• Fitch Solutions projects GDP growth in Guyana will reach 46.0% in 2022, from 19.9% in 2021, as the expanding oil sector will fuel a surge in growth. Oil production and exports have underpinned the Guyanese economy since ExxonMobil began production from the Stabroek block in Q4 2019. The first producing project, Liza-1, surpassed production expectations of 104,000 barrels/day (b/d) in 2021, with actual output of 110,000 b/d. 
• It is expected that production from ExxonMobil’s second floating platform project, Liza 2, which came online ahead of schedule in February 2022, will provide additional oil production in the coming months. In turn, higher oil revenues will fund greater government expenditures which will spur growth in the non-oil economy. Elevated oil prices, strong demand for energy and additional exploration offshore will sustain export and investment growth in 2022. 
• Goods exports will grow 61.0% in 2022, as Fitch’s Oil & Gas team recently revised its oil production forecast for Guyana to 234,500 b/d in 2022, from 147,600 b/d previously, due to ExxonMobil’s ability to deliver robust output growth from two existing offshore projects over the coming months. 
• In addition, oil prices will average USD100.0/barrel in 2022 due to the lingering impact of the Russia-Ukraine conflict, incentivising additional domestic production. Finally, upstream investments are expected to remain high over the near term as the ExxonMobil-led consortium continues to prioritise Guyana’s assets in their capital expenditure plans and prices remain elevated.

(Source: Fitch Solutions)

• The European Commission proposed on Wednesday a one-year suspension of import duties on all Ukrainian goods not covered by an existing free trade deal to help the country's economy during the war with Russia. 
• The measures will apply in particular to fruit and vegetables, subject to minimum price requirements, agricultural products facing quotas, and certain industrial goods, tariffs on which were only due to be phased out by the end of 2022. 
• That phase-out, set out in the 2016 EU-Ukraine free trade agreement, applies to fertilisers, aluminium products and cars. 
• The European Union will also exempt Ukraine from safeguard measures that limit steel imports, and lift anti-dumping tariffs the EU currently imposes on Ukrainian steel tubes, hot-rolled flat steel products and ironing boards. 
• Ukrainian President Volodymyr Zelenskiy said he had discussed the proposal with European Commission President Ursula von der Leyen on Wednesday and expressed his gratitude.

(Source: Reuters)

• Global oil prices rose modestly on Wednesday due to ongoing concerns about tight worldwide supply, underscored by another drawdown in U.S. distillate and gasoline inventories. 
• The market rebounded late in the session after losing ground for most of the day, in part due to strength in the dollar and as China grapples with fresh coronavirus outbreaks that are sapping demand. However, Russia's move to cut off gas shipments to two European nations added to overall worries about tight energy supply. 
• Brent crude futures settled up 33 cents to $105.32 a barrel, while U.S. West Texas Intermediate crude settled up 32 cents to $102.02 a barrel. 
• The U.S. Energy Information Administration said crude stocks rose by just 692,000 barrels last week, short of expectations, while distillate inventories, which include diesel and jet fuel, fell to their lowest since May 2008. 
• The drop in distillate stocks helped boost U.S. heating oil futures to an all-time closing record at more than $4.67 a gallon. Refiners process crude into diesel, jet fuel and other products, and U.S. refiners have been running at high rates to meet demand, particularly in Europe, a big user of diesel fuel.

(Source: Reuters)

• The unemployment rate in January 2022 was 6.2% compared to 8.8% for the same quarter in 2021. 
• This rate is below its pre-pandemic level; however, it should be noted that in January 2020, before the start of the current pandemic, while the unemployment rate was 7.3%, there were more employed persons (1,272,700 in January 2020 relative to 1,257,100 in January 2022). There was also an overall larger economically active population (1,372,900) than in January 2022. 
• In January 2022, male employment increased by 28,200 (4.3%) and female by 29,600 (5.5%). The increase in the number of employed males was mainly in the occupation group ‘Craft and Related Trades Workers’ while the increase in female employment was mainly in ‘Clerks’. The increase in employment for males and females was mainly in the industry group ‘Real Estate and Other Business Services.’ 
• The overall improvement in employment levels continues to be driven by the rebound in economic activity and expansion in service sectors such as business process outsourcing. It is also anticipated that the public investment project which will involve the expansion of the North Coast Highway with the construction of an additional two lanes from Seacastles to Mammee Bay, will also create new jobs. That being said, as the gradual recovery continues, we should see a further reduction in the unemployment rate. However, the rate of decline may be impacted by a likely increase in the number of persons seeking jobs.

(Source: STATIN)

• Jamaica’s total spending on imports increased by 25.4% for the 2021 calendar year. This increase was largely attributed to higher imports of “Raw Materials/Intermediate Goods” (24.4%), “Fuels and Lubricants” (65.0%) and “Consumer Goods” (12.3%). Overall, expenditure on imports for 2021 was 6.7% below the amount spent for 2019. 
• Total export earnings in 2021 were valued at US$1,440.5Mn, an increase of 15.2% relative to 2020. Exports of “Mineral Fuels”, which rose by 75.5%, were the main contributor to the increase. 
• Earnings from domestic exports increased by 10.0% to US$1,281.3Mn on the back of a rise in exports from the Manufacture and Agriculture industries, which increased by 30.8% and 8.1% respectively. This increase was likely due to expansion in global demand stemming from greater vaccination and gradual economic reopening in 2021. Notably, over the past three years, the Manufacture industry’s share of total domestic exports moved from 30.8% in 2018 to 56.3% in 2021. 
• Despite the increase in total exports in 2021, earnings were 12.9% below that of the pre-pandemic period in 2019.

