Interest rate eases

January 17, 2014 by

Rates on the most recent Treasury Bills fell in the latest offering by the Government of Jamaica.

The rate for the January Treasury bill came out at 6.12 percent compared to 6.2522 percent in December. Investors on Wednesday, 15 January, applied to purchase $400 million 30 days Government of Jamaica Treasury Bills dated Friday, 17 January 2014. This resulted in the average yield of 6.11877 percent. However, yield went as high as 6.29577 percent. A total of $567,065,100 was submitted by applicants in their bid to obtain the instruments.

Related post | T-bill rates mixed at auction

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Is aluminium vehicles good news?

January 15, 2014 by

At the recent Detroit Auto Show, Ford introduced an aluminium-bodied F-150 pickup that is as much as 700 pounds (318 kilograms) lighter, than the predecessor, making it the “most fuel efficient it’s ever been”, Ford CEO Alan Mulally said.

“Overall, up to 700 pounds of weight have been saved, helping the F-150 tow more, haul more, accelerate quicker and stop shorter, and contributing to efficiency,” Ford says in a statement about the new truck.

Ford will expand its use of aluminium, which is more costly than steel, throughout its line-up, starting with larger models that can realize the biggest weight savings, he said. Aluminium is more expensive to utilise but offers benefits such as less weight for the vehicle thus saving on fuel as well as being a longer lasting and tougher material, Mulally said. Aluminium is said to costs about twice as much as steel, but the vehicles will be made from an alloy of aluminium.

As reported in ABC News, Brian Johnson of Barclays Capital estimates Ford earns about $11,000 on a pickup truck sale compared to $5,000 for a car, the Los Angeles Times reported, and the F-Series trucks comprises nearly half of Ford’s North American profits.

Aluminium is already being used in motor vehicles but has not replaced steel, the historical material of choice for more than a century. If Ford succeeds with usage across the majority of its vehicles, it’s likely to result in others in the industry doing likewise. Jamaica would stand to benefit, as greater usage could mean greater demand for alumina which historically is a major export product for the country.

Image courtesy of wandee007/FreeDigitalPhotos.net

Chart via The Wall Street Journal

 

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BOP improvement for Q3 confirmed

January 13, 2014 by

Provisional data for the September 2013 quarter shows that there was a significant improvement in the current account deficit of Jamaica’s Balance of Payments. The outturn in the quarter reflected improvements on all sub-accounts. However, net private and official capital inflows were insufficient to finance the deficits on the current and capital accounts for the September 2013 quarter, which was funded by Bank of Jamaica from the net international reserves.

The central bank, in a release on the current account, stated that it “recorded a deficit of US$409 million for the period July to September 2013, an improvement of US$202 million over the corresponding period in 2012”. This outturn, the release stated, “reflected improvements on all sub-accounts but was primarily evident in a decline of US$146 million in the deficit on the merchandise trade sub-account, associated with a contraction of US$197 million in imports, there was a reduction of US$51.5 million in exports. The decline in imports mainly reflected reductions of US$132 million and US$73 million in expenditure on chemicals and mineral fuels, respectively. For exports, the fall was mainly due to lower earnings from chemicals, in particular, ethanol”.

For the quarter, there was a decline of US$8 million in the deficit on the income sub-account stemming mainly from a decrease of US$20 million in investment income outflows. The decline in investment income outflows was largely related to lower remittances of direct investment companies. With regard to the services sub-account, there was an increase of US$5 million in the surplus due principally to a decline in transportation charges as a result of the lower imports. The surplus on the current transfers sub-account increased by US$44 million reflecting growth of 6.2 per cent in gross remittance inflows.

Related post | Balance of payment improves

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Remittances inch up

January 8, 2014 by

Remittances is an important source of foreign currency for Jamaica and many parts of the Caribbean basin countries. The data made public by Bank of Jamaica for the year to September reflects moderate growth.

Net remittances for January to September 2013 were US$1 349 million, which represented a growth of US$23 million or 1.7 per cent relative to 2012. The outturn reflects an increase in gross remittance inflows and a contraction in outflows. Total remittance inflows were US$1,532 million, an increase of US$7 million.

US$Sheet280x150pxWhat the report has failed to indicate that the lower than normal growth is not necessarily an indication of worsening economic conditions in the source countries. In fact North America, from which the bulk of flows emanate, has been showing growth in the economy.

Limited studies done by the Investors Choice going back to 2008-09 indicates a strong correlation between exchange instability of the Jamaican dollar with a reduction in inflows. It should come as no surprise that some funds that would normally flow into the formal system have in fact been diverted thus reflecting what may be considered lower inflows. In the first 4 months of 2013 when there was scarcity of foreign exchange in the system, remittances actually declined compared with 2012, while in 2012 for the same period, remittance increased during a period when foreign exchange was easily available.

Related posts | Remittances keeps growing | Remittances up, but barely

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Statin confirms growth of 0.5%

January 6, 2014 by

The Statistical Institute of Jamaica (Statin) is confirming that the Jamaican economy recorded growth of 0.5 per cent in the third quarter of 2013 when compared to the similar quarter of 2012.

