• According to Fitch, the Jamaican economy will contract by 5.1% y-o-y in 2020, from -2.6% previously, as the Covid-19 pandemic halts tourism activity and exacerbates the contraction in bauxite production.
• A 5.1% contraction would be deeper than Jamaica’s 4.3% contraction in 2009 during the global financial crisis and would be its largest recession since 1980. In particular, Fitch expect sizeable declines in the tourism and mining industries, which accounted for 9.2% and 3.4%, respectively, of GDP in 2018.
• The coronavirus pandemic will exacerbate the contraction in Jamaican goods exports. Bauxite, which accounted for 62.7% of goods exports in 2019, is mined for its high aluminum content. However, both price and volume effects will undermine Jamaica’s mining sector.
• At the same time, the sustained spread of Covid-19 in key source markets will lead to a steep decline in Jamaican tourism activity and service exports. The coronavirus pandemic has led to extended lockdowns and steep contractions in the US and UK, which accounted for 68.6% and 11.9% of total arrivals to Jamaica in 2019, respectively.
• An estimated 160,000 workers in the tourism industry, equivalent to 11.7% of Jamaica’s total labour force, have been laid off since March. Fitch expect unemployment to average 13.0% in 2020, up from 7.3% in January 2020.

(Source: Fitch)

• Key Insurance Company Limited reported unaudited net loss of $338.62Mn (EPS: -$0.919) for the three months ended March 31, 2020, representing a 789.9% (or $300.57Mn) increase relative to the$38.05Mn loss made in the prior year.
• The main contributors to this performance was a 410.8% (or $221.99Mn) increase in claim expense, an 11.4% (or $11.22Mn) increase in administration and other expense as well as a reported $323.14Mn in amortization of underwriting assets. In addition, the company recorded a 73.3% (or $34.95Mn) reduction in commission on reinsurance ceded and a 73.7% (or $8.67Mn) decrease in investment income.
• The stock has risen 49.7% since the start of the calendar year. Key Insurance closed Tuesday’s trading session at $4.79 and currently trades at a P/B of 5.73x which is above the Main Market Financial Sector Average of 1.76x.

(Source: Key Insurance Financials)

• The IMF Executive Board approved The Bahamas’s request for emergency financial assistance of about US$250 million to help meet the urgent balance-of-payments needs stemming from the COVID-19 pandemic.
• The COVID-19 pandemic comes on the heels of the widespread destruction caused by Hurricane Dorian in September 2019. Coupled with domestic containment measures, the collapse in tourism will cause a deep recession.
• The Bahamian authorities have taken timely and targeted measures to boost health spending and mitigate the socio-economic impact of the pandemic, supporting jobs and vulnerable segments of the population.

(Source: IMF)

• Several toll road concessionaires in Latin America have suffered a sharp decline in revenues as a result of travel and trade restrictions during the coronavirus pandemic, but they may receive help from governments before the end of the year.
• In Colombia, where tolls for freight vehicles were waived until May 31 to guarantee the continued supply of goods, the government is expected to reimburse toll road operators for lost revenues in July, but it is not expected to provide additional compensation for the decline in revenues beyond the availability payments already outlined in the concession contracts.
• In the meantime, concessionaires face downgrades as the drop in revenues forces them to dip into their cash reserves. Fitch Ratings downgraded Ruta al Mar to BB+ from BBB- and put a negative outlook on the BBB- rating for Pacífico 3 in April.
• Fitch expects traffic to return to 2019's levels in 2021 in most countries in Latin America but not before 2023 in Mexico. As a result, the rating agency downgraded Concesionaria Mexiquense to BBB from BBB+ and put a negative outlook on Red de Carreteras de Occidente (RCO). In Panama, it cut ENA Este to BB- from BB and ENA Norte Trust to BB+ from BBB-.

(Source: Latinfinance)

• China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns.
• While China - the world’s second-largest oil consumer - is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said.
• Widespread lockdowns to contain the spread of the virus took an especially heavy toll on oil markets, wiping roughly 70% off global prices by mid-April and leading to huge build-ups in oil and fuel inventories worldwide.

