• Real GDP in Trinidad & Tobago (T&T) is expected to grow by 4.4% in 2021, from an estimated 8.0% contraction in 2020, as energy exports strengthen. T&T experienced its largest recession since 1983 in 2020, as the COVID-19 pandemic significantly undermined demand for its energy exports and local public health restrictions limited mobility and commercial activity in the non-energy sector. 
• Global economic growth is projected to reach 5.7% in 2021 as the impact of the pandemic in developed markets (DM) fades, which should, boost energy demand. As a result of the global economic recovery, Fitch Solutions’ Oil and Gas team forecasts upstream production, including crude, natural gas plant liquids (NGPL) and other liquids, will grow by 3.1% in 2021. 
• However, the downside risk posed by T&T’s slow vaccination programme to the non-energy sector is significant. The twin island republic is currently facing a nationwide lockdown which began in  May and could undermine the recovery because of its effects on the non-energy sector. Already, the 2021 real GDP forecast has been revised down to 4.4%, from 5.3% previously. It is anticipated that the country will grow by 2.0% in 2022. 
• Structurally lower natural gas prices and concerns about the business environment will limit investment in the coming years, constraining long-term growth.

(Source: Fitch Solutions)

• S. retail sales declined in May, after a stimulus-related splurge in the prior two months, suggesting consumers are starting to shift more of their spending to services as the economy reopens. The total value of retail purchases fell 1.3% in May following an upwardly revised 0.9% gain in April, Commerce Department figures showed Tuesday. 
• For the last year, demand for goods has been propped up by elevated savings supported by fiscal stimulus, bringing total retail sales well above pre-pandemic levels. The May decline in retail sales suggests that as travel picks up and entertainment venues reopen, spending on goods is starting to moderate. 
• The total value of retail sales was $620.2 billion in May, well above the almost $526 billion in February 2020, before the pandemic. The sales data precede Wednesday’s conclusion of the Federal Reserve’s two-day policy meeting. 
• Investors and economists will be watching to see whether the Fed adjusts its outlook for scaling back monetary support as price pressures build and areas of the economy -- like spending -- improve more quickly than expected. 
• While consumer spending is expected to continue strengthening, the pace will probably moderate as enhanced unemployment benefits expire and stimulus checks are spent. A sustained pickup in inflation may also cause consumers to limit discretionary expenditures.

(Source: Bloomberg)

• Prime Minister Boris Johnson pushed back his plan to lift England’s coronavirus restrictions for at least another four weeks to try to prevent “thousands” more deaths and a surge in hospitalizations.  
• The government was forced to act after modeling showed hospital admissions could reach similar levels to the pandemic’s first wave of infections in spring 2020 -- a peak of 3,099 a day -- if Johnson stuck to his schedule to end social-distancing rules on June 21. 
• In a televised press conference on Monday, Johnson said he had no choice but to delay his plan until July 19 at the earliest, to allow more people to get their second vaccine dose. 
• The government is expected to put the delay to a debate and vote on Wednesday in Parliament, where Johnson is likely to face anger from Conservative colleagues for backtracking on what they dubbed “Freedom Day.” 
• Covid cases have been rising rapidly, fueled by the highly transmissible delta variant first identified in India. It’s now dominant in Britain. Infections in England are growing 70% every week nationally, Johnson’s spokesman, Max Blain, told reporters on Monday, and in around a third of the country, they are doubling every week. That’s pushing up hospital admissions by 15% week-on-week, and by 66% in northwest England.

(Source: Bloomberg)

• Aided by cost containment measures, CAC2000 reported a net profit of $8.70Mn (EPS: $0.07) for the 6-month period ending April 2021, a significant improvement over the net of loss of $21.53Mn (EPS: -$0.17) incurred over the same period in 2020. The reduction was across the board as direct costs fell 18.4%, selling & distribution expenses declined 10.5% and general admin expenses contracted by 11.4% year over year. 
• The gains from greater efficiency were enough to outweigh the 11.3% (or $65.04Mn) drop in revenues as the COVID-19 pandemic continues to challenge the company both globally, through supply chain disruptions that have resulted in longer shipping times, shortage of materials and boarder closures and restrictions on travel; and locally as CAC continues to adjust to the regularly changing curfews, rules and days of work lost due to both. 
• The company recently launched EnRvate Limited, which is a joint business venture with Tropical Battery to provide energy-saving solutions to corporate clients. The venture bodes well for the diversification and growth of revenue in the coming years, as companies continue to explore ways to cut their energy costs and contribute to the green energy revolution. 
• CAC2000’s stock price has declined by 20.0% since the start of the year and closed Monday’s trading at $10.40, implying a P/E ratio of 21.2x earnings, which is below the junior market distribution sector average of 27.5x earnings.

(Source: Company Financials & NCBCM Research)

• The Tourism room stock in Trelawny is poised for further growth, with the proposed Sun Rise Reef development in Duncans Bay, near Falmouth. Developers, Atelier-Vidal Limited and partner, Coast and Land Aesthetic Development Limited say, the project will build out a collection of exclusive beach front villas, condominium residences and over-water suites. 
• Construction of Sun Rise Reef is projected to start in May 2022, and will last for 18 months. The eco-friendly development, was designed by architectural firm Atelier-Vidal. 
• The Duncans Bay community is also expected to benefit from the resulting upgrade in the road network and security infrastructure. Mr. Dowding explained that Sun Rise Reef is intended to be a catalyst that will uplift the Duncan’s Bay area. “We aim to give back to the community and assist with developing some of the shared infrastructure that will be used to service both Sunrise Reef and Duncans Bay,” he said. 
• Chairman of the Corporation, Councillor Colin Gager, said the Trelawny Municipal Corporation stood ready to lend its support to any development that will improve the parish’s tourism product, provide employment opportunities and boost its economy.

