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Robust Growth In Guyana Makes It An Outlier In The Region Published: 01 May 2020

  • Fitch expects real GDP growth in Guyana will surge in 2020 as crude oil production and increased investment outweigh the downside growth pressures from the Covid-19 pandemic.
  • That said, low global energy prices, sustained investor risk aversion and domestic political uncertainty will likely weigh on foreign investment in Guyana and may cap its economic potential.
  • Fitch maintains its 2020 and 2021 real GDP growth forecasts of 20.8% y-o-y and 17.4% respectively, up from an estimated 4.7% expansion in 2019. 

 (Source: Fitch)

Oil rises towards $27 as OPEC+ begins record cut Published: 01 May 2020

  • Oil rose towards $27 a barrel on Friday as OPEC and its allies began a record output cut to tackle a supply glut weighing on the market due to the coronavirus crisis.
  • Output cuts of 9.7 million barrels per day by the Organization of Petroleum Exporting Countries, Russia and other producers, known as OPEC+, began on Friday. Even so, there are doubts the reduction, the largest ever agreed, will be enough.
  • Brent LCOc1 for July rose 37 cents, or 1.4%, to $26.85 by 1205 GMT. U.S. crude CLc1 for June added 83 cents, or 4.4%, to $19.67. Both benchmarks rallied sharply on Thursday. Brent rose 12% and U.S. crude gained 25%.

(Source: Reuters)

U.S. Fed balance sheet increases to record $6.7 trillion Published: 01 May 2020

  • The Federal Reserve’s balance sheet increased to a record $6.7 trillion this week as the central bank used its nearly unlimited buying power to soak up assets to keep markets functioning amid an abrupt economic free fall due to the coronavirus pandemic.
  • It is now the equivalent of roughly 31% of the size of the U.S. economy before the crisis struck, and will certainly grow larger in the weeks ahead as the Fed keeps piling on assets and the economy shrinks.

(Source: Reuters)

Seprod’s Reports Contraction In Bottom Line Due to Closure of Sugar Operation Published: 30 April 2020

  • For the year ended December 31, 2019, Seprod Limited reported audited net profits of $973.33Mn (EPS: $2.33), which represents an 8.4% (or $88.72Mn) decline relative to the same period in 2018.
  • This contraction was mainly driven by a 139.9% (or $421.94Mn) increase in net loss from discontinued operations which is connected to the July 2019 closure of its Golden Grove sugar manufacturing operations. That said, net profit from continued operations increased 24.3% (or $333.22Mn) year-over-year. 
  • Seprod’s stock price has fallen 13.6% since the start of the calendar year, closing Wednesday’s trading session at $44.05. At this price, the company trades at a P/E of 18.9x earnings, which is above the Main Market Distribution & Manufacturing Average of 15.2x.

 (Source: Seprod’s Financials)

Contractions In Tourism, Remittances Will Widen Jamaica's Current Account Deficit Published: 30 April 2020

  • According to Fitch, Jamaica’s current account deficit will widen to 5.8% of GDP in 2020, from an estimated 2.5% of GDP in 2019, as the coronavirus pandemic disrupts the country’s main export activities.
  • Historically, large remittance inflows have produced sizeable secondary income surpluses, which, in turn, have helped contain Jamaica’s overall current account deficits. However, as the US economy enters a recession in 2020, it will cause a significant spike in unemployment, weighing on household incomes of Jamaican-Americans and reducing the funds they are able to send back to Jamaica.
  • However, steady foreign direct investment inflows and sizeable international reserves will reinforce Jamaica’s external account stability. According to Fitch durable FDI inflows—which are less prone to volatility than other investments—is expected to support Jamaica’s external financing needs over the coming quarters.
  • While FDI inflows will likely slow in the coming quarters as both sectors contract, Jamaica’s international reserves, which were USD3.2bn in March 2020, equivalent to 4.8 months of imports, will offer moderate support in the event of a short-term imbalance in its external accounts.

(Source: Fitch Solutions)

IMF grants emergency loan for Costa Rica Published: 30 April 2020

  • The International Monetary Fund (IMF) has approved $508 million in emergency financing for Costa Rica to respond to the coronavirus pandemic, Costa Rica's central bank said on Wednesday.
  • The five-year loan, granted through the IMF's Rapid Financing Instrument (RFI), carries a spread of 150 basis points over the IMF's special drawing rights (SDRs), equal to an interest rate of 1.55% per year.
  • Costa Rica requested the loan when an IMF delegation visited the country on April 16-17.
  • The IMF also approved the disbursement of $65.6 million in emergency financing for Dominica, Grenada and Saint Lucia to help cover balance of payment needs during the coronavirus pandemic.

(Source: Latin Finance)

IDB Invest raises coronavirus response Published: 30 April 2020

  • IDB Invest, part of the Inter-American Development Bank (IDB), said on Tuesday that it made available another $2 billion to address the coronavirus pandemic in Latin America and the Caribbean.
  • The multilateral lender can now supply up to $7 billion in financing to support companies affected by the COVID-19 outbreak, including an additional $500 million in long-term loans and $1.5 billion in trade finance, it said in a press release.
  • IDB Invest and the Mexican business council CMN announced a program to lend up to $12 billion a year to small businesses to cope with the coronavirus pandemic. Before that, IDB Invest printed $1 billion in two-year bonds in its largest debt sale ever to fund part of its response to COVID-19.

(Source: Latin Finance)

US weekly jobless claims hit 3.84 million, topping 30 million over the last 6 weeks Published: 30 April 2020

  • First-time filings for unemployment insurance hit 3.84 million last week as the wave of economic pain continues, though the worst appears to be in the past, according to Labor Department figures Thursday.
  • Jobless claims for the week ended April 25 came in at the lowest level since March 21 but bring the rolling six-week total to 30.3 million as part of the worst employment crisis in U.S. history. Claims hit a record 6.87 million for the week of March 28 and have declined each week since then.
  • The surge in unemployment has come amid efforts to contain the coronavirus spread. While some states and municipalities have begun bringing their respective economies back online, much of the key U.S. infrastructure remains on lockdown.

(Source: CNBC)

Fed pledges to keep rates near zero until full employment, inflation come back Published: 30 April 2020

  • The Federal Reserve painted a dour picture of current conditions and pledged Wednesday to continue its historically aggressive policy stance until it is comfortable that the U.S. economy is back on its feet.
  • Following this week’s Federal Open Market Committee meeting, the central bank said it would maintain its current interest rate target between 0% and 0.25%.

(Source: CNBC)