• In 2020, real GDP contracted by an estimated 17.9%, and unemployment averaged 27.0%. This elevated unemployment is the main driver behind Barbados’ score of 65.0 out of 100 in the ‘social stability’ subcomponent of Fitch’s Short-Term Political Risk Index (STPRI), its lowest subcomponent score in the index. 
• Moving forward, Fitch Solutions forecasts that real GDP will rebound to 1.8% growth in 2021 and 4.0% in 2022 as the tourism sector re-opens, which the agency expects will lower unemployment to 14.0% in 2021 and 12.1% in 2022. An improving labour market will in turn reduce social stability risks. 
• That being said, Barbados’ economic recovery will limit risks to social stability in the quarters ahead, while the ruling, centre-left Barbados Labour Party (BLP)’s significant legislative majority will boost policymaking. As a result, Fitch Solutions assigned Barbados a score of 80.0 out of 100 in its Short-Term Political Risk Index, which is above the Caribbean average of 70.7. 
• Medium-term risks to Prime Minister Mia Mottley’s re-election prospects are the unpopular fiscal consolidation measures, which will likely be implemented in the quarters leading up to the May 2023 parliamentary elections.

 (Source: Fitch Solutions)

• The Biden administration on Thursday released $3 billion in COVID-19 rescue funds aimed at helping localities bolster their economies in the wake of the pandemic, calling on communities to seek funding for a range of revitalization projects. 
• The funding, authorized by the $1.9 trillion American Rescue Plan Act, is part of President Joe Biden's "Build Back Better" agenda to rebuild the nation after the novel coronavirus triggered widespread shutdowns and led to more than 600,000 U.S. deaths so far. 
• New funding will be available to communities nationwide through six programs ran through the Department of Commerce targeting jobs, for instance, in tourism, the agency said in a statement. 
• Commerce Secretary Gina Raimondo highlighted that the initiative could create as many as 300,000 jobs in the near term. Of the total funding, $1 billion will be allocated for up to 30 localities that apply for money for up to eight community projects such as building infrastructure or training workers.

(Source: Reuters)

• The International Monetary Fund on Thursday said it would revamp its concessional lending programs to better support low-income countries during the COVID-19 pandemic and recovery, and raised the prospect of limited sales of IMF gold to boost its lending capability. 
• The IMF said its executive board last week backed reforms that include raising the access limits for concessional financing for low-income countries by 45%; eliminating access limits for the poorest countries with eligible programs; and maintaining zero-percent interest rates on such loans. 
• To boost the lending capacity of its Poverty Reduction and Growth Trust, the IMF said it would seek an additional $18 billion in coming years from member countries, on top of some $24 billion already raised since the start of the crisis, plus $4 billion in subsidies to support zero-percent interest rates. 
• Richer member countries could channel their existing and new Special Drawing Rights emergency reserves to raise the funds, the IMF said, adding that the expected approval of a $650 billion increase in the IMF's SDR allocation this August could help facilitate the fund-raising process.

(Source: Reuters)

• A total of €30Mn (approximately US$35Mn) in concessional funding support is being provided to bolster the response of the Caribbean Development Bank’s (CDB’s) 19 borrowing member countries (BMCs), including Jamaica, to the coronavirus pandemic. The funds are intended to assist beneficiary countries in accessing and deploying COVID-19 vaccines and strengthening the capacity of their health services to deal with the pandemic. 
• The allocation, which is programmed for deployment by year end, has been repurposed from a €120Mn Climate Action Line of Credit II, jointly executed by the CDB and European Investment Bank (EIB) in 2017 to aid the BMCs in combatting climate change. The funds will be critical for BMCs in getting more affordable access to safe vaccines and related material, equipment and services for their populations. 
• The programme includes debt service support, policy-based lending, the purchasing of personal protective equipment for front-line workers, procurement of digital devices and other technology that support services to underpin online learning and assist with learning recovery. It will also include financing of a regional communication engagement strategy to increase vaccination, and the provision of working capital to micro, small and medium-sized enterprises (MSMEs).

(Source: JIS)

• Minister of Agriculture and Fisheries, Hon. Floyd Green, has welcomed the insurance product, GraceKennedy (GK) Weather Protect, which will provide coverage for farmers and fisher-folk impacted by adverse weather events. The policy is being provided through GK Insurance and will protect the businesses of farmers and fishermen against heavy rain, wind and drought. 
• Green, who was speaking at the virtual launch of the insurance scheme on Tuesday (July 20), said this new product “could not have come at a better time”, given the fact that the hurricane season has begun. He pointed out that the impact of severe weather conditions has been a major challenge for the agricultural sector, noting that between 2004 and 2017, the sector suffered $196Bn in losses from weather-related events. 
• In October last year, there was a significant period of sustained rains that caused more than $2.50Bn in damage to crops across Jamaica, and affected 14,000 farmers. “They (farmers) had to depend on the Government to find the resources to give them to start their agricultural enterprise again. While we were able to pull together over $600 million to get our farmers up and running, one of the realities is that a lot of the farmers had to wait for significant periods to get that support from the Government… [due to several factors],” he said. 
• This is where the GK Weather Protect product could better serve farmers and fishers by providing an accessible, affordable and flexible insurance product that offers a quick payout. Jamaica now has from the private sector “a truly affordable and accessible crop insurance scheme that will help to protect our farmers from the realities that they face because of our weather patterns”.

