• Minister of Labour and Social Security, Hon. Karl Samuda, says Jamaica must actively seek to implement transformative initiatives that can position the local labour force to generate and maintain sustainable productivity gains. 
• “This can be accomplished with careful attention to areas such as labour market reform, education, infrastructure that supports technology adoption, targeted investments in research and development as well as reallocating resources to higher value-added production,” Mr. Samuda said. 
• He maintained that as creative and innovative ways are identified to increase productivity during the pandemic, it is imperative to also bear in mind that “at [its] core is efficiency”. 
• “The more efficient we are with our labour, investment and natural resources, the more we can produce. Our goal is not to only produce more. We want to produce higher quantities and qualities of goods and services with every hour of labour, every dollar of investment, and every ounce of our natural resources,” the Minister added. 
• “As we continue to grapple with the impacts of the COVID-19 pandemic on the global economy, the Jamaica Productivity Centre will be working to strengthen partnerships with stakeholders and highlight potential solutions, success stories and best practices… and our next step to promote growth in the Jamaican economy,” he said.

(Source: JIS)

• Prime Minister, the Most. Hon. Andrew Holness on Tuesday (June 22) announced special measures for the reopening of the entertainment sector. The protocols were crafted by the Ministries of Health and Wellness, Local Government and Rural Development, and Culture, Gender, Entertainment and Sport, working in tandem with industry practitioners. 
• Holness, who was delivering a statement to the House of Representatives, said that at this stage, the Government is contemplating two categories of events – small events with no more than 100 persons in total, including organizers and support personnel, and large events of over 100 persons. 
• Organizers of small events may make applications for permits as they normally would through their local authorities, who will work with them to ensure that the protocols are in place for a safe event. The municipal corporations have agreed to reduce the cost for permits and licences by 50%,” he said. 
• For large events, such as stage shows, church conventions, conferences or crusades, festivals and related activities, organizers will be required to go through an additional layer of approval. “Organizers of large events must first send an application to the Ministry of Culture, Gender, Entertainment and Sport. The Ministry will review the application to see that it meets the requirements,” the Prime Minister indicated. 
• This reopening will support increased demand for the goods and services produced by listed companies in this sector such as KLE Group, Palace Amusement etc, which should positively influence their top and bottom-line. Companies in other sectors, such as manufacturers and distributors of alcoholic beverages and party items should also realize an improvement in profitability. 
• That being said, if social distancing protocols are not properly implemented and observed, there is an increased risk that it could influence another spike in cases and cause a re-tightening of restrictions.

(Source: JIS & NCBCM Research)

• The Mexican peso (MXN) will depreciate against the US dollar in H221, due to shifting expectations around the US Fed policy compared to a still accommodative Banxico in the short term, and investor uncertainty over economic policy direction in Mexico. 
• After a strong rebound from Q2 2020’s all-time lows, the peso has seen notable volatility in H1 2021, facing pressure from rising long-dated US bond yields in March. 
• Over the longer term it is forecast that the currency will modestly depreciate, weighed down by relatively weak economic fundamentals, such as low investment. The average exchange rate is expected to be MXN20.30/USD in 2021, slightly weaker than its previous forecast of MXN20.12/USD, to account for recent volatility. The unit will likely trade sideways to MXN20.50/USD at the end of 2021 and MXN20.80/USD at end-2022. 
• This depreciation will likely increase the value of debt held by corporates such as PEMEX which are heavily indebted and possess a large concentration of US denominated debt, making repayment more challenging, exacerbating poor liquidity issues.

