• The global economy is set to grow by 4.7% this year thanks to a stronger-than-expected recovery in the United States, a report by the U.N. Conference on Trade and Development (UNCTAD) said on Thursday, revising up its previous forecast of 4.3%.
• The upwards revision from its previous forecast made last September factors in an expected boost in U.S. consumer spending on the back of progress distributing COVID-19 vaccines and a vast stimulus package, the report said.
• "The global recovery that began in the third quarter of 2020 is expected to continue through 2021, albeit with a good deal of unevenness and unpredictability, reflecting epidemiological, policy and coordination uncertainties," the report said. Earlier this month, the OECD also revised higher its growth forecast for this year to 5.6 % from 4.2 %.
• However, the 22-page UNCTAD report called 'Out of the frying pan...into the fire?' said COVID-19 will have lasting economic consequences that will require continued government support. It said the main risk to the global outlook is a "misguided return to austerity".

(Source: Reuters)

• European Central Bank President Christine Lagarde said governments must make sure to roll out their historic joint spending plan on time to ensure the region’s recovery from the coronavirus pandemic.
• The European Union’s 750 billion-euro ($896 billion) recovery fund “should become operational without delay,” Lagarde told lawmakers in the European Parliament. “By brightening economic prospects for firms and households, fiscal policy would also strengthen the transmission of our monetary policy measures.”
• The president also urged the EU’s member states to finalize their spending plans in the coming weeks. National governments are currently in talks with the European Commission on how to spend the money from the joint fund, and some submissions have been judged inadequate so far. Plans are due by the end of next month with funds to be disbursed in the summer.
• The euro-zone economy is already lagging behind the U.S. because of its slow vaccine rollout, now complicated even more by the suspension of AstraZeneca Plc’s shot in several member states.

• For the fiscal year 2021/22, the Factories Corporation of Jamaica (FCJ), plans to implement capital programs valued at $1.32Bn.
• Under the program, the focus will be placed on the redevelopment of Garmex Free Zone Phase 1, which will involve the construction of four factory buildings, providing 90,000 square feet of commercial and industrial space; two mini-warehouses totaling 36,000 square feet, along with other infrastructure works.
• The focus will also be placed on the development of Garmex Free Zone Phase 2. This phase will see the upgrade and improvements of other facilities of the FCJ, to make them more attractive and supportive of micro, small and medium-sized enterprises (MSMEs).
• Construction of the Morant Bay Urban Development Centre, which will be undertaken via a joint venture agreement with China Harbour Engineering Company, will commence during the year. The Urban Centre will provide 492,000 square feet of office and commercial space and will favorably impact economic development and employment in the parish of St. Thomas.
• This project will provide existing and new businesses with the industrial space and necessary support facilities required to operate in the special economic zone to take advantage of benefits that will flow to them from working in the zone and make them more competitive externally. The benefits include tax-free rental income, employee tax credits, low corporate income tax, stamp and customs duty exemptions on import goods, among others.
• This will foster increased economic output and job creation which should enable a stronger recovery of the Jamaican economy.

(Source: JIS & NCBCM Research)

• The Development Bank of Jamaica (DBJ) plans to disburse $8.49Bn in loans during the 2021/22 fiscal year. It will provide financial and non-financial products to micro, small and medium-sized enterprises (MSMEs) through credit guarantees, debt and equity financing, and institutional capacity-building.
• This will expand and improve MSMEs’ access to finance and business development assistance giving them the room to fund expansion or improve competitiveness, increase contribution to GDP and facilitate more job creation.

(Source:  JIS & NCBCM Research)

• On March 17, 2021, Moody's Investors Service downgraded the Government of Panama's long-term issuer and senior unsecured debt ratings to Baa2 from Baa1. Moody's also changed the outlook to stable from negative.
• The very material deterioration in Panama's fiscal strength driven by the severe economic shock from the pandemic was behind the downgrade. While most sovereigns have experienced some diminution in their fiscal strength, in Panama's case the erosion has been unusually large relative to rating peers.
• The stable outlook balances Panama's high economic growth potential and relatively favorable funding conditions against the challenges the authorities will face in adopting policies to arrest the upward debt trend and ultimately support fiscal consolidation.
• This marks the second downgrade of the sovereign since the start of the year. Last month, Fitch rating agency downgraded the sovereign to BBB- (one notch below the current Moody’s equivalent rating of Baa3), also on account of the severe weakening of public finances due to the economic disruption caused by the coronavirus pandemic.
• Given the sharp deterioration in Panama's fiscal strength, upward rating pressure is limited. However, if Moody's were to conclude that fiscal consolidation efforts would prove insufficient to prevent a further deterioration in Panama's fiscal strength relative to its peers, this would add negative rating pressure. Additionally, if economic growth is below estimates, this could weigh on the fiscal accounts and exert further pressure on Panama's credit profile and its sovereign rating.

