• Fitch Solutions forecasts Guyana’s current account deficit will narrow from 11.5% of GDP in 2020 to 6.8% in 2021 and 3.2% in 2022. 
• Guyana’s current account deficit will flip to a surplus in 2023 due to receipts from booming oil exports. 
• Imports are also forecast to also grow as the country emerges from the pandemic and economic activity generates higher demand for foreign goods.

(Source: Fitch Solutions)

• Credit to the private sector continued its “long-term decline” during the COVID-19 pandemic to drop below a sum equivalent to 50% of GDP, Moody’s has revealed. 
• The credit rating agency, in its just-published full country analysis on The Bahamas, highlighted the increasing difficulties companies and individuals are facing in accessing loans by disclosing a more than 15 percentage point slump in total outstanding credit over the past decade - a trend that further worsened due to the fall-out associated with COVID-19. 
• “Credit to the private sector has been on a long-term decline for years, with credit to the private sector falling from around 65% of GDP in 2010 to around 50% by end-2019,” Moody’s said. 
• “The IMF credits the contraction in credit to more stringent lending standards, a low-growth environment keeping demand for credit low, and overall, more caution from banks. This trend persisted in 2020 and 2021, with total outstanding credit in June 2021 flat relative to December 2020, and 4% below that of December 2019.

(Source: Moody’s & The Tribune)

• Fitch Solutions has revised its 2021 global growth forecast from 5.7% to 5.6%, reflecting a further weakening of economic momentum across developed markets (DMs) and emerging markets (EMs). This is a touch weaker than the 5.9% consensus forecast collected by Bloomberg. 
• Despite a more pessimistic view generally, it has revised its projections for the eurozone (from 4.6% to 4.9%) – owing to stronger expected growth in France (5.2% to 5.9%) and Ireland (6.5% to 11.4%). 
• However, downward revisions in Asia (most notably China) and Middle East and North Africa (MENA) have more than offset these upward adjustments. Fitch cut its 2021 growth forecast for China by 0.7 percentage points to 7.8% to reflect a plethora of intensifying headwinds. These include, negative growth spill-overs from Evergrande’s financial difficulties, further outbreaks of COVID-19, Beijing’s regulatory campaign and pursuit of ‘common prosperity’ and power shortages. 
• High-frequency data continue to point to a weakening of growth momentum across DMs and EMs, supporting the view that global growth has peaked. Composite PMIs for both DMs and EMs fell in September, with the EM measure slipping below the neutral 50-mark threshold for the first time since July 2020.

(Source: Fitch Solutions)

• Oil prices jumped on Monday to the highest levels in years, fuelled by rebounding global demand that has contributed to power and gas shortages in key economies like China. 
• Brent crude rose $1.26, or 1.5%, to settle at $83.65 a barrel. The session high was $84.60, its highest since October 2018. 
• U.S. West Texas Intermediate (WTI) crude gained $1.17, or 1.5%, to settle at $80.52, after touching its highest since late 2014 at $82.18.
• The pace of economic recovery from the pandemic has supercharged energy demand at a time when oil output has slowed due to cutbacks from producing nations during the pandemic, focus on dividends by oil companies and pressure on governments to transition to cleaner energy.

(Source: Reuters)

• Fitch Solutions expects the Bank of Jamaica (BOJ) to hike its benchmark interest rate to 2.0% by end-2021 and 2.75% by end-2022, from 1.50% currently, in response to above-target inflation. On September 30, the BOJ raised its policy rate by 100bps, the first change in its policy rate since August 2019. The recent hike was also the first interest rate increase since December 2008, as falling inflation allowed the BOJ to carry out a multi-year easing cycle that saw the central bank’s policy rate decline from 17.00% to 0.50%. 
• Inflation surged to 6.1% YoY in August, above the BOJ’s target of 4.0-6.0% and the highest rate since June 2020. The BOJ also cited rising private sector inflation expectations for its aggressive hike in its public statement following the September 30 meeting. 12-month ahead inflation in the BOJ’s Inflation Expectation Survey increased to 7.4% in July, the most recent survey, up from 7.0% in June. 
• Inflation will continue to climb in the quarters ahead, averaging 5.9% in Q421 and 6.0% in 2022. This view is underpinned by three dynamics. Firstly, tropical storms Grace and Ida have undercut agricultural supplies driving food prices up 7.1% in August, and will likely continue to impact food prices through end-2021. Second, energy prices will remain elevated in the quarters ahead. In addition to raising the price of gasoline, higher energy prices will also boost shipping costs, along with supply chain bottlenecks, which will filter through to higher prices for imported goods. Jamaica imported goods worth 29.2% of GDP in 2020. 
• Thirdly, it is expected that falling unemployment will increase demand in the quarters ahead, pushing up consumer prices. Unemployment is forecasted to average 7.9% in 2022, down from 12.6% in Q320, as the tourism industry rebounds. Core inflation averaged 7.2% in Q221, the latest period for which data are available, up from 2.9% in Q220, suggesting that headline inflation will increase as the economic recovery increases demand across goods and services categories. 
• In August and September, policymakers at the US Federal Reserve (Fed) and the European Central Bank (ECB) announced plans to rein in asset purchases in the quarters ahead. In the absence of additional hikes by the BOJ, tighter monetary conditions would undermine the relative attractiveness of Jamaican assets, weakening the Jamaican dollar (JMD) and raising the possibility of more significant pass-through inflation. 
• Risks to Fitch’s interest rate forecast are weighted to the upside. In its public statement following the September 30 meeting, the BOJ noted that inflation breached its inflation target earlier than expected. Should inflation continue surprising to the upside in the coming months, it is expected that the BOJ will respond with a more aggressive set of interest rate hikes than currently forecasted.

