• Fitch Solutions forecasts real GDP in the Bahamas will grow by 1.5% in 2021 and 4.8% in 2022 as public health restrictions loosen and the tourism sector recovers.  
• The tourism sector’s recovery in 2022 will drive growth in exports and job creation, which will boost domestic private consumption. 
• A possible fourth wave of COVID-19 cases and elevated public debt levels pose downside risks to the economic recovery. 
• The sovereign is also facing fiscal challenges which has resulted in a recent downgrade in its rating. On November 12, 2021, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on the Commonwealth of The Bahamas to 'B+' from 'BB-', while at the same time, changing the outlook on the rating to stable from negative. The downgrade reflects the failure of successive governments to implement timely and effective reforms that have weakened public finances, created a high debt burden, and increased funding pressures.

(Source: Fitch Solutions and Standard & Poors)

• Fueled by a persistent shortage of available workers, wage pressures will take over as the dominant driver of U.S. inflation in the second half of next year, according to Jefferies Group LLC. 
• “We believe the U.S. is entering the tightest labour market conditions since the 1950s,” Aneta Markowska, chief financial economist at Jefferies, wrote in a note Monday. As a result, wage pressures are unlikely to ease next year, keeping inflation elevated even as supply chain bottlenecks abate. 
• While transitory factors have accounted for about 1.5 percentage points of the core consumer price index increase over the past year, tightness in the labour market is contributing nearly 1 percentage point and that “is unlikely to change,” Markowska said. Excluding food and energy, consumer inflation is up 4.6% from a year earlier, the most since 1991.

(Source: Bloomberg)

• The Bank of Canada will not raise its benchmark interest rate until the slack in the country's economy is absorbed, which has not yet happened but is getting closer, Governor Tiff Macklem said in a newspaper opinion piece on Monday. 
• Macklem also noted that while inflation risks have increased, driven by pandemic induced demand shifts, supply disruptions, and higher energy prices, the central bank continues to view the recent dynamics as transitory. 
• "For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed. We are not there yet, but we are getting closer," Macklem wrote in an op-ed for the Financial Times newspaper. 
• He added that the central bank's flexible inflation target, which is focused on the 2% midpoint of a 1-3% control range, means Canadians can be confident that inflation will be kept under control, while supporting a full recovery.

(Source: Reuters)

• Private consumption will grow by 4.2% in 2021 and 3.5% in 2022 as the return of the tourism industry boosts employment in Jamaica, according to Fitch Solutions. The tourism industry represented approximately 29.0% of employment in 2019. As activity in the industry gathers pace in the coming quarters, it is expected that firms will re-hire workers, driving down unemployment. 
• Unemployment was 9.0% in Q221, below the 12.6% in Q320 but still above the average of 7.7% in 2019. Unemployment is forecast to average 7.9% in 2022, which will boost household incomes and private consumption. 
• At the same time, a strong labour market in the US, where the majority of Jamaican expatriates work, will bolster continued remittance inflows. Remittances accounted for 15.2% of GDP in 2019, and in the year through July 2021, increased 30.4% y-o-y. Strong remittance inflows will further support household incomes and private consumption. 
• A brighter outlook for tourism will drive a 4.0% increase in investment in 2021 and 3.5% in 2022. In Q221, Tourism Minister Edmund Bartlett announced the economy would benefit from approximately USD2.0bn in investment in the tourism industry in 2021 and 2022. Additionally, the government passed the Casino Gaming Amendment Act in July, which will facilitate the construction of casinos in the years ahead. The continued global spread of COVID-19 poses downside risks to Jamaica’s recovery. It increases the possibility that more vaccine-resistant variants of COVID-19 will develop and weaken the demand for global travel and threaten Jamaica’s recovery.

(Source: Fitch Solutions)

• Jamaica’s current accounts surplus is expected to grow to 0.8% of GDP in 2021 and 0.6% of GDP in 2022, from a 0.1% deficit in 2020. In Q121, remittance inflows brought in USD742.0mn, which was enough to offset most of the goods trade deficit of USD770.1mn. It is expected that this trend will continue throughout 2021, resulting in Jamaica’s first current account surplus since 1994. However, moving into 2022, sustained import demand will begin outweighing the impact of service exports and remittances, narrowing the current account surplus. 
• The goods trade deficit is expected to continue to widen in 2022 as rebounding economic activity leads to import growth of 8.5%. Real GDP growth of 4.1% is expected in 2022, with a rebound in private consumption boosting goods import demand. In the year through May 2021, goods imports have grown 24.0%. Import growth should decelerate in the coming months as base effects fade, though Fitch still expects it to outweigh the 5.5% growth that it forecasts for goods exports. 
• Overall, the goods trade deficit will widen to USD3.6bn in 2022, up from USD3.2bn in 2020 and USD2.9bn in 2021, and will be the largest contributor to the narrowing of the current account surplus in the coming quarters.

