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Tourism and Education to Power Grenada Expansion Published: 20 June 2019

 

  • Grenada will continue to enjoy steady growth over the coming years, driven by the tourism and education sectors.
  • Analysts at Fitch Solutions, expect real GDP to expand by 3.5% in 2019, after averaging 5.5% y-o-y growth from 2014-2018, as the overall global economy slows.
  • Risks to the forecast are weighted to the downside as Grenada’s economy is heavily exposed to natural disasters or a slowdown in the global economy.

 (Source: Fitch)

Guyana Will See a Competitive Election in 2019 After CCJ Ruling Published: 20 June 2019

 

  • Guyana will see a competitive general election in 2019 after a Caribbean Court of Justice (CCJ) ruling upheld the December 2018 no-confidence vote against President David Granger’s A Partnership for National Unity (APNU) government.
  • Fitch Solutions expect the opposition People’s Progressive Party/Civic (PPP) is most likely to regain control of the government in the next election; however, we cannot rule out the possibility that Guyanese voters re-elect Granger.
  • Political risks will remain high in the coming months given sectarian tensions between the Indo-Guyanese and Afro-Guyanese communities and the likelihood of a close election.

 (Source: Fitch)

Traders are pricing in a 100% chance of at least one Fed rate cut in July Published: 20 June 2019

  • The fed funds futures market is now pointing to a 100% chance of an easing of monetary policy next month.
  • The market is also pointing to a 64% chance of one rate cut in the 2% to 2.25% range and a 36% probability of two cuts, according to the Chicago Mercantile Exchange (CME) Fed Warch tool.
  • The tool is based on futures pricing from live markets and reflects the views of traders placing real bets on the CME exchange.
  • The Fed decided to keep the benchmark rate in a target range of 2.25% to 2.5% on Wednesday. However, Fed chair, Jerome Powell said the case for a more accommodative policy has strengthened and added that policymakers are concerned about some of the recent economic developments.
  • The Fed also dropped the word “patient” from its statement.

 (Source: CNBC News)

Oil Surges After Iran Downs U.S. Drone and Fed Signals Rate Cut Published: 20 June 2019

  • Oil rose after Iran said it shot down a U.S. spy drone in its airspace, stoking Middle East tensions further after the attack on two tankers last week, while a more dovish stance from the Federal Reserve lifted financial markets.
  • Futures climbed as much as 3.3% in New York.
  • The reported drone drowning follows a missile strike by Yemeni rebels overnight on Saudi Arabia.
  • The Fed’s readiness to lower interest rates for the first time since 2008 boosted stock markets and weakened the dollar, spurring demand for commodities priced in the U.S. currency.
  • Oil also gained after U.S. government data showed inventories declined by 3.1 million barrels last week, more than analysts had estimated.

(Source: Bloomberg

1834 Investments Limited Reports Plummeting Profits Published: 19 June 2019

  • 1834 Investments Limited’s profit took a nose dive for the year ended March 31, 2019. Net Profit ended the year at $5.54Mn (EPS: $0.46) down from $81.93Mn (EPS: $6.76) a year earlier, a decline of 93.2%.
  • Revenues decreased by 38.6% to $27.87Mn, whilst other income plummeted 76.5% and together, were the main contributors to the group’s performance.
  • The stock has fallen 7.8% since the start of the calendar year. 1834 Investments closed yesterday’s trading session at $1.07 and currently trades at a P/E of 2.33x earnings which is below the Main Market average of 20.35x.

