• Fitch Solutions maintained its view that Latin American governments are unlikely to advance market-oriented reforms in the coming quarters due to public opposition to spending cuts, divided legislatures and other idiosyncratic risk factors. 
• As a result, Latin America's average score in Fitch’s Reform Tracker has fallen to 3.4 out of 10 in Q421, from 3.5 in Q321 and a high of 5.4 in Q419. 
• In upcoming elections in Chile, Colombia and Brazil, candidates campaigning against reform efforts initiated over recent years appear to be frontrunners, weakening reform prospects in the medium term.

(Source: Fitch Solutions)

• The Central Bank left the target policy rate unchanged at 3%, while the 1d repo rate and the overnight rate remained at 3.5% and 2.5%, respectively. The CB reiterated its view that inflationary pressures are largely due to temporary global supply shocks resulting in spikes of oil and other commodity prices, as well as logistical issues such as scarcity of shipping containers. 
• On the domestic front, beef prices have also fueled inflation. The authorities still expect inflation to converge towards the target range of 4.0% +or- 1.0% by mid-2022. In the meantime, the CB is gradually withdrawing the liquidity programs introduced during the pandemic. 
• The Bank indicated that economic activity expanded by 12.7% during the first nine months of the year, and that GDP is likely to expand by more than 10% in 2021. 
• It also acknowledged that domestic demand is recovering on the back of the various stimulus programs and the successful vaccination campaign, with strong performance of construction, local manufacturing, commercial activities, and free zones.

(Source: Oppenheimer)

• World food prices rose for a third straight month in October to reach a fresh 10-year peak, led again by increases in cereals and vegetable oils, the UN food agency said on Thursday. 
• The Food and Agriculture Organization's (FAO) food price index, which tracks international prices of the most globally traded food commodities, averaged 133.2 points last month compared with a revised 129.2 for September. 
• The October reading was the highest for the index since July 2011. On a year-on-year basis, the index was up 31.3% in October. 
• Agricultural commodity prices have risen steeply in the past year, driven by harvest setbacks and strong demand.

(Source: Reuters)

• The Bank of England kept interest rates on hold on Thursday, wrong-footing investors who had been convinced that it would be the first of the world's big central banks to raise borrowing costs after the COVID-19 pandemic. 
• The BoE kept alive the prospect of a move soon, saying it would probably have to raise bank rate from its all-time low of 0.1% "over coming months" if the economy performed as expected. 
• But seven of its nine policymakers voted to leave rates unchanged for now - even as they forecast inflation would reach almost 5% in April - so they can see how many people lose their jobs after the recent end of the government's furlough scheme. 
• The announcement sent shockwaves through markets, sending sterling towards its biggest fall since the early days of the COVID-19 pandemic in March 2020.

(Source: Reuters)

• The Government is seeking to ensure that wide-ranging legislative and product provisions being targeted for implementation and delivery under the proposed Micro-insurance Bill redound to the benefit of all Jamaicans, especially the most vulnerable. 
• Micro-insurance looks to assist low-income persons by offering insurance plans tailored to their needs. Key among the provisions, is the fit and proper requirements for potential service providers, who have to be registered. The Minister of Finance said in addition to defining micro-insurance and specifying the relevant products to be offered, the legislation will require that these offerings have stipulated minimum terms and conditions and that all be administered under formal contractual arrangements. 
• Clarke maintained that this will be crucial to properly service the market where incomes are in a number of instances low and there are a lot of demands on income. The legislation will require that claims be resolved and paid out within five days, so that the experience of the insured is such that the micro-insurance is seen as one that adds value. 
• Work on the Bill’s development is currently advanced, and it is expected to be tabled in Parliament before the end of the 2021/22 fiscal year, on March 31, 2022. It is anticipated that the legislation will be passed during the 2022/23 fiscal year, which starts on April 1, 2022. 
• The development and implementation of a micro-insurance policy framework forms part of the Government’s thrust to broaden the base of the economy and deepen its inclusiveness by making insurance accessible to all Jamaicans.

