• Honduras’ economic recovery will boost government revenues, narrowing the fiscal deficit in in the quarters ahead. 
• However, the persistent effects from the COVID-19 pandemic and hurricanes Eta and Iota have contributed to slower rebound in government revenues than previously expected. As a result, the agency has revised its 2021 and 2022 fiscal deficit forecasts to 6.2% and 5.1% of GDP, from 5.9% and 3.1% previously. 
• Fitch forecasts that public debt will rise moderately, peaking at 64.6% of GDP in 2023, from 54.5% in 2020. That being said, the possibility of a leftist candidate winning the November 2021 presidential election and significantly boosting spending poses upside risks to this forecast.

(Source: Fitch Solutions)

•  Barbados and other countries in the world have the potential to become locations for the manufacturing and or bottling of vaccines. Prime Minister Mia Amor Mottley raised this point, as she addressed a press briefing on the first day of the 15th Session of the United Nations Conference on Trade and Development (UNCTAD 15), presently under way at the Lloyd Erskine Sandiford Centre. 
• “We can only ask that all of our actions move to a point of vaccine equity.  And we can only ask that there also be an urgency about identifying locations such as ours and others in other parts of the world to become locations for the manufacturing and or bottling of vaccines, so as to ensure a ready capacity to distribute to those most in need,” Ms. Mottley indicated. 
• The Prime Minister made it clear that she did not believe it was impossible for vaccine manufacturing and bottling plants to be made available throughout every region in the world “to ensure the shortest distance to people’s arms”. 
• “We are at a point where the pandemic will finish when we decide as a people globally that it must finish.  And until such time, we will continue to have persons being affected by it. And we are in the race against further mutations and variants that may well be worse than what we see in Delta, which is bad enough,” she cautioned.

(Source: GIS)

• The latest activity data suggests that the economic recovery in most emerging markets (EMs) slowed in August and September. Across the EM world, year-on-year manufacturing output growth slowed in late Q321. 
• Slower year-on-year growth is partially due to fading base effects, however, Fitch solutions believes that underlying momentum has weakened in recent months. September’s Purchasing Managers' Index (PMI) surveys, for instance, suggest that conditions in the private sector weakened in Central Europe and, crucially, in China. 
• Few EMs have released trade figures for September, but early data shows that export growth slowed in Brazil and Turkey and picked up a touch in Vietnam. Given escalating supply chain issues and faltering global consumer demand, Fitch expects that figures from elsewhere will show that EM-wide export growth slowed down at the end of Q321.

(Source: Fitch Solutions)

• The International Monetary Fund expects global economic growth in 2021 to fall slightly below its July forecast of 6%, IMF chief Kristalina Georgieva said on Tuesday, citing risks associated with debt, inflation and divergent economic trends in the wake of the COVID-19 pandemic. 
• Georgieva said the global economy was bouncing back but the pandemic continued to limit the recovery, with the main obstacle posed by the "Great Vaccination Divide" that has left too many countries with too little access to COVID-19 vaccines. 
• Additionally, inflation pressures, a key risk factor, are expected to subside in most countries in 2022 but could continue to affect some emerging and developing economies, she said, warning that a sustained increase in inflation expectations could cause a rapid rise in interest rates and tighter financial conditions.

(Source: Reuters)

• Renewed tourism activity in Jamaica will drive real GDP growth of 4.6% in 2021 and 4.1% in 2022, up from a 9.9% contraction in 2020. This is an upward revision from 4.4% previously. The modest easing of travel restrictions and more limited overnight curfew in Q221 supported tourism arrivals and commercial activity. 
• In the coming quarters, an increasing global vaccination campaign is expected to increase overseas travel demand, bolstering real exports and private consumption in Jamaica. However, real GDP growth is anticipated to slow to 4.1% in 2022 as base effects fade. 
• Real export growth is forecasted to be 8.2% in 2021 and 3.8% in 2022 as high levels of COVID-19 vaccinations in key source markets will support tourism inflows to Jamaica and services exports. The US, UK, and Canada, key tourism source markets, ramped up their vaccination campaigns in H121, with at least 65.0% of their respective populations receiving at least one dose of a vaccine as of October 2021. This is expected to underpin greater demand for overseas travel. Moreover, airline and cruise ship companies have announced plans to increase travel options to Jamaica.' 
• Private consumption growth is expected to be 4.2% in 2021 and 3.5% in 2022 as the return of the tourism industry boosts employment. Unemployment was 9.0% in Q221, below the 12.6% in Q320 but still above the average of 7.7% in 2019. At the same time, a strong labour market in the US, where the majority of Jamaican expatriates work, will bolster continued remittance inflows. Remittances accounted for 15.2% of GDP in 2019, and in the year through July 2021, increased 30.4% y-o-y. Strong remittance inflows will further support household incomes and private consumption. 
• A brighter outlook for tourism will drive a 4.0% increase in investment in 2021 and 3.5% in 2022. However, higher borrowing costs will place a ceiling on investment growth in the quarters ahead. On September 30, the Bank of Jamaica (BOJ) raised its benchmark interest rate to 1.50%, from 0.50% previously, which will filter through to make credit more expensive for businesses. 
• The continued global spread of COVID-19 poses downside risks to Jamaica’s recovery. The persistent spread of the disease increases the possibility that more vaccine-resistant variants of COVID-19 may develop. If the risk remains prominent in the developed markets that dominate overseas demand for tourism, it will weaken global travel and threaten Jamaica’s recovery. Moreover, as of October 2, only 18.1% of Jamaicans had received one dose of a vaccine, leaving the country vulnerable to additional, economically disruptive outbreaks of COVID-19 in the coming quarters. While tourism is set to make a much-anticipated comeback, the recent fire at the Jamalco plant poses a significant downside risk to the outlook. The fire resulted in the loss of vital assets, including the powerhouse, two turbine generators, turbine generator control equipment, two control rooms, and a fuel oil pump station. As a result, production is currently non-existent and stage one of the three-stage resumption model will result in only a 50% restoration of plant capacity by June 2022.