(Source: Fitch Solutions)

• Cuba will see barely positive real GDP growth in 2021, as a severe wave of COVID-19 cases and border closures shut the tourism industry as US sanctions constrict hard currency inflows. Fitch Solutions has revised its real GDP growth forecast for 2021 to 0.1%, from 1.0% previously. 
• In 2022, growth is forecasted at 4.7%, as strong progress on vaccinations will see the tourism industry recover, while vaccine exports and a series of economic reforms will boost private consumption, investment and exports in the medium term. 
• Nevertheless, with US sanctions likely to remain in place, the agency does not expect real GDP will return to pre-pandemic levels until 2024.

(Source: Fitch Solutions)

• Fitch Solutions remains neutral on Latin American currency as political uncertainty and declining investor appetite for risk assets will largely offset the cycle of monetary policy tightening being carried out by regional central banks. 
• In the longer term, Fitch expects continued monetary policy tightening, relatively attractive valuations, and stabilising growth to support demand for Latin American currencies as political risks fade. 
• Within the region, Fitch is most bullish on the Peruvian sol and Chilean peso, while it expects the Argentine peso will continue depreciating as elevated inflation persists.

(Source: Fitch Solutions)

• A surprisingly strong rebound in the first half of this year boosted economic activity in emerging and developing countries in the Europe and Central Asia region, with the regional economy now projected to expand by a better-than-expected 5.5% in 2021, says the latest edition of the World Bank’s Economic Update for the region, released on October 6^th. 
• The rebound was largely driven by a strong recovery in exports during the first half of this year, as activity in the Euro area bounced back and commodity prices rose sharply,  and  stronger domestic demand due to vaccinations and support packages. The boost to exports, however, may be fading due to the ongoing global and regional spread of more contagious COVID-19 variants, which has also dampened the recovery in regional domestic demand. 
• In 2022, regional growth is forecast to moderate to 3.4%, as external demand and commodity prices further stabilise, global growth plateaus, and pandemic stimulus is withdrawn. The outlook remains highly uncertain given the continuation of the pandemic, especially in the context of unequal vaccine access and hesitancy.

   (Source: World Bank)

• The global risk environment has deteriorated since September 2021. Concerns about both the Delta variant and a ‘Lehman moment’ for Chinese property firms such as Evergrande have eased slightly, but a flurry of (new) risks have started to be priced in, weighing on risk assets. 
• The US Federal Reserve (Fed) has turned more hawkish, cementing the view that it will taper before the end of 2021 and revealing that it could hike interest rates in 2022. Jerome Powell also signaled that high inflation could last longer than initially anticipated. 
• Meanwhile, there is a fiscal impasse in the US, and given the significant uncertainty surrounding the US debt ceiling, the US Treasury is potentially at risk of running out of cash around mid-October. In addition, global growth has likely peaked, credit impulse is slowing, Chinese growth headwinds are prominent, and soaring energy prices could further dent the recovery and keep prices higher for longer.

(Source: Fitch Solutions)

• Owing to higher direct and indirect expenses, Elite Diagnostic Ltd. experienced a 77.4% YoY decline in net profit to $1.93Mn (EPS: $0.005) for the financial year ending June 30, 2021. 
• Admin and other expenses increased by 22.6% ($36.30Mn) on the back of higher spending on advertising and promotion, repairs and maintenance and utilities, and higher expected credit losses. Staff costs also grew due to higher expenditure on salaries and wages, statutory contributions and staff welfare and training. 
• Direct costs also rose by 10.6% (or $17.09Mn), and depreciation and amortization by 15.7% (or $13.89Mn). Also negatively impacting the bottom-line was an increase in loss on foreign exchange from $465K in 2020 to $6.72Mn in 2021. The overall falloff in net profit was tempered by a 15.3% (or $67.11Mn) increase in income.
• The company faced many challenges during the year with the St Ann branch and the negative effects of the COVID-19 pandemic. The St Ann location continued to underperform most of the year due to the MRI and CT breakdown. The equipment challenges were finally resolved during the end of the 3^rd quarter with the enlistment of overseas expertise. However, the pandemic continued to negatively impact its operating hours and interventional procedures. 
• Elite continues to see increased demand for imaging services and has purchased a new MRI system that will be installed at the Liguanea branch and become operational in early 2022. The new MRI system will reduce the company’s operating hours and its related expenses. With the issues at St Ann branch finally resolved, the location is now operating at a desired capacity. These factors could result in improved earnings in 2022, however, the evolving pandemic still poses downside risks to its performance. 
• Elite Diagnostic’s stock price has declined by 0.3% since the start of the year and closed Tuesday’s trading session at a price of $3.00 per share.

(Source: Pulse Investment Financials & NCBCM Research)