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Dominican Republic 10-Year Forecasts Published: 01 February 2019

  • Fitch expects the Dominican Republic to remain one of the Caribbean’s fastest-growing economies over the next decade.

 

  • The country's tourism and manufacturing sectors will be major growth drivers, attracting significant foreign direct investment.

 

  • However, the country’s economy will remain closely tied to that of the United States, despite recent attempts to diversify its trading partners, exposing it to external economic shocks.

 

(Source:  Fitch)

Trade progress Published: 01 February 2019

  • While both the U.S. and China cited progress at the high-level trade talks in Washington, they stopped short of announcing a breakthrough that would end the conflict.

 

  • They agreed to strengthen cooperation on technology transfers and intellectual property rights, while China said it would buy more U.S. goods. 

 

  • Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will visit the Beijing in mid-February to hold the next round of talks ahead of the March 1 deadline for avoiding further tariffs.

(Source: Bloomberg)

China Facing Greater Potential For Public Unrest In 2019 Published: 01 February 2019

  • Fitch expects that China will experience slowly growing pressures in terms of social stability over the coming years, driven in part by weakening growth and rising income inequality, a trend that is expected to become increasingly entrenched as the economy slows.

 

  • A challenging job market outlook, combined with several politically sensitive anniversaries in 2019, could see small pockets of social protests emerge.

 

  • Fitch expects Beijing, which has signaled that it will exercise even greater control over traditional and social media, will be able to contain any social unrest, even if the frequency and scale of demonstrations increase relative to less politically sensitive years.

 

(Source: Fitch)

Fitch Upgrades Jamaica’s Credit Rating to B+ Published: 31 January 2019

On January 31st, 2019 Fitch Rating agency upgraded Jamaica’s credit rating from B to B+ with a stable outlook

Fitch attributed the upgrade of Jamaica's Issuer Default Ratings (IDRs) to the country’s track record of large primary surpluses that have cut general government debt/GDP significantly. Jamaica has run one of the largest primary surpluses of any sovereign rated by Fitch at about 7% of GDP in 2018. The primary surplus has been above 7% since 2013, reducing general government debt/GDP to a projected 96.4% in FY 2018 from a peak of 135.3% in FY 2012. 

The debt burden is on a downward path but still compares unfavorably to the current ‘B’ median of 60.7% of GDP. The fiscal stance is being guided by a fiscal rule that aims to reduce debt to 60% of GDP by 2025. Fitch also expects current fiscal policy settings to lead to a sustained fall in debt/GDP.   Fitch’s debt dynamics model assumes rising interest rates in the U.S., medium-term growth of 2% and a narrowing of the primary surplus to 5.5% of GDP by FY 2027; under these assumptions debt is expected to fall under 60% of GDP by FY 2027.

Some key drivers of the rating upgrade include projections that government surplus as a percentage of GDP will improve, the decline in government interest burden, cross-party support for the economic reforms that began with the IMF and the BOJ bill that aims to make the central bank independent with inflation targeting the explicit goal of monetary policy.

Consider Buying Shares in Public Companies Listed on JSE – PM Holness Published: 31 January 2019

  • Prime Minister, the Most Hon. Andrew Holness is encouraging ordinary Jamaicans to participate in the ownership of State entities being shortlisted for privatization through placement on the Jamaica Stock Exchange (JSE), by purchasing shares when Initial Public Offerings (IPOs) are announced.

 

  • He says this will, among other things, afford them the opportunity to share in the potential capital gains and profits to be generated.

 

  • This, the Prime Minister added, is consistent with the Administration’s thrust to create an ownership economy characterized by inclusive participation by Jamaicans at all levels.

 

  • He was speaking during the opening ceremony for the JSE’s 14th Regional Investments and Capital Markets Conference at The Jamaica Pegasus hotel in New Kingston on Tuesday (January 22)

(Source: JIS)

JMEA Pushing to Capitalize on Export Opportunities Published: 31 January 2019

  • The Jamaica Manufacturers and Exporters’ Association (JMEA) will be pushing to capitalize on business opportunities that are available in the international market, according to its President, Metry Seaga.

 

  • Speaking at the launch of the second staging of the Jamaica International Exhibition (JIE) at the Hilton Rose Hall Resort and Spa in Rose Hall, St. James, recently, he highlighted opportunities for growth in a number of regions across the world including the UK and our closest neighbor Haiti.

 

  • The UK Import market grew by one percent in 2017, which amounted to US$4.9Bn, while the total value of Jamaica’s exports for the same year was US$1.3Bn.

 

  • Haiti is one of the largest Caribbean Community (CARICOM) countries in terms of population size, with a total value of goods imported in the region of US$2Bn, of which Jamaican exports only accounted for 0.7% of that amount.

 

(Source: JIS)

Potential Implementation Of Helms-Burton Act In US Poses A Risk To Cuba's Economic Outlook Published: 31 January 2019

 

  • The US government is reportedly considering implementing the Helms-Burton Act, which allows US citizens to sue the Cuban government over past nationalizations of assets.

 

  • This would mark a significant escalation of tensions between the countries. While there is uncertainty over how the law would work in practice, Fitch expects it would be broadly negative for investor sentiment towards Cuba.

 

  • By allowing lawsuits against Cuba to proceed, this policy would fall in line with President Donald Trump‘s more aggressive stance towards leftist regimes in Latin America.

(Source: Fitch)

Barbados’ Fiscal Consolidation To Weigh On Growth Published: 31 January 2019

 

  • Fitch expects Barbados’ IMF-sponsored debt restructuring and fiscal consolidation programme to weigh heavily on near-term growth.

 

  • However, recently approved multilateral financing will lessen near-term financial pressures and allow for restructuring that will bolster medium-term outlook.

 

  • Nevertheless, significant downside risks remain as inflation could accelerate with rebounding energy and food prices.

(Source: Fitch)

The Fed may be moving closer to ending its rally-killing balance sheet reduction Published: 31 January 2019

  • Fed officials have been discussing when to curtail the reduction in the bonds it is holding on its balance sheet.

 

  • Recent indications from central bank leaders indicate that the end of the program is getting nearer, according to a Wall Street Journal report.

 

  • Markets have attributed the tightening of financial conditions in part to the roll-off in proceeds from what had been a $4.5 trillion balance sheet.

(Source: CNBC)

Hammond warning Published: 31 January 2019

  • K. Chancellor of the Exchequer Philip Hammond declined to rule out quitting the government in protest if the U.K. plunges out of the European Union with no deal in the next nine weeks.

 

  • The House of Commons is trying to prevent that from happening in a series of votes scheduled for Jan. 29, with pound traders bullish as they see the chances of a no-deal Brexit fading.

 

  • Away from politics, companies are still struggling to get contingency plans in place.

(Source: Bloomberg)