 (Source: 1834 Investments Financials)

Guyana Receives US$35M to Boost Financial Sector Published: 19 June 2019

  • The World Bank Group approved a US$35Mn Development Policy Credit to support Guyana’s efforts to strengthen financial sector development and fiscal management to better prepare the country to benefit from its newly discovered oil and gas reserves and transform its oil wealth into human capital.
  • This financing provides critical support to our reform agenda and efforts to strengthen institutions and build a resilient economy that is capable of withstanding both external and domestic shocks. These reforms will be the keys needed to guide the management of oil revenues for the benefit of present and future generations,” said Finance Minister Winston Jordan.
  • While currently, nearly one in four people in Guyana live in poverty, experts estimate that GDP will surge when commercial production of newly-discovered oil and gas begins. In response, the government has embarked on a series of reforms to diversify the economy and turn oil windfalls into human development and sustainable growth in the long term.
  • This particular financing focuses on strengthening financial stability and enabling sound financial development to promote macroeconomic stability and long-term growth. In particular, it will support banking reforms and depositor protection, the establishment of a deposit insurance scheme, implementation of new insurance law, and the country’s anti-money laundering efforts.

 (Source: Guyana Chronicle)

Barbados Will Run Significant Current Account Deficits In The Coming Years Published: 19 June 2019

  • Barbados will run wide current account deficits over the coming years as machinery and food imports outweigh service exports, principally from tourism.
  • It is expected that stable FDI inflows and support from multilateral lenders will provide stability to support Barbados’ external account.
  • Fitch Solutions, forecast that Barbados will maintain a significant current account deficit of 3.4% of GDP in 2019 and 3.5% of GDP in 2020, following a deficit of 3.5% in 2018.

 (Source: Fitch)

Iran Threatens Nuclear Escalation as War Tensions Increase with US Published: 19 June 2019

  • Tensions between the US and Iran escalated at the beginning of this week following reports that Tehran will cease to abide by restrictions implemented in the 2015 international agreement limiting its ability to produce nuclear weapons. 
  • Iran will increase uranium enrichment activities "based on the country's needs" and could exceed limits imposed by the 2015 deal in as little as 10 days, Behrouz Kamalvandi, a spokesman for Iran's nuclear agency, said Monday.
  • Iran's latest threat comes at a time of heightened conflict with the U.S., days after two oil tankers were disabled by what the U.S. has said forcefully was an attack orchestrated by Tehran. 
  • The country's provocative statement on uranium enrichment serves as the first evidence that Iran may violate the nuclear agreement, brokered by the Obama administration and from which President Trump has removed the U.S.

(Source: US News)

Trump Moves From Trade War Toward Currency War Published: 19 June 2019

  • President Donald Trump has already given the global economy trade wars. Now there are signs he may be gearing up for a currency war, too.
  • With a series of tweets on Tuesday aimed at the European Central Bank and an announcement by Mario Draghi, its president, that he was prepared to cut interest rates further below zero in response to Europe’s slowing growth, Trump made a rare American presidential intervention into another economy’s monetary policy.
  • “Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,’’ Trump stated.
  • By targeting Draghi directly and responding in real time to an overseas central bankers’ policy pronouncement, Trump was dialing up the heat just as his own Federal Reserve was gathering in Washington to decide on rates in a decision expected Wednesday, June 19, 2019.

 (Source: Bloomberg)

STATIN Releases Inflation Results for May Published: 18 June 2019

  • The All Jamaica Consumer Price Index recorded an inflation rate of 0.8% for May 2019 according to the Consumer Price Index (CPI) Bulletin.
  • This movement was mainly attributable to a 0.5% increase in the index for the ‘Food and Non-Alcoholic Beverages’ division. The increase in this division was chiefly as a result of the 1.1% increase in the index for the class ‘Vegetables and Starchy Foods’ due primarily to increases in the prices for some agricultural produce such as cabbage, lettuce, and yam.
  • Additionally, the ‘Housing, Water, Electricity, Gas and Other Fuels’ and ‘Transport’ divisions also registered increases in their index of 3.7% and 0.5% respectively.
  • For the period under review, the calendar-year-to-date inflation rate rose by 1.6%, the point-to-point by 4.8% and the fiscal year-to-date by 0.9%.

 (Source: STATIN)