• Japan’s government expects the economy will contract this year as activity slowly recovers from the coronavirus crisis, with a return to growth seen next year, four government sources told Reuters.
• The world’s third-largest economy is expected to have contracted 23.9% in the second quarter as the pandemic slammed global demand and Japan’s state of emergency prompted people to stay at home and businesses to close. Preliminary GDP data will be released on Aug 17.
• Reflecting uncertainty over how long the pandemic will last, the government will take the unusual step of announcing several growth scenarios for 2020 and 2021 this week, based on whether the pandemic will end quickly or be prolonged. Real GDP is expected to shrink in the current fiscal year through March 2021 under either scenario, but it would be smaller than a 5% contraction, one of the sources said.

(Source: Reuters)

• For the year ended March 31, 2020, Proven Investment Limited reported an audited net profit attributable to shareholders of US$29.98Mn (EPS: US 4.79 ¢), up 337.8% (or US$23.13Mn) relative to the prior year.
• This favorable outcome can be attributed to the 86.2% (or US$32.51Mn) increase in total income primarily due to a one-off US$24.93Mn gain from the disposal of Access Financial Services. This increase along with a US$9.13Mn rise in the share of profit from associates outstripped the 45.1% (or US$11.79Mn) growth in total operating expenses.
• If this one-off gain from the sale of the subsidiary is removed, the profit attributable to shareholders is US$8.70Mn relative to the non-normalized profit of US$29.98Mn.
• Proven’s stock has fallen 28.6% since the start of the year and closed Monday’s trading session at $33.21. At this price, the stock trades at a P/E of 5.2x earnings, which is below the Main Market Financial sector average of 13.9x earnings.

(Source: PIL Financials)

• More than 40,000 local fisheries stakeholders are poised to benefit from the implementation of the ‘Promoting Community-based Climate Resilience in the Fisheries Sector Project’ by the Ministry of Industry, Commerce, Agriculture, and Fisheries (MICAF).
• The US$4.875Mn five-year World Bank-funded initiative aims to enhance climate-resilient practices among targeted fishing and fish-farming communities across Jamaica in a bid to strengthen the sector through several engagements.
• Minister without Portfolio in MICAF, Hon. Leslie Campbell noted that over the past two years, the sector contributed US$79Mn to Jamaica’s gross domestic product (GDP), with exports totaling more than one tonne.

(Source: JIS)

• President David Granger’s refusal to concede the March 2020 election and leave office will heighten political risks in Guyana in the coming weeks.
• While Fitch’s core view remains that Granger will eventually step down and allow the opposition People’s Progressive Party/Civic (PPP) to assume control of the government, they note the possibility of increased sanctions by the US and other governments if Granger remains in power.
• Fitch Solutions has revised Guyana’s score in the Short-Term Political Risk Index to 48.0 out of 100, from 54.3 previously, as the government’s refusal to verify the election results or leave the office to underpin the possibility of political violence.

(Source: Fitch Solutions)

• Fitch Ratings has affirmed Banco Atlantida, S.A.'s (Atlantida) Long-Term (LT) Issuer Default Ratings (IDRs) at 'B+', and revised the outlook from stable to negative.
• Fitch also placed both Inversiones Atlantida’s (Invatlan) LT and ST IDRs, each at 'B', and the US$150Mn senior secured notes 'B'/'RR4' on Rating Watch Negative (RWN).
• The negative outlook on Atlantida LT IDRs reflects the increased downside risks from the economic implications of the coronavirus pandemic. Fitch believes that although the ultimate impact of the weaker economic conditions is yet unclear; this could materially affect the banks' financial performance.
• Invatlan's RWN reflects the delay in the delivery of the audited 2019 financial information due to operational issues with the external auditor derived from the pandemic, according to management.

(Source: Fitch Ratings)

• Unemployment benefits would be cut by nearly half in a new plan proposed by Senate Republicans. The policy would replace a $600-a-week federal boost, which lapsed over the weekend in all states, with a reduced benefit of $200 a week.
• The plan would pay the new $200 subsidy through September. In October, that would be replaced by a different formula capping total state and federal jobless benefits at 70% of lost wages.
• That amounts to a 43% cut in total benefits when compared with the prior, $600-a-week policy, a temporary measure enacted in March under a federal relief law. The proposal would impact nearly 32 million Americans currently receiving unemployment benefits — about five times the level of the Great Recession more than a decade ago.

(Source: CNBC)

• New orders for key U.S.-made capital goods increased by the most in nearly two years in June and shipments accelerated, but the gains were likely insufficient to avert the deepest plunge in business investment and economic activity since the Great Depression in the second quarter because of the COVID-19 crisis.
• Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 3.3% last month, the Commerce Department said. That was the biggest increase in these so-called core capital goods orders since July 2018 and followed a 1.6% rise in May.
• The improvement in manufacturing reported by the Commerce Department on Monday was driven by pent-up demand following the reopening of businesses.

 (Source: CNBC)

• The Jamaican dollar (JMD) will depreciate over the coming months due to a widening current account deficit and loose monetary policy.
• In the long term, Fitch expects the JMD to weaken steadily as a slow economic recovery weighs on investors’ expected returns and the Bank of Jamaica (BOJ) continues to reduce its participation in the foreign exchange market.
• Fitch revised its 2020 forecast average to JMD144.0/USD, from JMD139.3/USD previously, and its 2021 forecast to JMD149.0/USD, from JMD143.2/USD.

 (Source: Fitch)

• The Short-Term Political Risk Index score for the Dominican Republic of 67.0 out of 100 is now higher than last quarter's score of 65.9. While the election of opposition candidate Luis Abinader in the July 2020 election represents a change in power from the ruling Partido de la Liberación Dominicana (PLD), this shift poses little risk to policy continuity.
• In addition, Abinader's party, the Partido Revolucionario Moderno (PRM), secured majorities in both houses of Congress, which will support policymaking.
• The Dominican Republic scores well in almost every sub-component, yet its score in the 'social stability' sub-component remains below the regional average. This is primarily due to a high level of inequality, persistent tensions with the Haitian migrant community and perceived impunity for government officials accused of corruption.
• Risks to social stability have increased this quarter due to the Covid-19 pandemic, which will push unemployment higher and may cause public unrest in the near term.  

(Source: Fitch)

• The impact of the coronavirus pandemic on Latin America's economic growth and public finances continues to put pressure on sovereign credit profiles, Fitch Ratings says in a new report.
• This is reflected in the high proportion of sovereign ratings on Negative Outlook in the region, even after a number of downgrades this year.
• The proportion of Latin American sovereigns on Negative Outlook has almost doubled since end-2019 to about 70% (excluding those rated 'CCC' or below, where Fitch does not assign Outlooks).
• The region has become the new hotspot for the pandemic, having initially recorded far fewer COVID-19 cases than affected countries in Europe and Asia.
• Despite some recovery in commodity prices (especially copper), Fitch has continued to revise down 2020 GDP forecasts for the region and its largest economies to reflect weak incoming data, the extension of lockdowns in some countries, difficulty in easing social distancing measures, and the risk of prolonged economic pain where attempts to contain the virus have been less effective.

(Source: Fitch)