• The Guyanese government's fiscal deficit will narrow to 4.7% of GDP in 2021, from 5.8% in 2020, due to accelerating public revenue growth.  
• While the country’s oil boom underpinned 43.5% real GDP growth in 2020, depressed economic activity in the non-oil sector caused total revenues to contract 6.9%. In addition, the price of Brent crude oil fell below pre-COVID-19 levels throughout much of the year, limiting the government’s intake from oil sales. 
• In 2021, broadening economic growth and higher energy prices will drive revenue growth and help shrink the budget shortfall. Notwithstanding, President Irfaan Ali will likely sustain higher public spending levels in the short-to-medium term, which will keep the budget balance in deficit despite the revenue-positive tailwinds.

(Source: Fitch Solutions)

• June was the Dominican Republic’s best tourism showing since the onset of the pandemic, officials said this week. A total of 468,367 travelers visited the Dominican Republic in June, a 20% jump from the 390,554 visitors that came to the country in May.  
• The June number represents about 80% of the visitors that came to the country in June 2019, according to Dominican Republic Tourism Minister David Collado.  In all, the country has welcomed just over 1.64 million passengers to the country so far in 2021, Collado said, that came from a total of 19,725 flights.  
• The influx of tourist arrivals was in large part due to a relatively liberal entry protocol. This has allowed the country to be among the strongest performers in the Caribbean in 2021. The country is ranked 19^th on Insider Monkey’s 25 best Caribbean islands to visit. 
• The strong recovery in the country’s tourism sector will be a significant driver of its economic rebound as the sovereign is expected to grow by 6.0% in 2021, following a 6.7% contraction in 2020 (Fitch Solutions). In addition to demand for its tourism product, robust external demand for Dom Rep’s goods and other services, as well as a swift national vaccination campaign will underpin this economic rebound over the coming quarters.

(Source: Caribbean Journal & NCBCM Research)

• Disagreement within OPEC could trigger a more a volatile period for oil, with prices jumping on lack of new supply or sinking suddenly if member countries decide to release crude independently. 
• Oil prices initially surged to a six-year high on news that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, ended their meeting Monday with no action and no new meeting date. A proposed plan by OPEC, Russia and other allies to bring 400,000 barrels a day back to the market was disrupted by the United Arab Emirates’ objection to other aspects of the deal. 
• West Texas Intermediate crude futures for August traded as high as $76.98 Tuesday before falling back to settle down 2.4% at $74.53 per barrel. Many analysts had expected oil to rise on the discord among members of OPEC, and say prices could still climb despite the sell-off. 
• “It’s going to get worse before it gets better. I still think $85 to $90 per barrel should be the upper end,” said John Kilduff, partner with Again Capital. “You’ll see more oil produced. They’re not going to go crazy, but they’re not going to live within the current structures. Russia will lead the charge.” 
• Some analysts had already expected oil spikes into the $100 per barrel range over the course of the next year. The feuding between Saudi Arabia and the United Arab Emirates opens a new fissure in OPEC, which now means oil could also tank if members decide to open the spigots.

(Source: CNBC)

• The United States on Tuesday urged China and the private sector to increase their participation in a G20 debt moratorium for low-income countries hammered by the COVID-19 pandemic, and a common framework for restructuring their debts. 
• A senior U.S. Treasury official said Washington was open to expanding the common framework for debt treatment agreed by the G20 and the Paris Club beyond just low-income countries to include small island states, fragile states and even some lower middle-income countries with high debt burdens. 
• G20 finance officials will review progress on the debt issue when they meet in Venice on July 9-10, amid growing alarm about a looming debt crisis. 
• The head of the International Monetary Fund, Kristalina Georgieva, has warned repeatedly about a "dangerous divergence" in the pandemic response and economic prospects that could leave developing countries lagging far behind for years. 
• The official said Washington would urge G20 countries to continue providing fiscal stimulus to aid the global recovery, and make transformative investments to address climate change and income equality.

(Source: Reuters)

• Bank of Jamaica (BOJ) Governor, Richard Byles, says work is being finalized to commence pilot implementation of the proposed central bank digital currency (CBDC) locally, in August. Mr. Byles indicated that technical support for the CBDC’s rollout, among other inputs, are being reviewed to facilitate onboarding of the first financial institution – National Commercial Bank (NCB) – to test the system. 
• The Governor said between September and December, the BOJ will look to onboard more banks, and will gradually expand the pilot into a full rollout in 2022. 
• CBDC is a form of central bank-backed currency and is, therefore, legal tender. It can be exchanged, dollar for dollar, with actual cash and is issued to licensed deposit-taking institutions (DTIs). Individuals, households, and businesses can use it to pay for goods and services, as obtains with cash. 
• According to the Bank, the benefits to be derived by citizens, businesses and the Government from the adoption and introduction of a viable digital currency solution include increased financial inclusion and another means of efficient and secured payments. Additionally, the BOJ says CBDC represents an opportunity for DTIs to improve cash management processes and costs.