(Source: Jamaica Information Service)

• The return of tourism activity in H221 will boost services exports and narrow Barbados’ current account deficit in the quarters ahead. Importantly, the island saw the resumption of cruise travel this week, which augurs well for growth in the sector. 
• The near-complete cessation of tourism activity in the final three quarters of 2020 due to the COVID-19 pandemic, significantly widened Barbados’ current account deficit. From 2015 to 2019, Barbados ran an average current account deficit of 4.1% of GDP but the deficit widened to 6.1% in 2020. 
• The economy is highly reliant on tourism and other service exports to offset wide goods and primary income account deficits, and the services trade surplus shrank to USD0.8Bn in 2020, from an average of USD1.1Bn from 2015 to 2019. 
• However, a broader economic recovery will increase Barbadian import demand, which will widen the goods trade deficit in 2021 and the years thereafter. 
• Fitch Solutions has revised its 2021 current account deficit to 4.9% of GDP, from 3.9% previously, as a slower-than-expected rebound in tourism activity in Q1 2021 leads to a wider current account deficit. The deficit is expected to narrow to 3.1% of GDP in 2022.

(Source: Fitch Solutions)

• The sovereign issuer-based default rate rose to a record high in 2020 against a backdrop of weakened sovereign credit profiles due to the COVID-19 pandemic, according to Fitch Ratings. 
• Fitch’s recent Sovereign 2020 Transition and Default Study shows that five Fitch-rated sovereigns defaulted in 2020, up from only one in the previous year. As a result, the sovereign default rate rose more than threefold to 4.2% from 0.9% in 2019. The previous high was 1.8% in both 2016 and 2017. 
• The scale and breadth of the pandemic’s economic impact and of governments’ policy responses put widespread pressure on sovereign ratings, with Fitch downgrading 32 sovereigns in 2020 compared with just two upgrades (both occurred before the pandemic). 
• The majority of last year’s downgrades occurred early in the pandemic, between late-March and mid-May. The resulting ratio of downgrades to upgrades was 16 to 1, whereas the ratio was 0.8 to 1 in 2019. By comparison, the 2009 ratio following the global financial crisis was 7 to 1. 
• Downgrade pressures have eased this year, but Fitch’s ratings indicate that more defaults are possible. Fitch has downgraded three sovereigns in 2021, with no upgrades, but its Outlook changes this year have had a positive bias. Fitch has revised the Outlooks on the ratings of six sovereigns to Stable from Negative, and three to Positive from Stable in 2021, while just one (Kuwait) has been assigned a Negative Outlook.

(Source: Fitch Ratings)

• U.S. consumers are expecting the economy to boom over the next year, with expectations for inflation, home prices, earnings and the labour market all picking up in May, according to a monthly survey by the Federal Reserve Bank of New York. 
• Median expectations for what inflation will look like over the next year rose for the seventh consecutive month to 4% in May. That is up from 3.4% in April and reaches a new high for the series, which launched in 2013. Expectations for inflation over the next three years increased more modestly to 3.6% from 3.1%. 
• Consumers also shared a much brighter outlook for the labour market at a time when more businesses are opening up, travel is increasing and hiring is improving. The average expectation that the U.S. unemployment rate will be higher one year from now dropped to a series low of 31.9% in May, down from 34.6% in April. 
• The perceived odds of losing a job over the next year also reached a new low, falling to an average of 12.6% in May from 15% in April. The shift was most pronounced among workers below the age of 40, those earning less than $50,000 in household income and people with no more than a high school degree.

(Source: Reuters)

• For the 6-month period ending April 2021, Scotia Group reported a net profit of $4.48Bn (EPS: $1.44), which translates to an 11.5% (or $462.73Mn) increase over the same period in 2020. 
• The outturn was driven by a 5.8% rise in total operating income on the back of a $1.00Bn rise in net gains on foreign currency activities, given higher trading volumes and revaluation gains. Other revenue, which grew by $969.70Mn due to gains realized on extinguishable debt securities, also influenced the improvement in the bottom-line. 
• Despite the positive outturn in the company’s bottom-line, net interest income, net fee & commission income and insurance revenue, contracted year-over-year by 9.4%, 11.5% and 30.3%, respectively. This performance reflects the lingering effects of the current economic conditions of the financial sector evidenced by lower transaction volumes as well as low market interest rates. 
• Since the start of the year, Scotia’s stock price has decline by 8.0% to $40.57 per share. At this price, the stock trades at a P/E ratio of 13.3x earnings, which is below the main market financial sector average of 17.9x earnings.

(Source: Company Financials)

• At the end of May 2021, Jamaica’s net international reserves (NIR) amounted to US$3.42Bn, which was 3.0% (or US$100.92Mn) higher than in April. A US$97.09Mn increase in foreign assets, and a marginal US$3.83Mn contraction in foreign liabilities contributed to the improvement. 
• The current recovery in the tourism sector with May having the highest number of overseas visitors since the country reopened its borders to tourists in June last year, augurs well for the NIR. Furthermore, remittance inflows have also remained robust supported by rising employment and government stimulus in source markets. 
• At the end of April 2021, the country had 30.57 weeks of goods and service import, which is higher than the 29.88 reported last month.

(Source: BOJ)