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China's robust exports, surging imports boost economic recovery; outlook challenging Published: 14 April 2021

  • China's exports rose sharply in March while imports growth surged to the highest in four years in yet another boost to the nation's economic recovery, signaling improving global demand amid progress in worldwide COVID-19 vaccination.
  • The data suggests the world's second-largest economy will continue to gather momentum as it emerges from the COVID-19-led slump in early 2020, though a lagging consumer rebound, a resurgence in COVID-19 cases in many countries and Sino-U.S. tensions have raised risks for the outlook.
  • Exports in dollar terms soared 30.6% in March from a year earlier, but at a slower pace from a record 154.9% growth in February. The analysts polled by Reuters have forecast a 35.5% jump in shipments.
  • "Strong foreign demand is likely to be sustained throughout the second quarter as the global economy further recovers," said Nie Wen, an economist at Hwabao Trust. "But with the acceleration in global vaccination efforts, industrial sectors in other countries are gradually restarting. It remains to be seen that if China's stellar export growth will begin to slide."

(Source: Reuters)

Tourism Stakeholders Want Resilient Corridors to be Fully Vaccinated Published: 13 April 2021

  • Tourism stakeholders are appealing for strong take-up of the coronavirus (COVID-19) vaccine among workers and operators in the resilient corridors. Chairman of the Tourism Resilient Corridors Committee, John Byles, has said that the move will propel Jamaica to “the front of the line” as a nation “that is taking the vaccination exercise very seriously.” He urges all tourism interests along the corridors to mobilize so that businesses can be protected through being able to communicate the full vaccination of the corridors.
  • President of the Jamaica Hotel and Tourist Association (JHTA), Clifton Reader has welcomed the move by the Government to prioritize the tourist sector. He said that the vaccination exercise is particularly important as the country’s main source market, the United States, is urging its citizens to only travel to COVID-19-vaccinated nations. He noted that the full vaccination of the resilient corridors’ employees and management will provide the perfect narrative for Jamaica as a premier tourist destination.
  • Montego Bay businessman, Jason Russell, has pointed out that cruise ships have made known their intentions to go only to vaccinated destinations when sailing resumes. Also, Chairman of the Tourism Enhancement Fund (TEF) Godfrey Dyer has said that the Ministry of Tourism will continue to educate sector workers about the importance of taking the vaccine, adding that Jamaica is poised for a massive return to tourism prominence.

(Source: JIS News)

Jamaica Producers Expands Logistics Interest Published: 13 April 2021

  • Jamaica Producers Group Limited (‘JP’) announced that it has entered into an agreement to acquire a 50.0% shareholding interest in Geest Line Limited. Geest Line Limited, based in the UK, is a leading shipping line connecting Europe and the Caribbean and has operated in the trade for more than 65 years.
  • Chief Executive Officer of JP, Jeffrey Hall, has stated that this acquisition is a key part of JP’s strategy to continue to strengthen and expand its investment portfolio in Caribbean Logistics and Infrastructure. Sealines Holding N.V., a worldwide leader in reefer vessel shipping services, will hold the remaining 50% interest in Geest Line Limited.

(Source: Jamaica Producers Group Limited)

Chilean Central Bank To Maintain Dovish Stance Despite Uptick In Inflation In Quarters Ahead Published: 13 April 2021

  • The Banco Central de Chile (BCC) will hold its benchmark policy rate at 0.50%, its technical minimum, and keep in place a suite of unconventional policies through end-2021 in an effort to support Chile’s economic recovery.
  • However, the agency has revised up its end-2022 policy rate forecast to 1.25%, from 0.75%, due to its more optimistic outlook for economic activity in Chile. In addition, it also increased its 2021 average inflation forecast to 3.2%, from 3.1% previously, as it expects base-effects and rebounding private consumption to push price growth above the 3.0% midpoint of the BCC’s target inflation band in Q221 and Q321.
  • The risks to the forecast are weighted to the upside as higher inflation could push the BCC to tighten sooner than currently expected. Supply chain bottlenecks amid the continued global spread of Covid-19 and robust consumer demand could lead to a multi-month upsurge in inflation beyond the 4.0% upper bound of the BCC’s inflation target band. If inflation expectations shifted upwards, the BCC is expected to begin tightening monetary policy to contain price growth.

(Source: Fitch Solutions)

Peruvian Presidential Election Headed To High-Stakes June Run-Off As Castillo Outperforms Published: 13 April 2021

  • Following the surprise first-round result in Peru’s April 11 general election, leftist Pedro Castillo will face either right-wing candidate Keiko Fujimori or Centre-right candidate Hernando de Soto in a June 6 presidential election run-off.
  • However, the ongoing uncertainty and elevated risks to policy continuity will threaten investor sentiment ahead of the second round in June, particularly as Castillo's party has campaigned on leftist economic policies.
  • Preliminary results indicate that the next Congress will remain highly fragmented. Castillo’s Perú Libre party will likely win the most seats, yet fall well short of a majority as 11 parties are expected to win representation in the 130-seat legislature.

