• The country’s unemployment rate fell to a record low of 7.1% for October 2021, according to the Statistical Institute of Jamaica (STATIN) Labour Force Survey. 
• This is 0.1 percentage points lower than the previous 7.2% pre-pandemic outturn recorded in October 2019. The October 2021 figure also represents a 3.7 percentage-points decline, relative to the corresponding period last year. 
• There were 1,234,800 persons employed in October 2021, an increase of 76,600 (6.6%) compared to 1,158,200 employed in October 2020. This increase resulted in the male unemployment rate declining from 8.7% to 5.5%, the female unemployment rate decreasing from 13.2% to 9.0%. 
• The three industries that accounted for the largest increase in employment were Real Estate and Other Business Services; Arts, Entertainment, Recreation and Other Services; and Construction. 
• This reduction in unemployment augurs well for the recovery as it should support an increase in private consumption of goods and services. However, this could fuel greater inflation and increase the likelihood of further rate hikes by the BOJ, to reduce inflationary pressures.

(Sources: STATIN & NCBCM Research)

• For the period January to September 2021, Jamaica’s total spending on imports and earnings from exports increased by 23.3% and 26.3% respectively, relative to the same period in 2020, as reported by the Statistical Institute of Jamaica (STATIN). 
• Imports for the period amounted to US$4,250.3 million compared to US$3,448.4 million for January to September 2020. This increase was mainly attributable to higher imports of Raw Materials/Intermediate Goods (22.2%), Consumer Goods (9.5%), and Fuels and Lubricants (62.2%). 
• Earnings from total exports for January to September 2021 were valued at US$1,150.2 million; 26.3% above the US$910.7 million earned in the similar 2020 period. The increase in exports was driven mainly by higher exports of “Mineral Fuels” which rose by 96.8%. 
• Domestic exports from the Manufacturing industry increased by 32.1%. Earnings from the Mining and Quarrying and Agriculture industries also increased by 6.2% and 7.5%, respectively. However, while the Manufacturing and Agriculture industries should continue to benefit from this in 2022, the Mining and Quarrying will likely see a decline as Jamalco is not slated to restart operations until June 2022. The resumption of operations this year will only be 50% of its production level until Q1 2024 when phase 3 of the restoration process is completed.

(Sources: STATIN & NCBCM Research)

• The Mexican banking sector assets will grow by 2.6% in 2022, down slightly from an expected 3.4% at the end of 2021 according to Fitch Solutions. This is anticipated as the country’s economy rebounds slowly and interest rates rise. 
• Tighter monetary policy, a volatile economic recovery and a stronger Mexican peso (MXN) caused banking assets to shrink in annual terms for the bulk of the year. Though Mexico’s loan portfolio is expected to shrink relative to GDP, loan growth will reach 7.1% from 4.7% in 2021. This growth is primarily driven by inflation averaging 5.9%. 
• Mexico’s loan portfolio will fall to 22.0% of GDP in 2022, from 22.6% in 2021, as a hiking cycle by the Banco de México (Banxico) and greater economic uncertainty weaken demand for credit. Banxico is expected to hike its benchmark rate by 100 basis points to 6.50% by end-2022, with risks to the upside. An increase in the policy rate will lead to higher interest rates, which could balance the falloff in Mexico’s loan portfolio. 
• Furthermore, growth will slow to 2.8% in 2022, from 5.6% in 2021, while the economic policies implemented by President Andrés Manuel López Obrador continue to deter investment.  That said, demand for housing loans will remain a bright spot, likely surpassing growth for business and consumer loans. 
• Over the longer term, Mexico’s solid economic growth and relatively low levels of banking sector penetration will support a multi-year expansion. The recent announcement by Citigroup that it will sell its retail banking operation in Mexico is unlikely to affect the sector’s stability.

• The world tourism industry barely improved last year compared to 2020, with all indicators staying way below pre-pandemic levels and industry professionals not expecting a full recovery before 2024, the World Tourism Organization (UNWTO) said on Tuesday. 
• Rising vaccination rates and the easing of travel restrictions did allow a small rebound in the second half of 2021, Madrid-based UNWTO said in a report, though the spread of the Omicron variant in December triggered another dip in both travel bookings and industry optimism. 
• "The pace of recovery remains slow and uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveller confidence," the report said. 
• Global tourism's direct gross product rose 19% in 2021 from 2020 to $1.9 trillion, as each tourist spent more and stayed longer than in 2020. But the tourism industry's revenue still barely surpassed half its 2019 levels. 
• Around 64% of tourism professionals polled by the UNWTO in December do not expect a full recovery before 2024 or later - up from the 45% polled in September when perspectives for travel revival had not yet been marred by Omicron.

(Sources: Reuters)

• British employers hired a record number of staff last month and labour shortages deepened - increasing the chance that the Bank of England will raise interest rates again next month - but pay was squeezed by rapidly rising inflation. Tuesday’s data suggests the surge in cases of the Omicron variant of coronavirus in December did little to dent the resilience of Britain’s job market. 
• The figures are also unlikely to ease the BoE’s concern that a rising inflation tide will be slow to ebb. Concerns about possible labour shortages and pay pressures over the medium term was a major reason why the BoE raised interest rates last month for the first time since the start of the pandemic. 
• Financial markets see an 85% chance that the BoE will raise rates again on Feb. 3 after its next meeting, and 10-year government borrowing costs rose to a three-month high after the data release. 
• Employers added a record 184,000 staff to their payrolls in December, while the headline unemployment rate for the three months to November - which includes both self-employed and employed workers - dropped to 4.1%, its lowest since June 2020. That being said, some economists had doubts about the payrolls data, which often see big downward revisions. November’s record reading of 257,000 was revised to 162,000 new hires on Tuesday.