Earlier in the year, Statin reported that the Jamaican economy declined by 0.1 per cent in the second quarter and declined by 1.3 per cent in the first quarter of 2013. To achieve positive growth for the calendar year would require growth rate of nearly twice the performance of the third quarter or close to 1 percent. Quite a bit of the growth in the latest quarter is a recovery from the negative impact that Hurricane Sandy had on the economy, particularly the agricultural sector, rather than improved performance from ongoing economic activities.

Statin, the body changed with gathering economic and social data on behalf of Government of Jamaica, said the third quarter performance resulted mainly from a 2.2 per cent increase in output of the Goods Producing industries as the Services industries declined by 0.1 per cent.

Within the Goods Producing Industries, all industries except Manufacture recorded increased output levels. Agriculture, Forestry & Fishing grew by 5.4 per cent and this was the first quarter of growth recorded by this industry since the passage of Hurricane Sandy. The Mining & Quarrying and Construction industries grew by 6.4 per cent and 2.1 per cent respectively. The Manufacture industry however, declined by 0.9 per cent.

There were mixed performances within the Services industries. Increased levels of output were recorded for Hotels & Restaurants (0.7 per cent), Finance & Insurance Services (0.3 per cent), Transport, Storage & Communication (0.2 per cent) and Real Estate, Renting & Business Activities (0.2 per cent). Industries that recorded lower levels of output were: Electricity & Water Supply (-3.5 per cent), Producers of Government Services (-0.2 per cent) and Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (-0.1 per cent). Other Services remained relatively unchanged during the period.

When compared with the second quarter of 2013, the economy grew by 0.8 per cent. This was due largely to a 3.2 per cent growth in the Goods Producing industries as the Services industries remained relatively unchanged.

Related posts | Economy declined 0.1% in Q2 | Businesses see J$ at $110 late 2014 | Inflation drops sharply in November

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November worse month for revenues

January 2, 2014 by

November 2013 was the worse month for Government of Jamaica revenue collections for the current fiscal year which started in April, coming in at $25.94 billion. The next lowest was August at $26.36 billion and October at $26.5 billion. The November collections were $2 billion short of the estimate of $28.55 billion forecasted by the Ministry of Finance when it presented the budget earlier in the year.

The shortfall in August was the worse reported as it was down by $6 billion compared to forecast. The best month was May which exceeded forecast by a billion dollars, all other months were short of budget. The data is reflecting a troubling trend of a likely shortfall going forward.

The reduction in the fiscal deficit that was at $9 billion at the end of October has been sharply cut and now stands at only $5.1 billion as the deficit for November that was planned at $1.3 billion hit $5.4 billion instead. Expenditure planned at $29.8 billion for the month ended at $31.3 billion instead, as payments on wages and programmes, climbed above the budgeted figures by $3.6 billion, to compound the impact of the revenue shortfall. The fiscal deficit sits at $24.9 billion versus $30 billion originally projected to November. Total revenues, which are $233 billion is up by a strong 10.6 percent over the 2012 period of $211 billion but is down by roughly nearly 3.5 percentage points. The budget called for an 18 percent rise in revenues for the fiscal year over that of 2013 to reach $407 billion with revenues to have risen by 14 percent up to November.

Jamaica_coat_of_arms_280X150The number of areas with improved revenues paled in comparison to those that under-performed as tax revenues fell short of forecast by $10.4 billion, partially offset by increased grants of $1.1 billion and non-tax revenues of $1.37 billion. Corporation Taxes delivered $1.1 billion more than planned by 8 percent; others to have performed ahead of forecast are Special Consumption Taxes by 7 percent with a surplus of $550 million; Motor Vehicle licenses 12.6 percent with a surplus of $191 million; Telephone Call Tax, 6 percent better with $246 million; Accommodation Tax up by $400 million or a huge 55 percent improvement and Travel Tax with an increase of 57 percent or $2.3 billion.

The underperformers overwhelmed the good performances with PAYE dropping $2.45 billion; tax on dividend, individuals and on interest falling by $2.5 billion; betting gaming was down $842 million; education tax by $935 million; Contractor’s levy by $305 million; Stamp Duty by $700 million and taxes on imported items by $7.7 billion as imports fell during the period.

Related posts | Fiscal deficit improvement continues | Govt set to wipe out deficit

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Inflation drops sharply in November

December 24, 2013 by

The Statistical Institute of Jamaica (STATIN) reported a slowdown in inflation for November compared with 0.9 percent in October and 1.03 percent in September.

According to the body charged with collecting and collating economic data on behalf of the Government of Jamaica, the All Jamaica ‘All Divisions’ Consumer Price Index for November 2013 was 209.9 reflecting an inflation rate of 0.5 percent when compared to the index of 209.0 for October. This upward movement was mainly the result of a 0.7 percent rise in the index for the most heavily weighted division, ‘Food’ & Non-Alcoholic Beverages’. The impact of this movement was however tempered by the 0.2 percent fall in the index for the second most heavily weighted division ‘Transport’. This was the only division to record a decline for the month, with lower petrol prices being the contributing factor. The index for the division ‘Housing , Water, Electricity Gas and Other Fuels’ rose by 0.2 percent, and there was a 0.3 percent advance in the index for ‘Education’ impacted mainly by an increase in the cost of examination fees.

