• Unemployment in Costa Rica was 17.4% in the moving quarter from May to July 2021, according to the National Institute of Statistics and Census (INEC). 
• Compared to the same quarter of last year, unemployment in Costa Rica has decreased by 7.0 percentage points. However, the unemployment rate has remained relatively consistent throughout 2021. 
• Of the unemployed population, virtually all reported losing their job or struggling to find work due to causes related to the pandemic, INEC says. “Of the total number of unemployed people who were affected, 93.4% indicated that they cannot find work due to COVID-19, and 6.6% stated that they were fired, suspended, or closed their business or activity,” the report reads. 
• Meanwhile, the INEC calculated the underemployment rate — the percentage of employed people who work fewer than 40 hours a week and want to work more hours — at 15.5%, a decrease of 9 percentage points compared to last year. The May-July 2020 quarter represented Costa Rica’s highest-ever unemployment rate (24.4%), corresponding to strict COVID-19 measures. Costa Rica’s unemployment rate has oscillated between 17% and 19% in 2021. 
• Earlier this year Costa Rica entered into an Extended Fund Facility with the IMF to stabilize the economy and ensure debt sustainability while protecting the vulnerable. It is anticipated that the initiatives that will be taken under this agreement to boost growth and improve income distribution, as well as the country’s vaccination campaign will bolster recovery and a reduction in the unemployment rate. However, its weak fiscal position and public opposition to new government measures are still downside risks to this expectation.

(Source: Tico Times & NCBCM Research)

• Fitch Solutions believes that the rapid decline in COVID-19 cases and acceleration in vaccinations will support Latin America’s economic rebound in the months ahead. 
• New cases in the region’s largest markets are at the lowest level since Q220, while vaccination campaigns have accelerated, allowing for a gradual loosening of public health restrictions. 
• While there has been notable variation in restrictions by country, the intensity of restrictions overall has been relatively modest in recent months despite the severe wave of COVID cases. This reflects policymakers’ concerns about the economic impact of lockdowns, popular fatigue with restrictions, and recent bouts of instability in markets such as Brazil and Colombia. 
• The agency expects governments will continue to gradually loosen restrictions moving forward, as vaccine availability improves, supporting its forecast for 5.6% real GDP growth in Latin America in 2021.

(Source: Fitch Solutions)

• Fitch Solutions has revised down their real GDP growth forecast for the US in 2021 from 6.2% to 6.0%, which now puts them slightly below consensus estimates of 6.1%. 
• They believe that supply-side constraints impacting output and rising COVID-19 infection rates weighing on consumer sentiment will cap growth rates in the second half of the year. 
• That being said, real GDP growth will remain strong by historic standards, underpinned by fiscal and monetary policy as well as strong momentum from the re-opening of the economy as vaccination rates continue to rise. Moreover, Fitch forecasts another year of above-trend growth at 3.7% in 2022.

(Source: Fitch Solutions)

• The European Central Bank (ECB) will trim emergency bond purchases over the coming quarter, it said on Thursday, taking a first small step towards unwinding the emergency aid that has propped up the eurozone economy during the coronavirus pandemic. 
• After the ECB pulled out all the stops last year as COVID-19 ravaged the economy, high vaccination rates across Europe are bolstering recovery prospects and policymakers have been under pressure to acknowledge that the worst is over. 
• With the economy now on a stronger footing, the ECB said that favourable financing conditions could be maintained with a "moderately lower pace" of asset purchases compared to the 80 billion euros it bought per month during the past two quarters

(Source: Reuters)

• Prime Minister, the Most Hon. Andrew Holness, has highlighted the need for the strengthening of engagement between CARICOM and the African continent, noting that “great economic potential” exists between the regions.
• The African Continental Free Trade Agreement (AFCFTA) serves as an enabling environment for trade and investment opportunities across the regions. The Minister highlighted that there is potential in the agro industry and logistic sector, and Jamaican companies have already invested in Africa. Opportunities also exist for scientific research, healthcare, technological innovation and digitisation, and tourism.
• There is solidarity between the two regions in addressing issues such as development financing, debt sustainability, and climate change in various regional and international fora while working for deeper integration.
• The African Union (AU) has also provided access to COVID-19 vaccines and other critical medical supplies to Caribbean countries through the Africa Medical Supplies Platform (AMSP). This has been a game-changer for the continent and the region.
• The Prime Minister added that the timely dialogue between the two regions will serve to entrench their platform of bonds and common historical experiences, which have been enriched by cultural, economic, and political affinities.

