the United States by boosting measures to curb migration without giving details. U.S. and Mexican officials have not released any more information about possible agreements reached during the meeting.

 (Source: Reuters)