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Unchecked Spread of COVID-19, Political Instability Loom As Risks To Growth In Nicaragua Published: 29 September 2020

  • COVID-19 continues to spread virtually unchecked throughout Nicaragua, posing downside risks to its real GDP growth forecasts for 2020 and 2021.
  • While Fitch Solutions maintains its 2020 and 2021 real GDP growth forecasts at -6.3% y-o-y and 1.0%, the absence of public health lockdowns or major fiscal support suggests that the economic recovery will be slow in the coming years.
  • In addition, fading external attention to Nicaragua suggests that President Daniel Ortega’s government will not offer electoral concessions ahead of the November 2021 general election, increasing the risk of economically disruptive social unrest.

(Source: Fitch Solutions)

CBTT Will Maintain Loose Posture Through 2021 As COVID-19, Energy Prices Weigh On T&T Economy Published: 29 September 2020

  • Fitch Solutions expects the Central Bank of Trinidad & Tobago (CBTT) will reduce its benchmark interest rate 50 basis points (bps) to 3.00% by end-2020, and hold the rate at 3.00% through 2021 to support economic activity in the wake of the COVID-19 pandemic.
  • Low inflation and international conditions, including the expectation for an extended period of low rates in the US, will support continued loose monetary policy.
  • However, we believe the CBTT is nearing the bottom of its current easing cycle, as COVID-19 economic restrictions limit the transmission of lower interest rates into the real economy.

(Source: Fitch Solutions)

U.S. Goods Trade Deficit Widens In August Published: 29 September 2020

  • The United States’ trade deficit in goods widened in August, with imports rising as businesses rebuild inventories that were depleted when the COVID-19 pandemic upended the flow of goods.
  • The Commerce Department said on Tuesday the goods trade gap increased by 3.5% to $82.9Bn last month. Imports of goods rose 3.1% to $201.3Bn, eclipsing a 2.8% increase in goods exports to $118.3Bn.

(Source: Reuters)

Dollar Slips; Markets In Wait-And-See Mode Before U.S. Debate Published: 29 September 2020

  • The dollar index slipped from the recent two-month highs on Tuesday, as markets wait for the first debate between the U.S. presidential candidates, signs of progress in U.S. fiscal stimulus talks, and economic data including German inflation.
  • After racking up its biggest weekly gains since early April last week as markets turned cautious and sought safer assets, the dollar gave up some gains on Monday and edged down further on Tuesday, ahead of the debate between President Donald Trump and Democratic challenger Joe Biden.
  • ING strategists told clients in a note that a rise in Trump’s perceived chances was likely to boost the dollar, “although the non-negligible risk of a contested outcome (along with the ultra-dovish Fed) may keep the dollar’s upside somewhat capped in the run-in to the vote”.

(Source: Reuters)

Producer Price Index Up Year-to-Date, But Down For the Last 12-Months Published: 25 September 2020

  • The Producer Price Index for the Mining and Quarrying industry increased by 6.0% in August 2020. This upward movement was mainly due to a 6.2% and 1.4% rise in the index for the major groups ‘Bauxite Mining & Alumina Processing’ and ‘Other Mining & Quarrying’, respectively.
  • Similarly, a 6.5%, 0.5%, and 0.8% hike in the index for the major groups, ‘Refined Petroleum Products’ and ‘Food, Beverages & Tobacco’ and ‘Chemicals and Chemical Products’ contributed to a 1.5% increase in the index for the Manufacturing industry.
  • Year-to-date, both indices declined, but for the period August 2019 - August 2020, the point-to-point index for the Mining & Quarrying industry decreased by 1.6%, while the point-to-point index for the Manufacturing industry declined by 2.3%.

(Source: STATIN)

JDIC Heightens Public Awareness About Increased Deposit Insurance Coverage Published: 25 September 2020

  • The Jamaica Deposit Insurance Corporation (JDIC) has embarked on a media campaign to heighten public awareness about the increased coverage limit for accounts held at deposit-taking institutions (DTIs).
  • Effective August 31, 2020, the coverage limit has been adjusted from $600,000 to $1.2Mn for holders of individual, joint, business, and trust accounts at commercial and merchant banks and building societies.
  • Jamaica Bankers Association (JBA) President, Jerome Smalling, said the adjustment in the deposit insurance limit is “timely”, noting that doubling the coverage “is truly impressive and should be commended”.
  • Smalling said that consequent on the increased deposit insurance coverage limit, “the JDIC has taken an important step to bolster the confidence of the depositing public, as well as protect against unregulated entities that enter the deposit-taking space from time to time.

(Source: JIS)

Banxico Likely At The End Of Its Easing Cycle After September Cut Published: 25 September 2020

  • Fitch Solutions expects that Banco de México (Banxico) will hold its benchmark interest rate at 4.25% through end-2021, after cutting the rate at its most recent policy meeting.
  • The agency expects inflation will hover near the upper end of Banxico’s 2.0-4.0% y-o-y tolerance band. This will discourage the bank from cutting further, despite the country’s deep contraction.
  • While the agency sees a plausible scenario in which the bank cuts to 4.00% in the near term, over the longer term, risks from financial markets and public finances could lead the bank to hike rates before expected.

(Source: Fitch Solutions

Surging Oil Exports Will Flip Guyana's Current Account Deficit To Surplus In Long Term Published: 25 September 2020

  • Guyana’s current account deficit will sharply narrow in the coming years, turning to a surplus by 2023, largely because of surging crude oil exports.
  • The country’s oil boom will support robust real GDP and import growth, in contrast with many markets in the Americas where imports have fallen in 2020 amid deep economic contractions.
  • Fitch Solutions forecasts Guyana’s current account deficit will be 38.9% of GDP in 2020 and 25.1% in 2021, from an estimated 51.1% deficit in 2019.

(Source: Fitch Solutions)

U.K. Budget Deficit Hits $222Bn Under Lockdowns Published: 25 September 2020

  • U.K government borrowing soared to 173.7Bn pounds ($222Bn) in the first five months of the fiscal year as the costs of the coronavirus pandemic continued to mount.
  • The budget deficit in August alone was 35.9Bn pounds, the Office for National Statistics said Friday. Britain now has borrowed more since a national lockdown was imposed in March than during the whole of the year following the 2008-09 financial crisis.
  • The pandemic has wrought havoc with the public finances. Debt is now above 2Tn pounds and the deficit –- the amount the government needs to borrow to fund its spending -– is set to be approaching 400Bn pounds in the current fiscal year.
  • At almost a fifth of gross domestic product, it would represent the largest gap in British peacetime. In 2009-10, the deficit hit 157.7Bn pounds or 10.1% of the economy.

(Source: Bloomberg)

Weekly US Jobless Claims Rise Unexpectedly As Stimulus Boost Fades Published: 25 September 2020

  • The number of first-time filers for unemployment benefits was slightly higher than expected last week as the labor market continues its sluggish recovery from the coronavirus pandemic.
  • The Labour Department reported Thursday that initial jobless claims for the week ending Sept. 19 came in at 870,000, adjusted for seasonal fluctuations. Economists polled by Dow Jones expected first-time claims at 850,000, down slightly from the previous week’s 860,000.
  • Without the adjustment, about 825,000 people filed last week, up from the previous week’s 796,000. More than 6 million people a week filed during the peak of the layoffs in the spring, when Congress approved $600 a week in supplemental benefits. The supplemental benefits expired this summer.

(Source: CNBC)