(Source: Fitch Solutions)

Fed's Rosengren says U.S. economy should see significant rebound this year Published: 13 April 2021

  • The U.S. economy could see a significant rebound this year thanks to accommodative monetary and fiscal policy, but the labor market still has much room for improvement, Boston Federal Reserve Bank President Eric Rosengren said on Monday.
  • "With labor-market slack still significant, and inflation still below the Federal Reserve’s 2 percent target, my perspective is that the current highly accommodative stance of monetary policy is appropriate," Rosengren said during a virtual discussion with business leaders.
  • Coronavirus vaccines' ability to successfully prevent the spread of new variants of the virus would also be important, he said. "Assuming virus variants do not become especially problematic, we should see an unusually strong post-recession recovery," he said.
  • Under a new framework adopted last year, Fed officials will be patient and leave rates near zero until inflation materializes - no longer raising rates in anticipation of higher inflation when the unemployment rate is low, Rosengren said.

(Source: Reuters)

Bank of England’s Tenreyro says removing policy support too early could be costly Published: 13 April 2021

  • Bank of England interest rate-setter Silvana Tenreyro said removing fiscal or monetary policy support for the economy too early after last year's coronavirus slump could have a damaging effect on the labor market.
  • "One lesson that we learned from the financial crisis is that withdrawing policy support too early can be very costly," Tenreyro said in an online discussion hosted by Swedish think tank SNS. "Withdrawing it too early ... can lead to scarring effects on the labor market that would be very costly and slow down growth going forward," she added.
  • The BoE last year cut rates to a record low of 0.1% and doubled the size of its bond-buying program to 895 billion pounds ($1.23 trillion). Tenreyro argued in late 2020 that the economy might benefit from cutting rates below zero.
  • Since then, Britain has made fast progress with its COVID-19 vaccination program, raising the prospect of a bounce-back for the economy this year and in 2022.

(Source: Reuters)

BOJ Prepares for Central Bank Digital Currency Published: 24 March 2021

  • After quietly exploring the viability of a central bank digital currency (CBDC) for some time, the Bank of Jamaica (BOJ) took the decision in May 2020, as a part of its ongoing retail payments reform, to venture into this digital innovation that is fast becoming a feature of global central banks.
  • CBDC is a digital form of central bank issued currency and is therefore legal tender. It is not to be confused with cryptocurrency, which is privately issued and not backed by a central authority. CBDC is fully backed by the Central Bank, the sole issuer.
  • The issuance and distribution of the CBDC will be fully integrated with the Bank’s financial market infrastructure, the JamClear® Real Time Gross Settlement System (RTGS). The approach will not compete with deposits in deposit taking institutions, but rather it will leverage the existing financial and telecommunications infrastructures of the country.
  • Individual consumers and businesses will benefit from the sheer convenience, from a broadened and more modern payment system, of a digital alternative to cash that is seamless, secure, and simple to use. They will also benefit from greater financial inclusion, as persons who do not currently have regular bank accounts will be able to access CBDC accounts in a way that will be easier and simpler than accessing regular bank accounts.
  • The financial system will benefit from increases in systemic efficiency and significant reductions in costs for cash distribution and storage. It will also allow for an increase in the menu items of services available to customers and create an opportunity to innovate unique products and systems complementary to CBDC use.

(Source: JIS)

SALF Increase Share Capital and 10:1 Stock Split Unanimously Passed at Annual General Meeting Published: 24 March 2021

  • Salada Foods Jamaica Limited (SALF) has advised that at its recent Annual General Meeting shareholders voted unanimously on the following Special Business Resolutions to increase the Company’s authorized share capital and a ten to one stock split.
  • With this resolution, the maximum number of shares that the Company is entitled to issue be and is hereby increased from 500,000,000 shares of no par value to an unlimited number of ordinary shares, such shares to rank pari passu with the existing shares in issue.
  • Each of the issued ordinary shares in the capital of the Company will be subdivided into 10 ordinary shares with effect from the close of business on Wednesday, March 31, 2021, resulting in the total issued capital of the Company being increased from 103,883,290 ordinary shares of no par value to 1,038,832,900 ordinary shares of no par value.
  • This is the first stock split for the company since the last one in November 2008, and the hope is to boost the liquidity of the stock as approximately 90% of the small float is held by the top 10 shareholders.

(Source: JSE)

IDB Studies Capital Increase Published: 24 March 2021

  • The Inter-American Development Bank (IDB) said Sunday that its board authorized studies to consider a capital increase as part of a multi-pronged program to resume economic growth in Latin America and the Caribbean.
  • According to the President of IDB, Mauricio Claver-Carone, the IDB arranged almost $24.00Bn in financing to diminish the impact of the COVID-19 pandemic in 2020 and it has earmarked $1.00Bn to buy and distribute vaccines in the region. 
  • The Washington DC-based development bank has also identified five areas for investment in a new program called "Vision 2025, Reinvest in the Americas," including regional integration and strengthening value chains, support for small and medium-sized businesses to narrow a $1.00Tn financing gap, promoting the digital economy and prioritizing investments for gender equality and climate change responses.
  • The development bank also committed $1.25Bn in financing for economic recovery plans in Colombia and added $500.00Mn to the Korea Infrastructure Development Co-financing Facility for Latin America and the Caribbean (KIF) with the South Korean government. This will be helpful in improving economic recovery prospects and governments’ fiscal performance.

(Source: Latin Finance)