(Source: Bank of Jamaica)

• For its financial year ending March 2021, Proven Investments Limited reported a net profit attributable to shareholders of US$11.53Mn (EPS: US$0.018) which translates to a 61.5% decline when compared to the US$29.98Mn (EPS US$0.048) earned over the same period last year. 
• This was mainly due to the $24.93Mn gain on the disposal of most of its shares in Access Financial Services, which would have inflated its 2020 earnings when compared to 2021. Adjusting for this one-off gain would result in net profit attributable to owners of the company amounting to US$11.04Mn in 2020. This would mean that net profit grew by 4.5% on a normalized basis when compared to the US$11.53Mn earned in 2021. 
• In spite of a 40.5% reduction in total income, owing to lower interest income and fee and commissions, the improvement in normalized net profit can be credited to a 45.2% decline in operating expenses. Opex fell due to reductions in staff costs, impairment reversals on loans, and lower investment and property expenses. There were also lower preferred dividend payments which also influenced the outturn. 
• Proven Investments’ JMD stock price has declined by 1.0% since the start of the year and currently trades at a P/E of 14.3x earnings, which is below the main market financial sector average of 17.7x earnings. Meanwhile, its USD issuance has appreciated by 2.8% and currently trades at P/E of 13.8x earnings which is above the USD market average of 10.8x earnings.

(Source: Company Financials)

• Following the 1.6% y-o-y contraction in Q121, Costa Rican real GDP is expected to return to growth from Q221 onwards as private consumption and investment levels recover following the COVID-19 pandemic. 
• Fitch Solutions forecasts growth of 3.2% in 2021 and 3.3% in 2022, implying that GDP will not regain the pre-pandemic level of output until 2022 following the 4.5% contraction in 2020. 
• Last year, the economy posted its first annual contraction since 2009 as the coronavirus pandemic depressed private consumption, investment and exports. 
• In addition, the government’s limited ability to spend in 2020 capped its fiscal stimulus package, contrasting with many other Latin American governments that enacted countercyclical measures to blunt the economic impact of the pandemic.  
• In the longer term, austerity measures tied to the government’s January 2021 IMF deal will likely constrain public consumption and growth. In January the IMF mission and the Costa Rican government reached a staff-level agreement on a three-year program to anchor the government’s policy and reform efforts, aimed at bolstering the country’s response to the pandemic and at laying the foundation for a strong and durable economic recovery. The arrangement is under the Extended Fund Facility (EFF) for about US$1.75 billion.

(Source: Fitch Solutions & IMF)

• Honduras will see robust real GDP growth in the quarters ahead as rebounding employment and strong remittance inflows power private consumption. 
• Its 2021 real GDP growth forecast was revised up to 5.0%, from 4.2% previously, and its 2022 forecast to 3.5%, from 2.9%, as economic prints in H121 constituently surprised to the upside. 
• The economic impact of the COVID-19 pandemic and the November 2020 landfalls of hurricanes Eta and Iota drove Honduras’ largest annual recession on record. While Fitch Solutions had previously expected both factors to continue limiting activity through H121, economic prints in the year through July have surprised to the upside. 
• In Q121, seasonally adjusted real GDP growth reached 6.2% q-o-q despite continued public health restrictions, suggesting that the country’s economy has become better adapted to pandemic-related disruptions. 
• However, Fitch sees significant downside risks to economic activity stemming from political instability surrounding the November 2021 presidential election.

(Source: Fitch Solutions)

• Euro zone businesses expanded activity at the fastest rate in 15 years in June as the easing of more coronavirus restrictions brought life back to the bloc's dominant service industry, a survey showed on Monday. But that surge in growth has come at a cost as inflationary pressures mounted due to labour shortages and disruptions to supply chains caused by the pandemic. 
• IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, jumped to 59.5 last month from May's 57.1, its highest level since June 2006. That was ahead of the 59.2 "flash" estimate and well above the 50 mark separating growth from contraction. 
• "The index was at its 15-year high, confirming that the recovery in the bloc's economy is well underway. At the same time, backlogs and producer price pressures show no signs of abating," said Mateusz Urban at Oxford Economics. 
• An acceleration in vaccination programmes on the continent has meant governments have allowed more of the services industry to re-open and the sector's PMI soared to its highest reading since July 2007. Activity in Germany's service industry grew in June at its fastest pace since March 2011 while in France the sector boomed following the easing of COVID-19 restrictions.

(Source: Reuters)

• Oil prices rose on Monday, driven higher after OPEC+ nations called off talks on output levels, meaning no deal to boost production has been agreed. Brent was up 94 cents, or 1.2%, at $77.11 a barrel, trading around 2-1/2 year highs. U.S. oil gained $1.11, or 1.5%, to $76.27 a barrel. 
• OPEC+ ministers abandoned the talks and set no new date to resume them, after clashing last week when the United Arab Emirates rebuffed a proposed eight-month extension to output curbs. The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed on record output cuts in 2020 to cope with a COVID-induced price crash. 
• The producers have been gradually easing the output restrictions, but a plan on Friday to lift output by about 2 million barrels per day (bpd) from August to December 2021 and to extend the pact on a series of gradual output shifts to the end of 2022 was blocked by the UAE. 
• The prospect of OPEC+ not adding the extra barrels to the market next month boosted prices, but also added volatility, said Rystad Energy oil markets analyst Louise Dickson, noting that prices briefly turned negative.

(Source: Reuters)