Before the advent of COVID-19, following significant fiscal and economic reforms, the Jamaican economy was characterized by macroeconomic stability evidenced by a substantial reduction in the debt to GDP ratio, 19 consecutive quarters of economic growth and a record low unemployment rate of 7.2 per cent.
The Covid-19 pandemic has negatively impacted Jamaica. Containment measures taken globally and locally, to slow the spread of the coronavirus brought economic activity to a halt and resulted in significant falls in economic output. The adverse impact of the pandemic included reduced inflows of foreign exchange, declines in government revenues, and an increase in unemployment.
PIOJ anticipates that Real GDP will recover within two to four years, and Employment levels within one to three years. It is not anticipated that the economic recovery from COVID-19 will be as long as the recovery period following the global economic recession in 2008-2009, given the relative strength of the Jamaican economy and the stimulus packages implemented both locally and globally.
From the Government of Jamaica’s preliminary review of the development targets under Vision 2030 Jamaica– National Development Plan, it is anticipated that based on projections for the Jamaican and wider global society and economy, there will be slippages achieving the targets in several indicators. Jamaica remains committed to pursuing the long-term goals, articulated in Vision 2030 Jamaica– the avenue through which the SDGS are implemented.
Brazil’s retail sales rose more than expected as commerce started reopening in May, although they remained well below last year’s levels as a raging coronavirus outbreak continues to weigh on consumption in Latin America’s largest economy.
Sales increased 13.9% from April, more than double what economists expected and the largest monthly jump in a series dating back to January 2000. From the prior year, sales dropped 7.2%, the national statistics agency reported on Wednesday.
The figures reflect the reopening of some stores as public authorities ease restrictions imposed during the pandemic and also the extremely low comparison basis of April.
Barbados’ economy will contract in 2020, as previous quarantine measures limit private consumption and a global recession reduces demand for Barbadian exports.
The persistence of global cases will impede the pace of a domestic recovery, despite the reopening of the local economy and resumption in tourism activity.
Fitch Solutions maintain its 2020 real GDP forecast for Barbados of -4.1% y-o-y, with risks weighted to the downside.
Britain will raise the threshold of a tax on property purchases from 125,000 pounds to 500,000 pounds to boost activity in the housing market after the coronavirus lockdown, finance minister Rishi Sunak said on Wednesday.
“This will be a temporary cut running until 31st March 2021. And, as is always the case, these changes to stamp duty will take effect immediately,” Sunak told parliament during a statement on the outlook for the economy.
He said the average stamp duty bill will fall by 4,500 pounds, and nearly nine out of ten people buying a main home this year will pay no stamp duty at all.
China’s June factory gate prices fell in annual terms for the fifth consecutive month but at a slower-than-expected rate, official data showed on Thursday, reflecting recent signs of modest improvement in the manufacturing sector.
The Producer price index (PPI) in June fell 3.0% from a year earlier, China’s National Bureau of Statistics said in a statement, compared with a 3.2% fall tipped by a Reuters poll of analysts and a 3.7% decline in May.
The consumer price index rose 2.5% from a year earlier, statistics bureau data also showed, in line with a 2.5% rise tipped by a Reuters poll and slightly faster from 2.4% growth in May.
Declining exports and private consumption will push Jamaica into a significant recession in 2020.
Fitch Solutions has revised down its 2020 real GDP growth forecast to -5.1% y-o-y, from -2.6% previously, as the Covid-19 pandemic halts tourism activity and exacerbates the contraction in bauxite production.
Risks remain to the downside as the global economic recovery could be derailed by a second wave of the coronavirus in H220.
For the three months ended March 31, 2020, ISP Finance Services Limited reported a 34.1% (or $5.45Mn) contraction in net profits to $10.54Mn (EPS: $0.10) from $15.99Mn (EPS: $0.15) made in the previous year.
This performance was driven by a 2.0% (or $1.58Mn) decline in total operating income as well as a 5.4% (or $3.37Mn) increase in total operating expenses.
The stock has declined 62.9% since the start of the year and closed trading at $12.00 on Thursday. At this price ISP currently trades at a P/E of 70.6x earnings which is above the Junior Market Financial sector average of 31.2x earnings.
It is expected that the Peruvian sol (PEN) will trade sideways in the coming months as a deep global recession and low copper prices cap the upside from improving investor risk sentiment.
In the longer term, the expectation is that the unit will return to a more modest rate of depreciation against the US dollar as a minimal real interest rate differential with the US and relatively expensive valuation offset higher copper prices and capital inflows.
Fitch revised its 2020 average forecast to PEN3.44/USD, from PEN3.40/USD previously, and its end-2020 FX forecast to PEN3.45/USD, from PEN3.40/USD, implying the sol will hold its value after depreciating 4.1% in the year to date.
Brazil’s public debt reached a record-high of 80.8% of GDP in May. The bulging primary deficit, the effect of a weaker currency on the external debt, and the contraction in GDP largely outweigh the benefits of an exceptionally low-interest rate for debt dynamics.
The debt-to- GDP ratio is poised to rise even further in the coming months. The critical question is how and when the government will be able to fix the problem.
Bloomberg’s economists expect public debt to reach 91.7% of GDP by year-end. This reflects their forecast for a 6.4% contraction in the GDP, a primary deficit of 10% of GDP, and a rather benign assumption that the currency strengthens to 4.80 reais per U.S. dollar.
The primary deficit will rapidly rise from 3.9% of GDP in May to at least 10%at the end of the year, with most of the slump coming through August.
U.S manufacturing activity rebounded in June, hitting its highest level in more than a year as the broader economy reopened, but rising COVID-19 infections threaten the recovery.
The Institute for Supply Management (ISM) said its index of national factory activity jumped to a reading of 52.6 last month from 43.1 in May. That was the strongest since April 2019 and ended three straight months of contraction.
A reading above 50 indicates growth in manufacturing, which accounts for 11% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 49.5 in June.