(Source: Fitch Solutions)

• If sea level rise over the next 29 years goes unmitigated, Antigua and Barbuda’s coastline could be unrecognisable, causing a major blow to the country’s bread and butter industry – tourism, coastal settlements and other coastal developments, according to a recent report. 
• The report titled ‘360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks’ explained that the region has a history of dealing with major shocks from both economic and natural hazards, adding that the region’s specialisation in tourism and commodity exports disproportionately exposes islands to economic cycles due to changes in demand in the tourism industry and commodity prices. 
• “In the absence of adaptation, by 2050, countries like Trinidad and Tobago, Antigua and Barbuda, St Lucia, and the Bahamas will see a large proportion of hotels unable to profit from proximity to a sandy beach,” the report said. 
• The World Bank report explained that erosion to the sandy beaches that many countries in the region like Antigua and Barbuda are renowned for, “directly affects” the tourism sector’s profitability, adding that “even under a moderate CO2 emissions pathway, 13 percent of nearshore hotels will experience beach loss resulting in a 17 percent decrease in tourism revenue for the region by 2050”.

(Source: World Bank)

• Value-added tax (VAT) and excise tax collections grew by $8.9 billion, or 21.5 percent, when compared with the level at the end of June 2020. This is according to the Ministry of Finance Mid-Year Report. 
• The growth reflected in this area was primarily due to a $1.8 billion increase in VAT collections from imported goods and services, outweighing the $0.6 billion contraction in VAT collections from domestic supplies. 
• The figures undermine government’s stated commitment to reduce taxes and ease the cost of living during their elections campaigns. Moreover, the Guyana Revenue Authority (GRA) mere weeks ago complained about the “drastic reduction in filing of VAT returns by VAT Registrants”. 
• Earlier this year, a host of tax reductions were announced by Finance Minister, Dr. Ashni Singh. These included lowered water rates and removal of VAT on residential and individual data usage, as well as on certain food and household items. The Government had also promised no new taxes.

(Source: Kaieteur News)

• Britain's economic recovery from the coronavirus pandemic lagged behind that of other rich nations in the July-September period, according to official data on Thursday, which underscored the interest rate dilemma facing the Bank of England. 
• Gross domestic product grew by 1.3%, the weakest three-month growth since Britain was under lockdown in early 2021.The Bank of England and a Reuters poll of economists had forecast an expansion of 1.5%. 
• The Office for National Statistics said Britain's economy remained 2.1% smaller than it was at the end of 2019, a bigger shortfall than in fellow Group of Seven countries Germany, Italy and France. 
• The United States has already surpassed its pre-crisis size. Canada and Japan, the other G7 members, have yet to report third quarter growth data but had already regained more ground by the second quarter than Britain had achieved by the third quarter.

(Source: Reuters)

• OPEC on Thursday cut its world oil demand forecast for the last quarter of 2021 as high energy prices curb the recovery from COVID-19, delaying the timeline for a return to pre-pandemic levels of oil use until later in 2022. 
• The Organization of the Petroleum Exporting Countries in a monthly report also raised its supply forecast from U.S. shale producers next year, a potential headwind to the efforts of the group and its allies, known as OPEC+, to balance the market. 
• OPEC said it expects oil demand to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month's forecast. The year's demand growth forecast was trimmed by 160,000 bpd to 5.65 million bpd. 
• "A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices," OPEC said in the report. OPEC also cited slower-than-expected demand in China and India for the downward revision.

(Source: Reuters)

• To reach the total number of formal and informal jobs that existed in the Dominican Republic before the pandemic, only 10,000 would be missing, according to data presented by the Minister of Economy, Planning, and Development (MEPYD), Miguel Ceara Hatton. 
• In the first quarter of 2020, formally and informally employed persons stood at 4,605.9Mn, and in the third quarter of 2021, employed persons reached 4,595.0Mn, down 0.24%. 
• Through a document issued, the MEPYD explains that the number of employed workers has increased. As of October 2021, formal contract workers exceed the employment level of February 2020. As a result, workers employed in the private sector recovered what was lost in 2020 and compensated for the reduction in formal public employment.

(Source: Dominican Today)