• Robust COVID-19 vaccination programs in key source markets will power a strong rebound in Jamaica’s sizeable tourism industry in H2 2021.
• The resumption of flights from major airlines such as Virgin Atlantic, British Airways, and Frontier to Jamaica as early as May 28, and the sizeable fiscal stimulus in the US, which accounted for 68.6% of stop-over arrivals in 2019, will further bolster tourism demand.
• In addition to boosting service exports, the turnaround in the tourism industry will build on recent employment growth, fueling private consumption. Private consumption, which accounted for 76.2% of GDP in 2019, is expected to grow by 3.2% y-o-y in 2021 as businesses in the tourism sector re-hire workers. Unemployment is forecasted to average 8.0% in 2021, down from 8.9% at end-2020, which should boost household incomes, and thereby private consumption growth.
• A brightening growth outlook and loose monetary policy will support investment growth of 3.0% y-o-y in 2021. The brightening economic outlook should boost business confidence in the quarters ahead, which will lead to a rebound in investment. Moreover, the expected return of tourism activity will likely further incentivize investment.
• Fitch Solutions has revised its 2021 real GDP growth forecast to 3.0% y-o-y, up from 2.5% previously, as the widespread availability of COVID-19 vaccines in source markets will lead to stronger tourism demand than previously expected.
• The continued spread of COVID-19 poses downside risks to Jamaica’s growth outlook. The government has so far relied on donations from wealthier nations and the COVAX facility. As a result, Fitch Solutions does not expect Jamaica to vaccinate all priority populations until 2022. This will leave the population vulnerable to additional outbreaks of the disease, which would likely prompt the government to re-impose restrictions on mobility and commercial activity.

(Source: Fitch Solutions)

• On April 27, 2021, Tourism Minister, Hon. Edmund Bartlett participated in a successful meeting with Saudi Arabia’s Minister of Tourism, His Excellency Ahmed Al-Khateeb, to discuss investment opportunities and other possible areas of collaboration between both nations.
• The Ministers discussed the possibility of Jamaica benefiting from the US$100.00Mn development fund the Government of Saudi Arabia has established in collaboration with the World Bank for small enterprises. They discussed how Jamaica can benefit from investment in various areas including tourism infrastructure, particularly the new tourism destination being developed in St. Thomas.
• The ministers also discussed the tourism development collaborative effort that Jamaica and Saudi Arabia will establish, including the establishment of a Global Tourism Resilience and Crisis Management Centre in Riyadh and collaboration with regards to sustainability and resilience projects.
• This new relationship will help in the post-COVID growth of the sector and enhance its contribution to economic growth.

(Source: JIS News)

• Brazil’s central bank is at risk of having to raise interest rates more than expected just a month after surprising investors with a bold rate hike, according to former central bank chief Gustavo Loyola.
• The central bank raised the benchmark funds rate by 75 basis points to 2.75% last month and indicated another increase of the same size in May. The move -- the first this year among the Group of 20 nations -- surprised economists, who had expected a 50 basis point hike, but now traders are already pricing in an even stronger tightening, according to Loyola.
• The recent agreement over this year’s budget left several loose ends that will continue to spark uncertainty about the country’s fiscal accounts, further complicating the central bank’s job, he said.
• The steady rise in COVID-19 infection rates since November of last year continues to cast a shadow on economic prospects for Brazil as consumers and businesses struggle to reconcile the urge to stay safe with the need for incomes and revenues. This along with reductions in fiscal support as the government turns to heal its finances, and the now less accommodative monetary policy to contain inflation, will adversely impact the recovery forecasts for consumers and corporates, and result in only a modest expansion in 2021.

(Source: Bloomberg & NCBCM Research)

• Mexico posted a larger-than-expected trade deficit in March, with a global shortage of chips hobbling the country’s vast automobile exports sector, data published by the national statistics agency INEGI showed on Tuesday.
• Latin America’s second-largest economy posted a $2.906 billion trade deficit last month when adjusted for seasonal swings. The deficit was $3.004 billion in non-seasonally adjusted terms.
• “The weak performance of auto exports in February-March reflects to some extent supply chain disruptions caused by gas supply restrictions in parts of the U.S. and Mexico and scarcity of semiconductors,” Goldman Sachs economist Alberto Ramos said in a note.
• Manufacturing exports, which account for roughly 30% of Mexico’s gross domestic product, jumped by 9.9% in March versus a year earlier and increased by 2.2% during the first three months of the year on an annual basis, according to INEGI data. That was weighed down in March by a 5.2% drop in auto exports, which account for roughly a third of all manufacturing shipments, and a 4.8% drop in January to March shipments of cars.
• The reactivation of Mexico’s manufacturing sector “will be slower than previously expected due to the problem with a chip” shortage in the automotive sector, economist Jose Luis De la Cruz said. He added, though, that a low base of comparison in April and May 2020 should boost figures over the next couple of months.