(Source: JIS)

• An improving COVID-19 situation in the Dominican Republic and economic tailwinds will bolster public support for President Luis Abinader and help facilitate his market-friendly policy agenda. 
• The DomRep government quickly secured enough COVID-19 vaccine doses to vaccinate its entire population, and the national campaign has vaccinated 49.5% of citizens as of July 19, making it the fastest vaccination effort in the Caribbean. The successful vaccination efforts have also allowed the country to facilitate visitors to the island without the requirement for a negative COVID-19 test, which has bolstered demand for its tourism product and allowed for a strong recovery in the sector so far this year. 
• Economic activity has also strengthened in 2021, averaging 13.4% monthly growth in the year through May. Real GDP growth is forecasted to be 6.0% in 2021 and 4.7% in 2022, which will help reverse the economic impact of the pandemic that caused real GDP to contract 6.7% in 2020. 
• However, political instability in neighbouring Haiti is likely to spur immigration to the Dominican Republic and may prompt the government to tighten entry requirements. 
• Fitch Solutions maintains the Dominican Republic’s score of 66.3 out of 100 in its Short-Term Political Risk Index (STPRI) as an improving economy and the recent developments in Haiti will offset in the country’s broader risk profile.  

(Source: Fitch Solutions & NCBCM Research)

• The United States has extended border restrictions on non-essential travel yet again. The U.S. and Mexico agreed to continue limiting non-essential travel “to prevent the spread of COVID-19” through August 21. The previous border restrictions were expected to end Thursday, July 22, 2021. 
• S. and Mexican officials determined that non-essential travel, such as tourism, between the United States and Mexico currently poses additional risk of transmission and spread of the virus. 
• Moreover, given the sustained human-to-human transmission of the virus, coupled with risks posed by new variants, returning to previous levels of travel between the two nations places the personnel staffing land ports of entry between the United States and Mexico, as well as the individuals traveling through these ports of entry, at increased risk of exposure to the virus associated with COVID-19. 
• This will continue to weigh on Mexico’s tourism sector outlook over the near term, given that the US is Mexico’s largest source market.

(Source: Reuters)

• Emerging-market investors have been pouring money into bonds and cutting back on stocks in a trend that’s set to intensify as the delta variant of the coronavirus ravages developing economies with low vaccination rates. 
• Bonds have seen net inflows for 11 straight months, the longest streak in Institute of International Finance data going back to early 2018. They surged to a net $99.2 billion in the six months through June, versus net equity withdrawals of $2.2 billion, according the data, which tallies emerging markets excluding China. 
• Equities haven’t attracted more money than bonds since November, when vaccine progress and Joe Biden’s election as U.S. president boosted optimism toward the global economy. The picture won’t change anytime soon because delta-variant risk to emerging markets hasn’t been fully priced in yet, said Paul Sandhu, head of multi-asset solutions at BNP Paribas Asset Management Asia Ltd. The money manager favours the long end of the curve in high-yield emerging markets such as Russia, Colombia and Turkey. 
• Pictet Asset Management’s Arun Sai also said he favours emerging-market bonds over stocks. Emerging-markets equities only attract sustained inflows when they offer a superior outlook to developed markets, according to Sai, who is a senior multi-asset strategist in London.

(Source: Bloomberg)

• Scientists are working on a benchmark for COVID-19 vaccine efficacy that would allow drug-makers to conduct smaller, speedier human trials to get them to market and address a huge global vaccine shortage. 
• Researchers are trying to determine just what level of COVID-19 antibodies a vaccine must produce to provide protection against the illness. Regulators already use such benchmarks - known as correlates of protection - to evaluate flu vaccines without requiring large, lengthy clinical trials. 
• Stanley Plotkin, inventor of the Rubella vaccine and an expert on correlates of protection highlighted that," Information is flowing in," he said. "By the end of this year, I think there will be enough data to convince everyone”. An established benchmark for COVID-19 would allow drug makers to conduct vaccine trials in just a few thousand people, about one-tenth the size of the studies conducted to gain authorization for currently widely-used coronavirus shots.

(Source: Reuters)

• Relaxed COVID-19 restrictions and a rebound in tourist arrivals will drive Jamaica’s economic recovery in the quarters ahead. The Jamaican economy has steadily recovered from the economic shock caused by COVID-19, which brought the tourism industry to a near-complete halt from Q220 to Q420, as restrictions on international travel have begun to loosen. 
• Real GDP grew at a seasonally adjusted rate of 0.6% q-o-q in Q121, despite a surge in COVID-19 cases in February and March that prompted the government to impose stringent restrictions on mobility and commercial activity. 
• The rebound in the tourism industry will boost service exports and investment and bolster private consumption through renewed employment growth. The return of tourism activity will boost employment, fueling private consumption growth of 4.0% in 2021. 
• The tourism industry historically accounts for approximately 30.0% of total employment in Jamaica. As a result, Fitch Solutions expects job growth to accelerate as arrivals rebound. The unemployment rate averaged 9.0% in Q121, below the 12.6% seen in Q320 but still above the average of 7.7% in 2019. 
• Unemployment is forecast to decline over the course of the year, averaging 7.8% in 2021, which will bolster household incomes and private consumption. Private consumption accounted for an average of 77.9% of GDP from 2015 to 2019. 
• This has led to the upward revision of 2021 and 2022 real GDP growth forecasts to 4.5% and 4.1% respectively, from 3.0% and 3.5% previously, as economic output in the year through July have surprised to the upside. The economy’s continued growth in Q121 suggests that it is more resilient to pandemic-related disruptions than Fitch had previously expected, underpinning its upward revision of real GDP growth forecast. 
• However, the entity’s forecast implies that the economy will not return to its pre-pandemic size until 2024. Limited fiscal support and the continued global spread of COVID-19 will slow the economic recovery.

 (Source: Fitch Solutions)