(Source: Reuters)

• OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil output cuts by one month while raising pressure on countries with poor compliance to deepen their cuts, OPEC+ sources told Reuters.
• OPEC+ agreed to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus. Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June

(Source: Reuters)

• The House of Representatives on Wednesday (May 27), approved amendments to the Financial Audit and Administration (FAA) Act to postpone Jamaica’s target of reducing debt to gross domestic product (GDP) to 60 per cent, by two years.
• In his address, Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, pointed out that arising from the disruptions caused by the COVId-19 pandemic, Jamaica’s real GDP for financial year 2020/21 is forecast to contract by 5.1 per cent, compared to an expansion of 1.1 per cent that informed the approved Estimates of Expenditure tabled in February.
• “The fallout in real economic activity will adversely impact the public sector’s revenue stream, thereby necessitating sharp reorientation of public expenditure. At the same time, the Government must and has been responding swiftly and decisively to effectively mitigate the impact of the pandemic,” Dr. Clarke said.
• He noted that given the unprecedented fiscal burden posed by the pandemic, the Government will require more time to reduce the public debt to 60 per cent of GDP. The legislation will facilitate the extension of the timeline from March 31, 2026 to March 31, 2028.

(Source: JIS)

• The Government has commenced work to review and revise the requisite strategic actions for implementing the country’s long-term National Development Plan – Vision 2030 Jamaica – in light of the impact of the coronavirus (COVID-19) pandemic.
• “Speaking at a digital quarterly media briefing on May 27, Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry, said the revamping exercise includes revisiting the targets up to 2030 and the period/schedule for achieving the planned outcomes and national development goals.
• “This process has commenced with Government-led strategic actions and plans from various sectors, including programme revisions and reviews, in an effort to adapt to the challenges, shocks and risks presented by the global pandemic,” he indicated.
• Noting that the Government is not yet in a position to present revised long-term development targets, Dr. Henry said that from the PIOJ’s preliminary review of the development targets, it is anticipated that based on projections for the Jamaican and wider global society and economy, “there will be slippages in several indicators”.
• Henry pointed out that prior to the COVID-19 pandemic, the country, in pursuit of Vision 2030 Jamaica, had entrenched macroeconomic stability as evidenced by low unemployment and inflation rates, a declining debt-to-GDP ratio, and seven consecutive years of economic growth.

(Source: JIS)

• If the COVID-19 pandemic has done nothing else, it has exposed the vulnerabilities and weaknesses of the global financial system and the mechanisms currently in place to help developing nations establish stronger economies, leaders from both rich and poor countries acknowledged in a United Nations-led forum on Thursday.
• Convened by Holness, as well as Canadian Prime Minister Justin Trudeau and UN Secretary General António Guterres, the discussion focused on trying to find concrete financing solutions to the COVID-19 health and development emergency unleashed by the pandemic.
• The leaders discussed how the need for a revamping of the system of global financial and monetary governance, as well as putting an end to opaque structures that facilitate tax evasion and illicit financial flows that rob resources from developing countries. 
• In addition, the leaders, which also included heads of Latin American, Caribbean and international financial institutions, discussed changing financing rules to include middle-income debt alleviation, rules for access to financial resources, and concessional funding related to COVID-19 and beyond.

(Source: Latinfinance)

• Mexico’s central bank on Wednesday said the economy could contract by as much as 8.8% in 2020 as it published a range of forecasts for this year due to the coronavirus pandemic, followed by a likely recovery in 2021.
• The bank said the downturn could see economic contraction of between 4.6% and 8.8% this year, revising down its forecast from an earlier estimate of 0.5-1.5% growth in 2020.
• Depending on the shape of the rebound, and whether it is so-called V-shaped or a U-shaped recovery, the bank said growth in 2021 could range from -0.5% to 4.1%.

(Source: Reuters)