Graph_paper_up280x150For the first 11 months of the calendar year 2013, the inflation rate was 9.1 percent. Year over year, inflation for November was 10.2 percent and for April-to-date the movement was 6.2 percent.

The other divisions that recorded increases in the All Jamaica ‘All Divisions’ index were: ‘Clothing and Footwear’ 0.7 percent, ‘Restaurants and Accommodation Services’ and ‘Miscellaneous Goods and Services’ each recorded increases of 0.6 of percent,’ Furnishings, Household Equipment and Routine Household Maintenance’ 0.5 percent, Alcoholic Beverages and Tobacco’ 0.4 percent, ‘Health’ 0.3 percent, and ‘Recreation and Culture 0.2 percent.

There were upward movements in all three regional indices: Greater Kingston Metropolitan Area 0.7 percent, Other Urban Centres recorded a movement of 0.4 percent and Rural Areas 0.4 percent.

Related posts | Inflation high, lower than September | Jamaica’s inflation jumps

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Ghana inflation elevated but falling

December 24, 2013 by

Ghana’s year-on-year inflation as measured by the CPI stood at 13.2 percent in November 2013, up from the 13.1 percent recorded in October 2013. The rate is well above the target set by the Central Bank of 9 percent for 2013. The monthly change rate for November 2013 was 0.8 percent, against the 2.3 percent recorded in October 2013.

The Food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 7.3 percent, 0.4 percentage points higher than the 6.9 percent recorded in October 2013. Three subgroups of the food and non-alcoholic beverages group recorded inflation rates above the group’s average of 7.3 percent.

GhanaCoatofArms150x150The non-food group recorded an average year-on-year inflation rate of 17.6 percent in November 2013, compared to a rate of 17.7 percent recorded in October 2013. Four subgroups recorded year-on-year inflation rates above the group’s average rate. Housing, water, electricity, gas and other fuels recorded the highest rate of 34.1 percent followed by Transport (26.4%), followed by Miscellaneous goods and services (17.8%) and Clothing and footwear (17.7%). Inflation was lowest in the Communications subgroup (4.3%).

Interest Rates | The inflation rate for 2012 was 8.8 percent and in 2011 8.6 percent. As a result of the hike in the inflation rate earlier in the year, the Central Bank of Ghana hiked policy interest rates to 16 percent in May and is unchanged since then.

The latest Treasury bill rates as of December 20 is 18.6721% for 91 – Days, 18.8305% for 182 – Days and 17.0000% for 1 and 2 – Year Notes.

Related posts | Ghana GDP up strongly to June

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Ghana GDP up strongly to June

December 24, 2013 by

Ghana’s Real Quarterly GDP for the second quarter of 2013 grew by 6.1%, (year-on-year) compared to 6.7% recorded in the first quarter. The Services sector recorded the highest growth of 9.2%, followed by the Industry Sector 2.5%, while the Agriculture sector showed a negative growth of 3.9% (see Table 1).

The positive growth recorded by the Services sector was due to increases in Information and Communication activities, and Real Estate, Professional, Administrative & Support Service activities. Financial and Insurance activities (27.5%), Information and Communication activities (24.5%) and Public Administration (19.7%) were the main contributors to the Services sector.

The main contributors of the Industry sector were Mining and Quarrying (29.1%); followed by Electricity (9.4%) and Construction (6.8%).

Image courtesy of wandee007/FreeDigitalPhotos.net

Image courtesy of wandee007/FreeDigitalPhotos.net

The Mining and Quarrying subsector within the Industry sector, recorded a growth of 3.7% due to the increase in the production of Oil and its development activities and Diamond over the first quarter. However, the manufacturing subsector recorded a negative growth of 19.8 percent, partly due to lower production in the food, beverages, and tobacco division, refined petroleum products, and chemicals and chemical products division.

Key findings of the performance in the Agriculture sector for the 2nd quarter of 2013 compared with the 2nd quarter of 2012 are Fishing (2.9%), the only subsector with positive growth, while the Crops and cocoa (-1.4%), Livestock (-12.6%) and Forestry and Logging (-8.6%) subsectors contributed negatively to the sector.

In the Agriculture sector, economic activity in the crop subsector reflected a positive growth of 1.5 percent due to its seasonal pattern (planting season). Economic activities in the Livestock, Forestry and logging, and Fishing subsectors recorded negative growths partly due to their seasonal patterns.

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Barbados gets US$150m loan

December 24, 2013 by

The Barbados Government has secured a 5-year US$150 million floating rate loan from regional and international investors.

The amount raised provides foreign financing for the current fiscal year and serves to augment the stock of international reserves while the recently announced fiscal measures take effect.

Consistent with Government’s medium-term fiscal and growth strategy, part of the loan proceeds will be invested in a number of critical capital projects. Government’s net public debt ratio is expected to increase to approximately 68.1% as at December 2013.

Related post | Barbados faces major economy challenges

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