• Barbados’ current account deficit will widen significantly to 6.3% of GDP in 2020, from 2.2% in 2019, due to a collapse in service sector exports.
• Fitch Solutions expects that a halt in tourism activity from March to July, amid the global spread of Covid-19, will severely undermine Barbados’ large service trade surplus and substantially increasing its current account deficit.
• A sizeable fall in goods exports will also lead to a widening of Barbados’ goods trade deficit, compounding the narrowing of the services trade surplus.
• Moreover, the agency expects the continued spread of Covid-19 and weak rebounds in key source tourism markets will keep Barbados’ current account deficit sizeable in 2021 at 4.7% of GDP.

(Source: Fitch Solutions)

• On August 31, Colombia’s Banco de la República (BanRep) lowered its policy interest rate by 25 basis points (bps) to 2.00%, a new record low.
• The bank’s unanimous decision to cut the rate in August brings its cumulative rate-cutting cycle to 225 bps (coming from 4.25% in January, as BanRep has shifted to a more expansionary stance to mitigate the economic shock of Covid-19.
• Fitch expects BanRep to pause its easing cycle, keeping its policy rate at 2.00% through end-2020, as it evaluates Colombia's economic recovery in the coming months.
• As of September 1, the government lifted a vast majority of public health restrictions as Covid-19 cases have appeared to plateau, which will ease the biggest headwinds to growth

(Source: Fitch Solutions)

• Bank of England Deputy Governor Dave Ramsden and another interest-rate setter, Gertjan Vlieghe, warned on Wednesday of risks that Britain’s economy could suffer more damage than spelled out by the central bank last month.
• Ramsden told lawmakers that the BoE had estimated the level of Britain’s economic output would permanently be about 1.5 percentage points lower than it would have been without the pandemic. However, given all the risks, he now believes that the number will be greater than 1.5%.
• Vlieghe said there was “a material risk” that it could take several years for Britain’s economy to return to full capacity after its coronavirus shock.

(Source: Reuters)

• France will spend 100Bn euros to help pull its economy out of one of Europe’s worst coronavirus-induced slumps, under a recovery plan that revives pro-business reforms championed by President Emmanuel Macron with a greener tinge.
• The $118Bn stimulus equates to 4% of gross domestic product, meaning France is plowing more public cash into its economy as a percentage of GDP than any other big European country, an official said ahead of its formal launch later on Thursday.
• France’s recession, marked by a 13.8% second-quarter GDP contraction that coincided with a COVID-19 lockdown and a projected 11% drop in 2020 as a whole, has also been one of the region’s deepest.

(Source: Reuters)

• Pulse Investments Limited’s audited net profit for the financial year ended June 30, 2020, grew 28.6% (or $187.13Mn) year over year to $840.36Mn (EPS: $0.13).
• Net profit growth was supported by a 9.4% (or $58.19Mn) and 32.7% (or $143.87Mn) increase in revenues and other income, respectively. However, a 5.0% (or $18.79Mn) rise in administrative and other expenses, as well as a 99.0% (or $6.30Mn) increase in finance cost moderated the overall impact of income growth on Pulse’s bottom-line.
• Despite the strong full-year performance, the pandemic has affected Pulse’s international model agency commission, rooms business, and Caribbean Fashion week’s live staging, which caused a reduction in income for the fourth quarter.
• However, with those revenue streams representing just over 10% of the company’s business and the greater portion of the financial year unaffected by the novel Coronavirus, there was no significant impact on the 2020 financial statements as there was reduced cost and increased income and profit from other areas such as media as well as gains on an investment property.
• The company’s stock price has declined by 35.7% since the start of the year, closing Tuesday’s trading session at $3.86. At this price, the stock currently trades at a P/E of 29.7x earnings, which is above the Main Market Industrials and Materials Sector Average of 20.9x.