(Source: Fitch Solutions & NCBCM Research)

• Argentine authorities are committed to reach an agreement with the International Monetary Fund no later than the end of March as part of an understanding with the Paris Club to avoid default, according to the group’s second-ranking official. 
• The country also agreed to treat all other external creditors in a comparable way as part of an accord with the group of wealthy nations in which it will make a partial payment, the Club’s Secretary General Schwan Badirou-Gafari said in an emailed response to questions. 
• “Given the commitments made by the authorities regarding the conclusion of an agreement with the IMF as soon as possible and not beyond end March 2022, as well as their commitment to comply with the comparability of treatment, Paris Club would be in a position to avoid declaring a default at end July,” said Badirou-Gafari. 
• Argentina announced on Tuesday that it would make a partial US$430Mn payment to the club to avoid a default after missing a US$2.4Bn payment that was due last month. 
• As part of the understanding, the country has until March 31 2022 to complete its restructuring with the Club, but Economy Minister Martín Guzmán said that deadline wasn’t going to have any impact on the timeline for IMF negotiations. 
• An IMF agreement would help the country to make policy and fiscal adjustments that will allow for a reduction in the country’s unsustainable debt levels. At the end of December 2020, the country’s government debt stood at 102.5% of GDP (CEIC data) and the government had defaulted on payments twice in 2020. According to Bloomberg, traders are almost certain that it will default once more in 2021.

(Source: BA Times & NCBCM Research)

• S. Treasury Secretary Janet Yellen on Wednesday warned Congress that the United States risks a debt default and a new financial crisis as soon as August if lawmakers fail to act quickly to suspend or raise the federal borrowing limit. 
• In testimony to a Senate Appropriations subcommittee, Yellen said defaulting on U.S. debt obligations would be "unthinkable" and "would have absolutely catastrophic economic consequences." 
• Yellen said that to avoid uncertainty for financial markets, Congress should pass new debt limit legislation - allowing the Treasury to continue borrowing - before the latest suspension expires on July 31. 
• A first-ever default on U.S. government debt obligations "would precipitate a financial crisis, it would threaten the jobs and savings of Americans at a time when we're still recovering from the COVID pandemic," Yellen said.

(Source: Reuters)

• Inflation pressures faced by British firms hit record levels this month, and growth in the private sector cooled only slightly from an all-time high in May when coronavirus restrictions were lifted, a survey showed on Wednesday. 
• The preliminary reading of the IHS Markit/CIPS UK Composite Purchasing Managers' Index (PMI) pointed to one of the strongest monthly improvements in business activity since 1998, with a reading of 61.7 - not far off May's unprecedented 62.9. 
• Input costs matched a previous record increase from June 2008 and prices charged by firms rose by the largest amount since these records began in 1999, as disruption to supply chains caused a scramble for components. 
• Inflation faced by consumers could now have a lot further to rise after breaking above the Bank of England's 2% target last month, said Chris Williamson, chief business economist at IHS Markit, which compiles the survey. 
• The BoE is not expected to change monetary policy when it announces the outcome of its June policy meeting on Thursday, but investors are waiting to hear whether it is sticking to its view that the rise in inflation is likely to prove transient.

(Source: Reuters)

• The Ministry of Health and Wellness is advising Jamaicans travelling overseas to observe strict safety protocols to prevent importation of the Delta and other variants of the coronavirus (COVID-19). 
• Chief Medical Officer (CMO), Dr. Jacquiline Bisasor-McKenzie, who was addressing the Ministry’s virtual COVID Conversations press briefing recently, said preliminary reports coming out of the UK indicate that this variant has been found to be 40% more transmissible. 
• Expressing concern about the highly contagious and virulent nature of the Delta and other COVID-19 variants, the CMO said maintenance of quarantine measures for persons who come into country are even more important to prevent importation of these variants. 
• Bisasor-McKenzie encouraged Jamaicans travelling abroad to continue to practise established COVID-19 safety protocols, even when they enter those jurisdictions that do not require maintenance of the precautions. 
• “They may bring back into the country a variant that is naïve to the population and, of course, that means that it will spread very, very quickly within the population. With the vast number of persons in country that are not vaccinated, we remain at risk from all the strains of the COVID-19. So we are still at risk of exposure for the variants, which present an additional risk,” she emphasized. 
• With only 5.5% of the population partially vaccinated, the spread of Delta or other COVID-19 variants of the virus would result in the re-imposition of strict containment measures that would constrain commercial activity and reduce the likelihood of a recovery in economic activity this year.