(Source: JIS News)

• Deputy Mayor of Montego Bay, Councillor Richard Vernon, says Frontier Airlines’ inaugural flight from Atlanta, Georgia, to Sangster International Airport in Montego Bay, is a show of confidence in the country’s management of the coronavirus (COVID-19) pandemic. 
• Vernon said that increasing the number of flights into Montego Bay and Jamaica, by extension, sends the message that Jamaica is safe for travel. Mr. Vernon noted that new flights also mean new business for Montego Bay, particularly when the direct flight is coming out of Atlanta, which is the sister city that Jamaica has shared such a close relationship with for many years. 
• This new Frontier Airlines flight route opens the door for more support from the diaspora. Further, having nonstop flights mean persons can travel freely, and business can be transacted at a faster pace. 
• It also augurs well for recovery in the tourism industry and indicates that there is demand for travel to Jamaica. As at July 2021, there have been 716,221 tourist arrivals, which is below the 1.07Mn and 2.64Mn reported in 2020 and 2019, respectively. The Government is forecasting 1.57Mn visitors and more than US$2.0Bn in earnings for this year.

(Source: JIS News & NCBCM Research)

• The Government may be reaching its debt limits given that such liabilities are now bigger than the economy, the Debt Advisory Committee’s head warned yesterday. 
• James Smith, former minister of state for finance in the first Christie administration, told Tribune Business that The Bahamas’ current debt-to-GDP ratio of 100.4% is “not a comfortable place to be” as he prepares to advise the Government on how to manage and reduce its $10.356bn stockpile of liabilities. 
• “We might be reaching our ceiling when we have debt at the level of GDP. It’s not a comfortable place to be,” he conceded. “It’s the quantum of the debt and the tenor of the debt that we have to look at, and the way forward would be to manage the debt by setting some objectives, but we wouldn’t know that until we get the committee formed and get a fully comprehensive background on it.” 
• While the economy’s rebound will increase output and gross domestic product (GDP), thereby likely taking the debt ratio back below 100 percent, this will likely remain elevated in the high 80 percent to 90 percent-plus range for some time to come given the blow-out produced by Hurricane Dorian and COVID-19 that further accelerated The Bahamas’ fiscal deterioration.

(Source: The Tribune)

• Fitch Solutions has revised its 2021 real GDP growth forecast for El Salvador to 9.2%, from 5.1% previously, as economic activity has surprised to the upside in the year through August. In 2020, the economy contracted by 7.9%. 
• Substantial rebounds in private consumption, exports and investment will persist in the coming quarters, though fading base effects will undermine headline figures. 
• As a result, Fitch has revised down its 2022 real GDP forecast to 2.7%, from 3.0% previously, as the agency anticipates that the accelerated rebound in H121 has brought the expansion forward and growth will return to its pre-pandemic pace.

(Source: Fitch Solutions)

• The Federal Open Market Committee on Wednesday detailed plans to begin scaling back asset purchases later this month and said the bar to begin the liftoff in rates would be more "stringent." 
• The monthly bond purchases of $120 billion, $80 billion in Treasuries and $40 billion in mortgage-backed securities would be trimmed by $15 billion a month. 
• Under the taper plans, the Fed will reduce monthly Treasury purchases by $10 billion and mortgage-backed securities by $5 billion. Still, the Fed's balance sheet will continue to expand, but at a reduced pace.  
• The taper puts the Fed on track to end its bond-buying program by mid-2022, but Fed cautioned that the pace of bond-buying may change depending on incoming economic data.

(Source: Investing.com)

• October’s Purchasing Managers' Index surveys suggest that emerging market (EM) manufacturing activity picked up at the start of Q421. This marks a significant improvement, given weak activity data in recent months. 
• The big story in EMs remains inflation, which jumped in September. This spooked bond markets and prompted central banks in Brazil, Colombia, Russia, Poland and Argentina to hike their policy rates. Policymakers in Turkey, by contrast, continued to cut their key rate. 
• While Fitch Solutions maintains their view that inflation will ease next year, it expects that many EM central banks will continue to tighten policy.

(Source: Fitch Solutions)