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.”
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.
On September 7th 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.
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.
The Human Employment and Resource Training/National Service Training Agency (HEART/NSTA Trust) remains committed to developing Jamaica’s labour force, by offering globally competitive training and employment opportunities.
This is being done through the organization’s Triple Access Strategy, which outlines three priority areas of focus for the strategic period (2022-2026) and is in alignment with the Vision 2030 National Development Goal, which is to ensure that “Jamaicans are empowered to achieve their fullest potential”.
Addressing a JIS ‘Think Tank’, on August 26, Managing Director of the HEART/NSTA Trust, Dr Taneisha Ingleton, outlined the priority areas of focus for the agency. She added that emphasis will be placed on certifying Jamaicans in labour market-driven and emerging skills and the facilitation of decent work.
Also, more Jamaicans can now advance their computer skills through Tech$ense, a digital literacy programme offered by the (HEART/NSTA) Trust which was first geared towards HEART trainees, and is now being extended to include other members of the public
It supports the Government’s thrust to reposition the nation as a technology-enabled society and helps participants to use technology confidently, manage their online identity and security as well as increase their employability to contribute to a reduction in the unemployment rate.
Mexican central bank reported that remittances to Mexico reached a new record high in July as Mexican families received $5.3 billion from abroad, an annual increase of 16.5%.
President Andres Manuel Lopez Obrador has been a strong supporter of remittances in the midst of an economic slowdown even as the inflation rate hit 8.15% in July, its highest level in nearly 22 years.
Remittances this year through July rose 16.4% to $32.8 billion, according to the country’s central bank, and the government has forecast remittances to reach $60 billion by the end of the year.
The economy is projected to expand by 1.9% in 2022 and 2.1% in 2023 and increased remittance is anticipated to contribute to economic growth, through its positive impact on consumption, savings, and investment.
Mount Gay Distilleries Ltd. has re-entered the sugar production industry with a major investment in a mill at its St Lucy location. At the same time, officials have announced the addition of a fifth ageing bond that will see the capacity going from roughly 50,000 barrels of rum to about 75,000.
Managing Director, Raphaël Grisoni explained that while the focus of the sugar mill will be on the production of “high-value” molasses and less so on sugar, the investment, which forms part of a more than $40 million project over the past four years, was a signal of the company’s commitment to the rum industry and the island.
The investment comes as Mount Gay joins forces with at least two other local rum producers in pursuing geographical expansion for Barbados rum. Grisoni noted that Mount Gay producing its own molasses was critical to that process while stressing that the investments will lead to added value.
Minister of Tourism and International Transport Lisa Cummins, said with the island being marketed as the birthplace of rum this investment in the industry was a welcomed one.
She also reiterated that Government was in the process of strengthening linkages between the “bread and butter” tourism industry and other sectors to ensure more locally-produced items are used in the tourism industry.
The Sterling has suffered its sharpest monthly fall against the U.S. dollar since the aftermath of the Brexit referendum, as political uncertainty and a historic cost-of-living crisis weigh heavily on the British currency. The Sterling dropped 4.5% against the greenback last month and continued to slide on Thursday, September 1, 2022, last trading just below $1.16 by mid-morning in London. The pound also fell nearly 3% against the euro last month.
The U.K. faces a rapidly deteriorating cost-of-living crisis as food and energy prices soar, with millions of households facing poverty this winter. The energy crisis arising from Russia’s war in Ukraine is now widely expected to push the eurozone and U.K. economies into recession, while some economists expect the U.S. to avoid the same fate given its relatively stronger economic position and energy independence.
In a research note Wednesday, August 31, 2022, Capital Economics Chief U.K. Economist Paul Dales said this divergence would drive further weakness in both the euro and the pound against the U.S. dollar and expects sterling to “plunge to new depths” as political and economic uncertainty continue to hammer U.K. assets.
Sri Lanka has reached a preliminary agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion, the global lender said on Thursday, as the country seeks a way out of its worst economic crisis in decades.
The agreement, which Reuters first reported on Wednesday, August 31, 2022, is subject to approval by IMF management and its executive board and is contingent on Sri Lankan authorities following through with previously agreed measures.
IMF conditions for the loan also include receiving financing assurances from Sri Lanka's official creditors and efforts by the country to reach an agreement with private creditors. Its programme, spread over four years, will aim to boost government revenue, encourage fiscal consolidation, introduce new pricing for fuel and electricity, hike social spending, bolster central bank autonomy and rebuild depleted foreign reserves. The country's reserves stood at $1.82 billion as of July, according to central bank data.
"The programme aims to reach a primary surplus of 2.3% of GDP by 2024," it added. Once the IMF package is approved, Sri Lanka is also likely to receive further financial support from other multilateral creditors.
GraceKennedy (GK) has confirmed that it has come to an agreement with the Bank of Nova Scotia to acquire 100% of Scotia Insurance Caribbean Limited (SICL), with the associated transaction being subject to regulatory approvals and other customary closing conditions.
SICL will be the newest member of the GraceKennedy Financial Group, which comprises GK Life Insurance Eastern Caribbean Limited, GK General Insurance, Key Insurance, Canopy Insurance, Allied Insurance Brokers, GK Insurance Eastern Caribbean, GraceKennedy Remittance Services, GraceKennedy Money Services Group, GK Capital Management and First Global Bank.
The announcement comes exactly one year after GK acquired another Bank of Nova Scotia subsidiary, Scotia Insurance Eastern Caribbean Limited (SIECL), in August 2021, which was subsequently rebranded under the name GK Life Insurance Eastern Caribbean Limited (GK Life).
Like GK Life, SICL is a licensed life insurance company, which offers credit protection to customers on personal loans, residential mortgages, personal lines of credit, and personal and small business credit cards. SICL currently operates in Barbados, Belize, British Virgin Islands, Cayman Islands and Turks & Caicos Islands.
GK Group CEO Don Wehby, commented on the development, “The acquisition of SICL is another step in the fulfilment of our strategy to grow GK’s insurance business in the Caribbean as we continue to expand the footprint of our Financial Group in the region. Along with last year’s acquisition of SIECL, the addition of SICL, and the five territories where it operates, will mean that we have expanded GK’s life insurance business to a total of 13 markets in less than two years.”
This acquisition will enhance GraceKennedy’s geographical diversification, which bodes well for the company’s revenue growth and profitability over the coming quarters.
