• The Bank of Jamaica (BOJ) has announced its decision to hold the policy interest rate, which is the rate offered to deposit-taking institutions on overnight placements with BOJ, unchanged at 0.50% per annum.
• The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (MPC) in September 2021 and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
• While the Bank does not target any specific level of the exchange rate, BOJ will also seek to ensure that movements in the exchange rate do not threaten the inflation target. Monetary policy decisions taken by the BOJ are aimed at ensuring that inflation remains within the Bank’s inflation target of 4.0% to 6.0%.
• These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year, starting from as early as the September 2021 quarter, inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. Inflation is projected to remain at 5.0% over the medium term, conditional on the gradual tightening of monetary accommodation.

(Source: JIS News)

• Fitch is expecting that a rebound in private consumption and investment in Peru will underpin a 10.2% real GDP growth in 2021 and 4.7% growth in 2022. In Q2 2021, real GDP grew 41.9% y-o-y and 6.5% q-o-q, with the Q2 results outlining a broad H121 recovery in private consumption (14.0%), public consumption (19.5%), fixed capital formation (82.3%), and exports (17.5%), though imports also rose 20.7% in the first half of the year.
• As Peru's national vaccination campaign progresses, it will allow for greater economic activity and fewer public health restrictions, underpinning Fitch’s expectation for a broad economic recovery in the short-to-medium term, especially as Peru's national vaccination campaign progresses. As of August 21, 29.2% of Peruvians had received at least one COVID-19 vaccine dose and 22.5% had been fully vaccinated.
• While the agency’s growth forecasts imply that Peru will fully recover from the pandemic in 2022, less favourable government policies and tighter monetary policy will cause growth to decelerate in the medium-to-long term, averaging 3.2% from 2023 to 2025.
• In addition, downside risks to the short- and long-term forecasts include the spread of COVID-19 variants in Peru and globally, in addition to elevated concerns over policy direction under leftist President Pedro Castillo.

(Source: Fitch Solutions)

• Fitch Solutions forecasts that Argentina will post a current account deficit of 0.7% of GDP in 2021 and 1.5% in 2022 (from a surplus of 0.9% in 2020), narrow shortfalls relative to recent years as multi-year high soybean prices support export earnings.
• Fitch Solutions have revised its real GDP growth forecast for Argentina to 6.2% for 2021, from 5.6% previously, due to a stronger than anticipated Q2 2021 and expected stimulus efforts in H2 2021. This will see the country exiting the three-year recession, but remaining subdued by an ongoing crisis of confidence among households and firms.
• The 2022 growth forecast was revised down to 3.3%, from 5.7% previously, as political headwinds will likely prevent a sustained rebound in consumption and investment.
• Several factors underpin this view, including the fact that the government will likely need to scale back its deficit spending as a condition of renegotiating its debt repayments to the IMF, as well as the expectation of multi-year high commodity prices (particularly soybean), which will leave the government with fewer resources to support its stimulus efforts.
• The forecasts imply that the Argentine economy will not return its peak size (reached in 2017) until 2025, among the slowest recoveries in the region.

(Source: Fitch Solutions)

• The IMF has distributed about $650 billion in new Special Drawing Rights (SDR) to its members on Monday, providing a "significant shot in the arm" for global efforts to combat the COVID-19 pandemic, Managing Director Kristalina Georgieva said.
• The International Monetary Fund's largest-ever distribution of monetary reserves will provide additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt, Georgieva said in a statement.
• IMF member countries will receive SDRs - the fund's unit of exchange backed by dollars, euros, yen, sterling, and yuan -- in proportion with their existing quota shareholdings in the fund.
• Georgieva said about $275 billion of the allocation will go to emerging markets and developing countries, with some $21 billion to flow to low-income countries.

(Source: Reuters)

• Corporate earnings have continued to strengthen over recent months, with Q2 2021 results showing record growth across several sectors. While these growth rates will ease due to base effects, earnings will nonetheless remain elevated and will help to underpin the cyclical recovery in global capital expenditure (CAPEX) and growth over the coming quarters.
• Earnings per share (EPS) reached new highs for the S&P 500, and 87% of companies posted a positive surprise in their earnings the most in almost three decades. The MSCI World Index saw a new high in EPS, and while the MSCI Emerging Market (EM) Index has seen an improvement in EPS from the lows in 2020, it has not hit a new high.
• Ongoing fiscal and monetary policy support globally, combined with the continued easing of restrictions as vaccination rates continue to rise, will help to underpin corporate profits over the coming quarters, which in turn will support CAPEX and economic activity.