(Source: JIS & NCBCM Research)

• Tourism Minister, Hon. Edmund Bartlett has revealed that since its reopening in June 2020, the tourism sector has been driving the economic recovery of Jamaica’s economy, through a steady increase in arrivals and tourism earnings. 
• Minister Bartlett expressed that “preliminary figures indicate that since the reopening of the tourism sector on June 15, 2020, Jamaica has recorded a total of 816,632 stopover visitors and generated earnings of approximately US$1.31 billon (J$196 billion), over the one-year period.” 
• He emphasized that this is further proof that the tourism sector is on a steady path to recovery. Minister Bartlett adds that “for the current calendar year, the Tourism Ministry is reforecasting to deliver 1.61Mn visitors against an earlier estimate of 1.15Mn, an improvement of 460,000 more visitors.” If this is realized, total visitor arrivals would be 2.62Mn below the total 4.23Mn arrivals reported in 2019, but 0.28Mn above total arrivals in 2020. 
• The Minister credits this improvement, in part, to the development of robust health and safety protocols for the sector as well as the establishment of the Tourism COVID-19 Resilient Corridors, which have seen a very low infection rate of 0.6%. He also noted that the measures enabled Jamaica to welcome some 342,948 tourists during the first five months of this year (January to May). This is 1.65Mn and 0.68Mn below the total arrivals after the same period in 2019 and 2020, respectively. 
• However, given that this 5-month total represents 36,675 more visitors than that recorded from June to December 2020 (following the reopening of the sector), there has been gradual improvement in the sector supported by the vaccine-led recovery in source markets, particularly the US.  
• The Ministry remains cautiously optimistic of cruise passengers starting to return around July/August. The first cruise out of North America to the Caribbean took place very recently and that has heightened expectations of more setting sail soon.

(Source: JIS & NCBCM Research)

• Royal Caribbean and Carnival cruise lines have agreed to a new combined investment of $350Mn in the Grand Bahama Shipyard, Prime Minister the Most Hon. Dr. Hubert Minnis announced today in his wrap-up of the 2021/22 Budget Debate in the House of Assembly. 
• The Prime Minister pointed out that to understand the scale of this investment, the original investment and other investments to date in the Shipyard have totaled approximately $250Mn dollars. “This new investment will match this and exceed it by $100Mn,” said Prime Minister Minnis on Monday 21 June 2021. 
• The proposed infrastructure works will replace the two damaged docks with larger docks. The new docks will be capable of handling and servicing the largest ships in the world, said the Prime Minister. 
• Once the expansion is completed, the shipyard will be the largest civilian shipyard in the Americas. Prime Minister Minnis said the new investment will result in a notable increase in employment and economic activity on Grand Bahama and for local businesses throughout Freeport and the rest of the island

(Source: Office of the Bahamian PM)

• Inflation has picked up markedly in recent months, both in emerging markets (EMs) and developed markets (DMs). The simple average of inflation among 22 of the world’s largest EMs rose from 3.8% y-o-y at the start of 2021 to 5.9% in May. However, it is believed that the rise will be temporary. 
• Accelerating inflation has already prompted interest rate hikes in Brazil, Russia, Mexico and elsewhere. It is expected that policymakers in EMs, including South Africa, Egypt and Colombia, will follow their lead by hiking their key rates before the end of 2021. 
• Even so, the risk of an economically disruptive acceleration in EM-wide inflation is low. For one, recent inflation prints may mark a sharp increase from the abnormally slow inflation of the past year, but they are not particularly elevated by recent standards and even these figures are currently being flattered by the base effects caused by lockdowns in 2020. 
• In addition to fading base effects, there are two key reasons why it is forecast that current period of comparatively elevated inflation will soon fade in most economies. Firstly, temporary factors that are disrupting supply chains will probably be resolved over the coming months; and secondly, the agency believes that commodity prices have peaked and will now ease in late 2021 and into 2022.

(Source: Fitch Solutions)