(Source: Moody’s Investor Service)

• Economic activity in Dominica will return to growth in the quarters ahead as the rollout of vaccinations in tourism source markets boosts tourism activity.
• Private consumption will also recover as tourism activity and loosened public health restrictions boost employment.
• Fitch Solutions has revised its real GDP forecast for 2021 to 3.0% y-o-y, from 2.1% previously, due to base effects and the sooner-than-expected availability of COVID-19 vaccines.

(Source: Fitch Solutions)

• Britain's economy has endured a torrid start to 2021, hit by a new COVID-19 lockdown and disruption caused by the country's less open trade relationship with the European Union.
• While better days are ahead, Bank of England officials meeting ahead of Thursday's monetary policy announcement must weigh up the likely strength of the recovery, the lasting damage caused by the pandemic, and how much inflation might result.
• The latest official data showed Britain's economy contracted in January, although not by as much as feared by some economists. Output remained 9% below its level in February 2020.
• Tax office estimates of the number of employees on payrolls showed tentative signs of recovery in January. But they remain more than 700,000 below the pre-pandemic norm.

(Source: Reuters)

• The Federal Reserve on Wednesday repeated its pledge to keep its target interest rate near zero for years to come after projecting a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down.
• The U.S. central bank now sees the economy growing 6.5% this year, which would be the largest annual jump in the gross domestic product since 1984, and the unemployment rate falling to 4.5% by year's end. This is higher than the GDP growth and unemployment rate projections of 4.2% and 5%, respectively, made in December.
• The pace of price increases is now expected to exceed the Fed's 2% target for the year, hitting 2.4% by year's end before falling back in 2022.
• "Indicators of economic activity and employment have turned up," the central bank's policy-setting Federal Open Market Committee said in a statement that kept the benchmark overnight interest rate in a target range of 0% to 0.25%.
• The improvement in the Fed's economic outlook did not immediately alter policymakers' expectations for interest rates, though the weight of opinion did shift. Seven of 18 officials now expect to raise rates in 2023, compared to five in December.

(Source: Reuters)

• Jamaica’s capacity to combat the coronavirus pandemic has been further boosted through a US$75Mn loan commitment from the Inter-American Development Bank (IDB).
• According to the IDB communiqué, the provision is earmarked to strengthen the efficiency and effectiveness of public policy and fiscal management, in response to the health and economic crises resulting from COVID-19.
• The allocation is intended to promote the availability and timely execution of public resources to respond to the pandemic. It will strengthen the countercyclical effect of fiscal policy through the introduction of temporary measures to protect the income of vulnerable households and increase liquidity for businesses during the crisis.
• The loan is also intended to promote post-COVID-19 economic and fiscal recovery. It will help finance cash transfers to employees, grants to low-income informal workers, vulnerable groups, and the unemployed, and provide student loan relief. Additionally, it is aimed at supporting small-business grant programs, especially in the tourism sector, and measures to strengthen fiscal institutions to improve efficiency and transparency of public investment.

(Source: JIS)

• The All-Jamaica Consumer Price Index (CPI) declined by 0.1% for February 2021 contributing to the lowest point-to-point inflation rate (3.8%) since October 2019.
• A 1.3% fall in the index for the heaviest weighted division, ‘Food and Non-Alcoholic Beverages’ was the main driver of the decline in consumer prices. However, increases of 1.4% in the index for the ‘Housing Water, Electricity, Gas and Other Fuels’ division and 0.5% in the index for the ‘Transport’ division tempered the decline in the CPI.
• Electricity rates rose in February due to new tariff rate changes for JPS approved by the Office of Utilities Regulation (OUR). Further, the index for the ‘Transport’ division advanced by 0.5% due to higher petrol prices supported by the vaccine-led recovery in global oil prices
• Consumer prices actually fell for the calendar year-to-February ( -0.1%), while the point-to-point (February 2020 – February 2021) rate was 3.8%, falling just below the lower bounds of the Bank of Jamaica’s (BOJ) inflation rate target of 4%-6%.
• Despite the current low inflation rate and expectations for continued weakness in domestic demand, the BOJ forecasts inflation to average 5.4% this year. This is being driven by expectations for a potential increase in agricultural food prices, higher international commodity prices as the global economy recovers and the effects of the increases in regulated utility prices. 

(Source: Statin)