(Source: PULS Financials)

• Fitch Solutions forecasts that the Honduran lempira (HNL) will average HNL24.77/USD in 2020, down slightly from its average of HNL24.74/USD in the year through August 31.
• It is expected that the lempira will weaken in the coming months as the Banco Central de Honduras (BCH) lowers its benchmark monetary policy rate, in an effort to support the supply of credit to households and business during Honduras’ sharp COVID-induced recession. The BCH’s easing will narrow the interest rate differential between Honduras and developed markets, weakening the appeal of Honduran assets.
• Fitch solutions except for the value of the lempira to continue declining in the long-term, averaging HNL25.5/USD in 2021 as the BCH further reduces its participation in FX markets, while monetary policy remains loose and the continued spread of Covid-19 undermines the outlook for the Honduran economy.
• As part of its 2019 agreement with the IMF, the BCH is increasingly allowing market forces to determine the value of the lempira. At the same time, it is expected that the BCH will hold its benchmark policy rate steady at 3.25% through end-2021 in order to boost economic activity.

(Source: Fitch Solutions)

• On August 27, the Banco de México (Banxico) released the minutes from its monetary policy meeting on August 13, at which policymakers decided to cut the bank’s benchmark interest rate by 50 basis points (bps), to 4.50%. This was the fifth consecutive 50bps cut and brought total cuts since the beginning of the current easing cycle in August 2019 to 375bps.
• The decision, unlike the previous four, was not unanimous, as one board member voted for a 25bps cut instead. The bank also released its Q2 2020 Quarterly Report on August 26, in which it lowered its 2020 real GDP forecast sharply while raising its inflation forecast above the 3% target.
• As a result, Fitch Solutions revised its end-2020 interest rate forecast to 4.25%, from 4.50% previously, based on its expectation that the bank will slow the pace of cuts to 25bps at its meeting on September 24. The bank will then hold the rate at 4.25% through the end-2021.

(Source: Fitch Solutions)

• The pace of job gains over the next decade will slow considerably amid a sharp decline in the active labor force and an aging population, according to Labour Department projections released Tuesday.
• From the period of 2020-29, the economy is expected to add a net 6 million new jobs, an annual growth rate of just 0.4%, the Bureau of Labour Statistics estimates. 
• That compares with the 1.3% annual rate during the 2009-19 period, which got a boost from the Great Recession recovery that started in mid-2009 and ended up being the longest expansion in U.S. history before it ended in February of this year.
• Outside of the pandemic, job creation is expected to slow amid demographic changes and a sharp increase in productivity brought on in part by technological changes.

(Source: CNBC)

• Oil rose towards $46 a barrel on Wednesday, gaining for a third day, supported by a report that U.S. crude inventories fell, and as surveys showing stronger manufacturing raised hopes of economic recovery from the coronavirus pandemic.
• U.S crude stocks fell by 6.4 million barrels, the American Petroleum Institute (API) said, more than forecast. Manufacturing surveys around the world showed expanding activity in August, although the outlook remains shaky.
• Brent crude LCOc1, the global benchmark, was up 31 cents, or 0.7%, at $45.89 a barrel, climbing for the third day. U.S. West Texas Intermediate CLc1 rose 28 cents, or 0.7%, to $43.04.

(Source: Reuters)

• Jamaica Broilers Group Limited reported a 12.4% (or $45.66Mn) increase in net profit attributable to shareholders to $414.06Mn (EPS: $40.60), for the three months ended August 1, 2020, relative to the corresponding 2019 period.
• Though the company realized a 5.1% (or $678.74Mn) decline in revenues, owing to the impacts of COVID-19, this was outweighed by a 3.0% ($302.21Mn) drop in the cost of sale, a 16.5% (or $375.23Mn) decline in administrative and other expenses, and a 255.3% ($194.96Mn) rise in other income during the period.
• Management attributes JBG’s improved results in early decision-making, aggressive cost reductions, and improved FX positions. It has also refocused on the absolute basics to keep the company running profitably due to the challenges brought on by COVID-19 which has translated into a better and deeper foundation for the company.
• The company’s stock price has decreased by 40.8% since the start of the year, closing Thursday’s trading session at $24.23. At this price, the stock currently trades at a P/E of 17.1x earnings, which is below the Main Market Distribution & Manufacturing Average of 22.6x.

(Source: JBG Financials)