(Source: STATIN)

• Fitch forecasts the Peruvian sol (PEN) will average PEN3.77/USD in 2022, from PEN3.88/USD in 2021, as favourable terms of trade have supported the currency through Q1 2022. 
• However, the PEN will weaken slightly in the coming months, as copper prices are likely to edge lower and Peruvian interest rates remain below those elsewhere in the region, weakening the sol’s attractiveness to investors. 
• Of note, the PEN, along with other commodity currencies has continued to rally following the Russian invasion of Ukraine on February 24, which has since kept commodity prices above historical trends. That said, while the exchange rate has tested multi-year resistance at PEN3.64/USD, Fitch believes it will struggle to break through this key level, as the factors that have driven the unit higher begin to fade over the coming quarters. 
• Consequently, the Agency expects a further, albeit modest depreciation in 2023, to an average of PEN3.84/USD, as inflation remains higher in Peru than in the United States and terms of trade weaken slightly as copper prices ease.

(Source: Fitch Solutions)

• Since the People’s Progressive Party/Civic (PPP/C) Government has not requested any disbursements from a US$20M loan Guyana took three years ago to help strengthen the nation’s capacity to manage the oil sector effectively, the World Bank said it has been forced to downgrade the country’s performance score on the loan. 
• The financial institution downgraded the project’s overall implementation to ‘Moderately Unsatisfactory’, as only around 24% of the total credit was disbursed and no disbursement requests have been received by the Bank since October 2020. 
• The bank also said that, starting in the fourth quarter of last year project implementation came to a halt, particularly on critical procurement activities intended to have helped the project reacquire its implementation timeline, and meet its indicators and performance objectives. 
• It also noted that, in late December 2021 the government indicated its intention to “refine the scope of the project to bring it in line with current government priorities.” However, the World Bank said it remains on standby awaiting any guidance from the Government of Guyana on the status and direction of the project and a resumption of critical project activities.

(Source: Kaieteur News)

• Global edible oil consumers have no option but to pay top dollar for supplies after Indonesia's surprise palm oil export ban forced buyers to seek alternatives, already in short supply due to adverse weather and Russia's invasion of Ukraine. 
• The move by the world's biggest palm oil producer to ban exports from Thursday will lift prices of all major edible oils including palm oil, soyoil, sunflower oil and rapeseed oil, industry watchers predict. That will place extra strain on cost-sensitive consumers in Asia and Africa hit by higher fuel and food prices. 
• Palm oil - used in everything from cakes and frying fats to cosmetics and cleaning products - accounts for nearly 60% of global vegetable oil shipments, and top producer Indonesia accounts for around a third of all vegetable oil exports. It announced the export ban on April 22, until further notice, in a move to tackle rising domestic prices. 
• This is happening when the export tonnages of all other major oils are under pressure: soybean oil due to droughts in South America; rapeseed oil due to disastrous canola crops in Canada; and sunflower oil because of Russia's war on Ukraine.

(Source: Reuters)

• The Chinese yuan strengthened slightly against the U.S. dollar on Wednesday, reversing a sharp weakening trend after the People’s Bank of China (PBOC) signaled support for its currency. 
• The yuan has tumbled by about 3% this month as the U.S. dollar strengthened, according to Wind Information. Prolonged Covid controls and worries about Chinese economic growth have also weakened sentiment on the yuan. 
• On Monday, the PBOC announced it would cut the deposits by 1 percentage point to 8%, effective May 15. The move reduces the amount of foreign currency that banks need to hold, theoretically reducing the amount of weakening pressure on the yuan. 
• “Looking forward, we expect this reserve ratio cut to slow down CNY depreciation in the near term, though it would also depend on the broad USD path and overall sentiment toward Chinese growth,” Goldman Sachs analyst Maggie Wei and a team said in a report Monday. “Uncertainties are still high with Shanghai facing protracted lockdown and new local Covid cases rising in Beijing.”

(Source: CNBC News)

• The IMF is predicting major growth of 11.2% for the Barbados economy this year and 4.9% in 2023, even as it downgrades its global growth forecast. At the same time, the fund is predicting that with the most vulnerable globally facing added pressures from rising prices, countries could be faced with social instability and food insecurity. 
• This healthy growth rate, which is in line with double-digit projections by the Barbados Central Bank at the start of the year, comes against the backdrop of a surge in consumer prices and other elevated risks as a result of the COVID-19 pandemic and war in Ukraine. 
• Noting that the Russia-Ukraine war will contribute to a significant slowdown in global economic growth this year, the IMF is predicting global growth of 3.6% for this year and next year, down from the 4.4% for this year and 3.8% for 2023, which was predicted back in January. 
• The Russia-Ukraine war, coupled with the continued effects of the COVID-19 pandemic, rising inflation, and expected bottlenecks in supply chains as a result of the new lockdowns in China should also result in a continued rise in inflation globally. Consequently, in the case of oil and other commodity importers such as Barbados, the IMF official cautioned that a surge in prices could spell trouble, with the war adding to a series of supply chain shocks that will spread “far and wide.
• Against this backdrop, inflation is expected to remain elevated for much longer and may lead to more aggressive responses from policymakers. However, the IMF is willing to provide assistance and urges countries to put “carefully calibrated and temporary” fiscal and monetary measures in place to help provide ease to their population.

(Source: Barbados Today)