(Source: Reuters)

• Consumer Prices rose by 0.8% in December 2021 according to Monday’s release from the Statistical Institute of Jamaica. A 4.7% increase in the index for the Housing, Water, Electricity, Gas and Other Fuels division due to higher rates for electricity was the main driver. In fact, Electricity, Gas and Other Fuels rose by 11.9%. 
• The point-to-point inflation rate for the period December 2020 – December 2021, was 7.3%, down from 7.8% in November. This was mainly influenced by increases in Food and Non-Alcoholic Beverages (4.9%), Housing, Water, Electricity, Gas and Other Fuels (11.7%), and Transport (13.9%). 
• For the fiscal year-to-date, the rate of inflation was 8.6%, while the inflation for the 2021 calendar year was 9.1%, significantly higher than the 5.2% increase in consumer prices in 2020. 
• Given that the inflation outturn continues to exceed the Bank of Jamaica’s 4.00% - 6.00% inflation rate target, we anticipate further rate increases in the coming months as the BOJ attempts to guide the inflation rate back within the target range and to manage inflation expectations.

(Sources: Statin and NCBCM Research)

• Following a record financial year, where SRF unlocked J$1.81Bn in net profits from its real estate investment assets, the Company generated a net loss of J$99.95Mn for Q1 FY 2021-22 (three months ending November 2021) versus net profits of $25.24Mn in Q1 FY 2020-21. 
• Negative net investment income of J$87.35Mn (J$32.86Mn in 2021), a decline in fair value gains on financial instruments and net foreign exchange losses of J$23.46Mn (relative to gains of J$43.20Mn in Q1 FY 2021-2021) were the main drivers of the drop in earnings. 
• This was further exacerbated by a 52.4% increase in interest expenses to J$37.56Mn and a 159.9% rise in total operating expenses to J$87.35Mn in Q1 FY 2021-22. 
• SRF remains focused on executing its strategy of unlocking value in real estate assets, using flexible capital to increase shareholder value. The company recently announced that it had secured financing for and had begun construction of the J$3.70Bn 9 storey One Belmont commercial tower on Belmont Road. It also increased its investments to income earning real estate investment notes (“REINs”) to J$1.58Bn, from J$941.76Mn, purchased an investment property at 26 Seaview Avenue, Kingston 10 and advanced the process to unlock value for its strategic beachfront investment property in Mammee Bay, St Ann. These investments should support an improvement in the company’s bottom-line over time.

(Sources: Company Financials & NCBCM Research)

• At the December 22, 2021, meeting of the European Commission College of Commissioners, the Commission concluded that “The Bahamas had addressed the strategic deficiencies previously identified in its AML/CFT regime”. The country has made significant steps to tackle uncertainties surrounding money laundering and terrorism financing. Accordingly, the Commission decided to remove the sovereign from the EU’s AML Blacklist. 
• This favorable outcome after many months of engagement is a welcomed one, and comes almost 12 months after the Financial Action Task Force (FATF) delisted The Bahamas on the 18th of December 2020 from its List of Jurisdictions Under Increased Monitoring (FATF’s Grey List). 
• This action by the FATF will cause banks and other financial and tax firms to scrutinize less closely their clients who have dealings or investments, with or in The Bahamas as the country now poses less threats to the financial system of the European Union. This new development should also allow the country to attract new foreign direct investment. 
• The Bahamas will continue to work with the European Union and all international partners as it seeks to maintain its AML/CFT/CFP regime on par with international agreed measures, which safeguard the global financial system.

(Sources: Eye Witness News & NCBCM Research)

• The monthly economic activity prints in Brazil, Colombia and Peru will be closely monitored over the next week to gauge the pace of the cooling in economic activity in the months ahead, says Fitch. 
• Throughout 2021, Peru and Colombia have posted strong recoveries from the COVID-19 shock, due to elevated consumption spending, which has driven retail sales and looser public health restrictions which has supported growth of manufacturing and industrial production. These factors contributed to monthly economic activity growth rates of 4.6% and 9.3% in October, for Peru and Colombia, respectively. 
• However, Peru’s September monthly economic activity grew 9.7%, signaling that the economy has entered a period of cooling for the month of October following strong growth. Brazil has also seen its economic activity decelerate, as elevated inflation and reduced stimulus measures have diminished purchasing power. 
• In the final economic activity prints of 2021, and into 2022, Fitch expects economic growth to cool across the region. This will be driven by base effects becoming less favourable, supply chain bottlenecks slowing production levels, high inflation and rising interest rates both at home and abroad. Overall, growth is expected to return closer to pre-pandemic trend levels in Latin America and much of the world in 2022.

(Source: Fitch Solutions)

• China’s economy rebounded in 2021 with its best growth in a decade, helped by robust exports, but there are signs that momentum is slowing on weakening consumption and a property downturn, pointing to the need for more policy support. 
• Notably, in a stark policy divergence with other major economies, China’s central bank cut its key interest rate for the first time since April 2020 to help bolster an economy that has lost momentum because of a property slump and repeated virus outbreaks. 
• The People’s Bank of China (PBOC) said it was lowering the interest rate on 700 Bn yuan ($110.19 Bn) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95%. 
• The rate cut is part of Beijing’s efforts to put a floor under growth in a crucial year of leadership transition for the world’s second-largest economy. The biggest challenges to meeting that goal are sporadic outbreaks of the more-infectious Omicron coronavirus variant, and continued falls in property sales reducing housing investment. 
• While inflation is the dominant concern for central bankers in the U.S. and Europe, China’s relatively stable prices mean policy makers have shifted to boosting growth. Official data Monday showed gross domestic product rose 4% last quarter from a year earlier, the weakest since early 2020.

(Sources: Bloomberg & Reuters)