• Global inflation will pose a policy challenge for central bankers as it continues to head higher, although not at the same pace as a few months ago. According to Fitch Solutions’ estimates, global inflation rose by 4.2% y-o-y in September, which is almost double the 2.2% average rate experienced in the five years prior to COVID-19 and well above most central banks’ mid-level inflation targets. 
• In turn, many emerging market (EM) central banks have been hiking, and some of them, such as Russia and Chile quite aggressively. Developed market central banks (DM), such as the Bank of England and the US Federal Reserve (Fed), have slowly become more hawkish. 
• Rising oil prices have also contributed to a rise in inflation expectations, as proxied by the US 10-year breakevens. This combined with supply chain issues suggest that inflation continues to broaden out across more countries, increasing pressure on central banks to turn more hawkish.

(Source: Fitch Solutions)

• U.S. consumer confidence unexpectedly rose in October as concerns about high inflation were offset by improving labour market prospects, suggesting economic growth was picking up after a turbulent third quarter. 
• The survey from the Conference Board on Tuesday showed consumers are eager to buy a home and big-ticket items such as motor vehicles and major household appliances over the next six months. The share of Americans planning to go on vacation was the largest since February 2020, just before the nation was slammed by the first wave of COVID-19 infections, which is a positive sign for Jamaica’s tourism industry. 
• The consumer confidence index increased to a reading of 113.8 this month from 109.8 in September, ending a three consecutive month decline. "Consumers are more upbeat after a rocky third quarter and this argues for a strong finish for the economy in 2021," said Christopher Rupkey, chief economist at FWDBONDS in New York.

(Source: Reuters)

• The Statistical Institute of Jamaica (STATIN) has developed an Export and Import Price Indices (XMPIs) that will measure quarterly price changes in the country’s goods inflows and outflows. Director General, Carol Coy, said that the development of the XMPIs is geared towards satisfying changing user needs and reflects the structural changes in the Jamaican economy. 
• In executing its mandate of producing and delivering quality statistics, STATIN recognizes that while it is important to produce its regular statistical products in a timely manner, it also needs to ensure that it meets the growing needs of its stakeholders as best as possible, noting that the XMPI bulletin will be released on a quarterly basis. 
• Meanwhile, Ms. Coy indicated that for the 2020 calendar year review period, the average export price fell by 10.3%, compared to the outturn in 2019. This was due to a 14.6% fall in the XPI of the Mining and Quarrying Industry, impacted by a reduction in the price of alumina. 
• In addition, average import prices fell by 4.4% relative to 2019, resulting from a decline in the import price of ‘Fuels and Lubricants’, and reflecting the fall in global oil prices, she told journalists. Additionally, the average import price for all other categories rose. The import price of ‘Consumer Goods’ increased by 10.5%, while that for “Intermediate Goods/Raw Materials’ rose by 2.7%. 
• Since the start of 2021, import and export prices have been affected by disruptions to the global supply chain, which could cause a rise in the XMPI for 2021.

(Source: JIS News & NCBCM Research)

• At least nine health departments across the island have begun house to house vaccination. Healthcare teams, including public health nurses and community health aides from Hanover, Manchester, St. Elizabeth, Trelawny, Westmoreland, St. Ann, St. Mary, Portland and St. Thomas have been deployed to communities across the island to administer the COVID-19 vaccines to shut-ins, disabled and the elderly. 
• According to Health & Wellness Minister, Dr. the Hon. Christopher Tufton, “This house to house vaccination programme is intended to take vaccines to communities that are not close to a fixed site and to persons who are not able to travel to these sites.” 
• This represents another phase in the national vaccination efforts and is in keeping with the principles of the programme, which includes national equity – developing appropriate deployment strategy and distribution infrastructure to ensure access to priority population. 
• The government is hoping to vaccinate 40% of the population by Christmas and to date only 12% of the population is fully vaccinated. Therefore, the house to house vaccination will help to increase vaccination numbers, as well as put the government closer to its target. Higher inoculation rates will put the country in a stronger position to relax containment measures.

(Source: JIS News & NCBCM Research)

• Barbados’ unemployment rate seems to be on a downward trajectory, and is estimated to have been 15.9% at the end of June this year. This was 1.3 percentage points less than the rate of 17.2% recorded for the 1st quarter of 2021. This decline was supported by a 3.9 percentage points increase in the labour force participation rate to 62.6%. 
• The Continuous Household Labour Force Survey released by the Barbados Statistical Service (BSS), showed that between April and June this year the unemployment rate for males contracted to 14.1%, while for females, the unemployment rate rose slightly to 17.8%. 
• Further dissection of the labour force survey showed that the wholesale and retail trade industry accounted for the majority of employment with some 15,400 persons. This was followed by public administration and defence at 12,500 persons; accommodation and food services (11,400); construction, mining and quarrying industry (9,700); manufacturing (7,700); and education (7,400). 
• Fitch Solutions forecasts that the sovereign’s unemployment rate will fall further this year to 12.3% by end 2021 from 21% in 2020. Tourism activity has been sluggish but a rise in arrivals is expected in Q4 2021, which should support higher demand for labour to meet the increase in the demand for the island’s tourism product.