(Source: Fitch Solutions)

• Despite robust revenue growth, Productive Business Solutions Ltd experienced a loss attributable to shareholders of US$726K for the 6-months ending June 2021 (loss of $1.14Mn H1 2020). 
• Revenue grew by 40.9% (29.89Mn) and other income improved by 32.2% YoY due strong performance of its information technology business. The receding impact of COVID-19 in the first half also positively impacted earnings. There was also a sharp recovery in print volumes, though they remain 7.0% below pre-COVID levels. 
• The earnings were also supported by a 20.3% (US$892K) decline in finance costs and a 7.3% (US$2.11Mn) reduction in selling, admin and general expenses. 
• Despite these favourable developments, direct expenses and taxation rose by 79.5% (US$32.19Mn) and 42.9% (US$347K), respectively and were the main reasons for the net loss.
• PBS’s stock price has appreciated by 4.6% since the start of the year and closed Thursday’s trading session at a price of $0.78 per share. At this price, the stock trades at a P/E ratio of 1.6x earnings, which is below the USD Stock Market average of 8.5x.

(Source: PBS Financials)

• Jetcon Corporation Ltd.’s net profit for the 6 months ending June 30, 2021 was $17.56Mn (EPS: $0.03), a fourfold increase over the same period last year. 
• Revenues, which grew by 31.0%($97.13Mn), was attributed to the adjustments being made to facilitate a reopening of economic activity, as countries have a better understanding of the effects of the COVID-19 virus. 
• Also supporting the earnings was a 1.9% (or $880k) reduction in total expenses due to lower administrative and other expenses. 
• Jetcon’s stock price has appreciated by 48.1% since the start of the year and closed Thursday’s trading session at a price of $1.17 per share. At this price, the stock trades at a P/E ratio of 97.5x earnings, which is above the Junior Market Distribution Sector average of 19.1x.

Source: (Jetcon Financials)

• Mexico’s President Andres Manuel Lopez Obrador said on Thursday he’ll seek central bank approval to use $12 billion in International Monetary Fund reserves to pay down debt, as he presses ahead with austerity. 
• Lopez Obrador thanked bank Governor Alejandro Diaz de Leon for being open to the idea of using the windfall, which is being transferred to the monetary authority from the IMF, to prepay liabilities. He declined to comment on Diaz de Leon’s prior remarks that the government must purchase the reserves from the bank. 
• AMLO, as the president is known, has made austerity a cornerstone of his administration and has vowed not to raise debt levels. His plan to use the IMF funds was proposed by his new finance minister and long-time confidant, Rogelio Ramirez de la O, who is leading the project.
• “The money shouldn’t just be stored away,” AMLO said. “That would be a loss, because it earns very little interest, while the government has to pay high interest on its debt.” 
• He added that the decision will depend on the central bank, known as Banxico, whose autonomy his government will “always respect, always.”

(Source: Yahoo Finance)

• Fitch Solutions forecasts that Argentina will post a current account deficit of 0.7% of GDP in 2021 and 1.5% in 2022 (from a surplus of 0.9% in 2020), narrow shortfalls relative to recent years as multi-year high soybean prices support export earnings. 
• The country posted a rare current account surplus (0.9% of GDP) in 2020, as a deep recession curtailed imports, while exports fell less significantly. Though Argentina's economic recovery remains highly volatile and incomplete, domestic activity has nonetheless bottomed out and with it import demand is rapidly rebounding, pulling the overall balance back into deficit. 
• Although Argentina's external financing needs will be modest over the coming quarters, the country is likely to see limited foreign investment given a lack of confidence in policy direction. 
• As a result, Fitch anticipates that the stability of Argentina's external accounts over the coming quarters will depend on the maintenance of capital controls and an eventual agreement to delay repayments to the IMF.

(Source: Fitch Solutions)

• As the base effects from last year’s contraction fade, the latest signs suggest that emerging market (EM) economies lost momentum in mid-2021. Fitch expects that economic growth will ease over the remainder of the year. 
• Only a few EMs have published Q221 GDP figures, but below-consensus outturns in both the US and China strengthened Fitch’s view that the global economy started to lose momentum in late Q2. Growth in China slowed from 18.3% to 7.9% y-o-y in Q221, which was below the Bloomberg consensus estimate of 8.1%. In the US, consensus expectations that growth would accelerate from 6.4% q-o-q (annualized) to 8.5% were dashed, with growth remaining pretty stable at 6.5% in Q221. 
• While Fitch expects that growth in the world’s two largest economies will remain rapid by recent standards, both are now past the peak of their recoveries. This will weaken a key tailwind that has boosted EM economies in recent quarters. 
• Indeed, the latest figures show that EM export growth slowed in May. Argentina and Colombia were the only two major EMs where export earnings rose faster in US dollar terms than they had in April. Evidence from Turkey, Brazil, Argentina, Chile, China and Vietnam suggests that export growth slowed further in June.

(Source: Fitch Solutions)