(Source: Reuters)

• Canada’s budget deficit will be structurally wider over the coming quarters as Prime Minister Justin Trudeau’s government increases public spending on social programs and investment over the next three years to support economic recovery.
• Fitch Solutions forecast a budget deficit of 8.7% of GDP in the fiscal year 2021/2022 and 8.5% in FY2022/2023, from an estimated 16.0% shortfall in FY2020/2021.
• While significantly larger deficits will push up public debt to 53.9% of GDP in 2021 and 57.6% in 2022, the country’s debt load will remain smaller than many other developed market economies, helping to keep borrowing costs low.

(Source: Fitch Solutions)

• Fully vaccinated people can safely engage in outdoor activities like walking and hiking without wearing masks but should continue to use face-coverings in public spaces where they are required, U.S. health regulators and President Joe Biden said on Tuesday while urging those who have not to get the shot.
• The updated health advice comes as just over 29% of the U.S. population is fully vaccinated, the CDC reported, and 43% have had one dose of the two-shot vaccines.
• "We’ve made stunning progress because of all of you," Biden said, adding that COVID-19 cases are "down dramatically." Deaths among senior citizens have dropped by 80% as vaccinations have increased, he said.
• The CDC called the new guidelines a "first step" in helping fully vaccinated Americans to resume activities they had stopped because of the pandemic.
• The White House is trying to overcome vaccine hesitancy, and Biden offered the new mask guidelines as another reason to get inoculated.

(Source: Reuters)

• The Tobacco Industry Regulations (Validation and Indemnity) (Repeal) Act 2021, was passed in the Senate on April 23. The legislation provides for the validation and confirmation of all acts in relation to the winding-up of the Tobacco Industry Control Authority, including the divestment of assets, entering into contracts, and the payment of redundancies to officers and servants.
• The decision by the Cabinet is aligned to the Government’s public sector Master Rationalization Plan, which proposes a reduction of the over 190 public bodies, comprising companies, agencies, and statutory bodies, as a critical feature of transforming the public sector.
• The ongoing effort to streamline and rationalize the public sector is guided by the policy on the categorization and rationalization of public bodies which requires a leaner, more efficient, and coherent grouping of public bodies. Under the policy, public bodies have been identified for the merger, outsourcing, and integration into parent ministries, privatization, divestment, and closure.
• This transformation is expected to make the public sector more capable, effective, and economical for the government. This will help to enhance Jamaica’s competitiveness and allow the GOJ to divert current expenditure to capital expenditure to support economic growth.

(Source: JIS & NCBCM Research)

• The St. Thomas Tourism Destination Development and Management Plan has been completed and will be unveiled in the 2021/2022 fiscal year. Minister Bartlett stated that the plan has identified 51 projects for implementation over the decade to 2030, of which 40 will be led by the Ministry of Tourism.
• “The destination assessment of St. Thomas identified that the parish has numerous attractions and places suitable for the development of tourist accommodation of various types, which should appeal to a wide cross-section of prospective visitors,” said the Minister.
• The close proximity of the parish to Kingston, especially to the Norman Manley International Airport, suggests that “considerable tourism development is possible there. The development of St. Thomas as a new tourist destination will serve as a catalyst for the wider social and economic development of the parish. This augurs well for the continued efforts by the government to diversify the existing tourism products and the economy.

(Source: JIS)

• The aggressive rollout of COVID-19 vaccines in Barbados and the return of tourism activity will reinforce the popularity of Prime Minister Mia Mottley. As of April 23, 25.0% of the Barbadian population had been vaccinated, a leading position among Caribbean countries.
• The government also has agreements in place to fully vaccinate 42.4% of the population. Given the pace of the vaccination program, Fitch Solutions expects economic activity to normalize relatively quickly following strict lockdown measures enforced in February and March 2021. 
• In the near term, the Mottley administration will focus on fostering economic activity through continued spending and a pledge to not raise taxes in FY2021/22 (April 2021 to March 2022).    
• However, Barbados’ fiscal outlook poses downside risks to Mottley’s re-election prospects as unpopular fiscal consolidation measures will likely be implemented in the run-up to the May 2023 parliamentary elections.

(Source: Fitch Solutions)

• The Democratic Party will continue efforts to resolve Puerto Rico’s territorial status in the coming months, while the party retains control of the US Congress and the presidency.
• Representatives have introduced two separate bills that would resolve the issue, though the bills have created divisions within the party that reflect divisions on the issue in Puerto Rico.
• If passed, Puerto Ricans would have equal voting rights and access to more resources which could improve their quality of life.
• However, given a lack of unified support behind a single bill and staunch opposition from the Republican Party, Fitch Solutions maintains its view that Puerto Rico is unlikely to be admitted as a US state in the near term.

(Source: Fitch Solutions & NCBCM Research)