(Source: JIS News)

• Mexican regulator’s recently approved Basel III liquidity rules, requiring one year of stable funding, may be a challenge for some small- and medium-sized banks with highly concentrated funding structures, according to Fitch Ratings. However, it is expected that the largest and second-tier banks will easily meet the new rules.
• On Aug. 23, 2021, the financial authorities published an update to the Liquidity Coverage Ratio (LCR) rules as well as the final rules to implement the Net Stable Funding Ratio (NSFR) for Mexican banks. The introduction of a minimum NSFR of 100% should be a credit positive for the banking system as a whole, improving resilience during cyclical downturns by increasing liquidity and reliance on stable funding sources.
• The new rules implementing the NSFR for Mexican banks will take effect in March 2022 and will help close the gap on Basel III implementation with its G20 peers. Some banks may have to adjust their balance sheets to meet the new requirements, most likely by utilizing effective asset management to reduce the required amount of stable funding.

(Source: Fitch Ratings)

• While headline growth in Panama will be strong at 11.2% in 2021 and 5.8% in 2022, Fitch Solutions does not expect that real GDP will recover from the COVID-19 pandemic until 2023. A steady rebound of industrial activity and strong export growth will help bolster the economic recovery following the country's 17.9% contraction in 2020.
• The current account balance will return to a deficit in the coming quarters as rebounding imports modestly outpace export growth, widening the goods trade deficit. In addition, stronger profits for foreign-owned corporates that operate in Panama will underpin a greater outflow of repatriated investment income, causing the primary income deficit to swell.
• Panama’s fiscal deficit is expected to narrow to 7.5% of GDP in 2021 and 5.6% in 2022, from 9.8% in 2020, as rebounding economic growth and Panama Canal shipping fees support government revenue. President Laurentino ‘Nito’ Cortizo will likely refrain from pursuing fiscal consolidation in the near term, particularly as his government extends spending programmes to bolster economic activity.
• While Cortizo’s embrace of expansionary fiscal measures and the country’s robust national vaccination programme will help bolster short-term stability, his long-term aim of narrowing the deficit and the potential for constitutional changes highlight key challenges once the economic impact of COVID-19 subsides..

(Source: Fitch Solutions)

• Purchasing managers’ indices continue to point to a weakening of growth momentum across developed markets (DM), supporting Fitch Solutions’ view that DM growth has peaked.
• Despite improving labour market conditions, the rise in COVID-19 cases in July and August 2021 has resulted in a weakening of consumer confidence and monthly retail sales fell in most DMs in July.
• Fitch retains its view that high inflation rates across DMs will only be temporary; however, inflation risks have shifted to the upside.
• Elevated inflation has increased pressure on major central banks to consider dialing down asset purchases, which could happen as soon as Q421. However, Fitch believes that the major DM central banks will not hike interest rates before 2023 so as not to stifle the economic recovery.

(Source: Fitch Solutions)

• The Bank of Canada left rates unchanged on Wednesday and said it expects growth to strengthen in the second half following a shock contraction last quarter. The central bank left its key interest rate at a record low of 0.25% and maintained its current quantitative easing program.
• Canada's economy unexpectedly shrank in the second quarter, data showed last week, and a preliminary estimate for July showed another contraction, putting pressure on its economic recovery.
• "The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery," the Bank of Canada said in a statement.
• The central bank kept its guidance that economic slack would be absorbed sometime in the second half of 2022, even with the surprise economic contraction in the second quarter and a softer start to the third quarter.

(Source: Reuters)

• The RJRGLEANER Communications Group has signed an agreement to acquire a 15.0% equity stake in StarApple Analytics Limited, a startup data analytics and artificial intelligence consulting company operating in Jamaica, which plans offer services regionally and beyond. The acquisition was done through the Group’s St. Lucia-based subsidiary, Media Plus Limited.
• StarApple, which was founded in December 2019, provides three main service offerings including data analytics consulting, artificial intelligence model development and corporate data analytics training. The company is poised to exploit growing corporate demand for its services arising from ongoing digital transformation strategies.
• The investment continues the group’s strategic objective of diversification into complementary businesses, following the increase in its ownership stake in the e-commerce business, Gustazos, to 50.0% and the acquisition of a 10.0% stake in digital marketing player ePost Caribbean Limited. The investment also aligns with the Group’s strategy of building capacity to harness insights from its vast store of market data to buttress business decisions and enhance client offers.

(Source: JSE News)