(Source: Barbados Today & NCBCM Research)

• In a speech on the occasion of the 74th anniversary of the Central Bank, Governor Héctor Valdez Albizu revealed that the country’s gross domestic product (GDP) reached a growth of 12.7% in the first nine months of this year and projected that at the end of this 2021 it would be double digits (10%) or more. 
• Valdez Albizu cited the Hotels, Bars and Restaurants sector as the great driver of growth from January to September, with 31.8%; followed by construction with 30%, free zones 24%, among other activities that in turn contributed to an increase in formal and informal employment. 
• However, he stressed that as in previous months, construction was once again the activity with the highest impact on growth, representing almost 80% of gross fixed capital formation. 
• “The remarkable performance of the first nine months of the year consolidates the projection that the Dominican Republic will achieve a double-digit expansion at the end of 2021, that is, 10% or more, placing the country again as one of the fastest growing economies in Latin America,” the governor said in his speech.

(Source: Dominican Today)

• Fitch Solutions, expects the Bank of Canada (BoC) will leave the benchmark interest rate unchanged, at 0.25%, through end-2021 but hike by 25 basis points (bps), to 0.50%, in 2022, an upward revision from their previous forecast of 0.25%. 
• Persistent inflationary pressures and higher inflation expectations amid an economic recovery underpin the hawkish view for the BoC, particularly as many other central banks have begun to raise interest rates in H221. 
• Elevated commodity prices and global supply shortages underpin Fitch’s 3.8% inflation forecast for 2021. However, it is expected that price growth will decelerate throughout 2022 and end the year at 2.3%.

(Source: Fitch Solutions)

• Global equity markets rose on Monday, while U.S. Treasury yields dipped as investors were buoyed by a better-than-expected U.S. corporate earnings season that kicked into gear this week. 
• A large proportion of S&P 500 companies are due to report results, including technology heavyweights Facebook, Apple Inc, Amazon, Microsoft, and Alphabet that have been the drivers of the market rally this year. 
• "The number one thing is that earnings are better than expected and what's more interesting is that as we approach the end of the year, we're going to see forward guidance being lifted, which would make the market multiple more reasonable," said Thomas Hayes, chairman of Great Hill Capital in New York. 
• The MSCI world equity index, which tracks shares in 50 countries, was up 0.29%, while the pan-European STOXX 600 index gained 0.07%.

(Source: Reuters)

• According to the Statistical Institute of Jamaica’s (STATIN) Labour Force Survey, the unemployment rate for July 2021 was 8.5%. This is 4.1 percentage points lower than the 12.6% out-turn for the same period last year. 
• The survey shows that the number of unemployed persons went down by 49,200 or 30.4% to 112,500. The number of unemployed males fell by 43.4%, while the number of unemployed females declined by 17.5%. The unemployment rate for youth, aged 14 to 24, was 23.9%, 6.4 percentage points lower than the July 2020 out-turn of 30.3%. 
• Meanwhile, the ‘Construction’ and “Real Estate and Other Business Services’ industry groups accounted for more than 50.0% of the increase in the employed labour force. Some 118,300 persons were employed in the construction industry, representing an increase of 26,100 or 28.3%, with males accounting for 25,900 of this figure. In the real estate and other business services industry, there were 115,100 persons employed, an increase of 23.0%(21,500). Females accounted for the largest increase – 11,900 or 25.4%. 
• Other industry groups recording notable increases were ‘Accommodation and Food Service Activities’ – up 17,800 persons; ‘Agriculture, Forestry and Fishing’ – up 6,200 persons; and ‘Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles’ – up 5,500 persons.

(Source: JIS News)

• According to Fitch Solutions, the JLP’s large majority has facilitated policymaking in recent quarters, including the smooth passage of a supplementary budget on October 12 that boosted emergency spending on the COVID-19 pandemic by JMD33.0Bn, equivalent to 5.6% of current expenditures in FY2020/21. The supplementary budget included cash transfers to those unemployed due to the pandemic and to incentivize vaccinations, food support and a bonus for healthcare workers. 
• While the supplementary budget will increase spending in FY2021/22 by 4.0%, Fitch maintains its view that the government will pursue fiscal consolidation in the medium term for three reasons. Notably, it expects the public debt will rise to 108.6% of GDP by end-2021 and that with limited access to international capital markets, the government will have to curtail spending. Despite austerity being politically unpopular, Fitch sees the government initiating fiscal consolidation in the medium term for two reasons. Firstly, throughout Jamaica’s two IMF programmes from 2013 to 2019, there was cross-party buy-in for reducing government spending and public debt. Secondly, elections are not constitutionally mandated until September 2025, giving the government several years to rein in spending before it faces voters. 
• That said, Fitch is revising down Jamaica’s score in its Short-Term Political Risk Index (STPRI) to 72.3 out of 100, from 74.2 previously, as a slow vaccination programme, and elevated inflation, unemployment and crime are raising risks to social stability. With only 19.2% of Jamaicans having received at least one dose of a COVID-19 vaccine as of October 19, Jamaica’s vaccination programme significantly lags other major Caribbean markets due to a limited supply and persistent vaccine hesitancy. 
• In addition, Fitch sees rising risks to social stability amid elevated inflation, unemployment, and violent crime pose. Inflation reached 6.1% in August, above the upper bound of the Bank of Jamaica’s 4.0-6.0% inflation target. Fitch forecasts that inflation will remain high in the quarters ahead, averaging 6.0% in 2022, the high end of the BOJ’s target range. At the same time, unemployment averaged 9.0% in Q221, above the 7.3% seen before the pandemic in Q120. The combination of elevated unemployment and erosion of household purchasing power increases the possibility of widespread protests against economic conditions.

(Source: Fitch Solutions)