(Source: Fitch Solutions & NCBCM Research)

• Weakening risk sentiment in global financial markets presents a growing challenge to Latin America and will likely contribute to pressure for higher interest rates. 
• Concerns over the Chinese real estate developer Evergrande's solvency are threatening the Chinese real estate market and in turn generating risks to emerging markets (EMs). 
• Adding to China's challenges, a coal supply crunch is creating acute power shortages that pose additional downside risks to Chinese economic activity. At the same time, US markets softened over the last week in part over a volatile political environment in which the outlook for raising the federal debt limit is unclear and highly risky. 
• The upshot is that Latin America's currencies have weakened and debt costs have risen, which may add to pressures on central bankers in the region to tighten monetary policy, all the while generating headwinds to economic activity. 
• The Bank of Jamaica like other central banks in the region has begun tightening monetary policy to curb rising inflation. It is also likely to generate headwinds to economic activity by raising the cost of borrowing for businesses and consumers.

(Source: Fitch Solutions)

• INVESTT (T&T’s national investment promotion agency, in alignment with the Ministry of Trade and Industry) is aiming to attract $50 million in foreign direct investment (FDI) and $180 million in local investment in the current fiscal year, according to its newly appointed chair Franka Costelloe. 
• Speaking at the virtual launch of the Trinidad and Tobago Investment Forum 2021 last week, Costelloe said the agency's mission is to attract, facilitate and retain foreign and local investment in Trinidad and Tobago and it takes its mandate seriously. 
• 'Notably, between 2016 and 2020, we have secured 17 investment projects with a generated capital expenditure of $526 million. This translates into a projection of 1,405 local jobs created during this period.' 
• She noted that the FDI lead pipeline, to meet this fiscal year's $50 million target, is healthy due to the consistent employment of focused targeting and marketing techniques. Costelloe believes the T&T Investment Forum will continue to add to the momentum already established in its investment promotion. 
• 'Barring the impact of the pandemic, this year, in fact, is projected to be our biggest annual success to date, estimated at $265 million against a $135 million target, with nine investments generating 850 jobs. Such success comes with great determination from our most valuable resource – our InvesTT Team.'

(Source: Trinidad Express Newspapers)

• The S&P 500 slumped Monday, paced by a selloff in tech at a time when investors are fretting about rising inflation and slowing growth. The S&P 500 fell 1.3%, the Dow Jones Industrial Average slipped 1.1% or 385 points, the Nasdaq was down 2.4%. 
• Facebook, down nearly 6%, led the slump in tech after a Facebook whistle-blower named Frances Haugen alleged that the social media company prioritizes profit over the wellbeing of its users. The news brought the regulatory spotlight back onto the social media companies, with Twitter and Snap falling more than 6%. 
• The selloff in tech was exacerbated by a further malaise in sentiment on growth stocks as investors price in higher rates and inflation. Growth stocks like tech, with high valuations, tend to have cash flow that extends further out into the future, which is unattractive in an inflationary environment.

(Source: Investing.com)

• Oil jumped to a three-year peak on Monday after OPEC+ confirmed it would stick to its current output policy as demand for petroleum products rebounds, despite pressure from some countries for a bigger boost to production. 
• The producer club's decision to keep increasing oil output gradually sent prices sharply higher, adding to inflationary pressures that consuming nations fear will derail an economic recovery from the pandemic.
• OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, has faced pressure from some countries to add back more barrels to the market as demand has recovered faster than expected in some parts of the world. However, the group has been reluctant to do so and is sticking with its 400,000 barrels per day (bpd) each month agreement.

(Source: Reuters)

• Bank of Jamaica (BOJ) announced its decision to increase its policy interest rate; the rate offered to deposit-taking institutions on overnight placements with BOJ, by 100 basis points to 1.5% per annum, effective 01 October 2021. 
• Accompanying this rate increase, the Bank decided to continue implementing measures to contain Jamaican dollar liquidity expansion. While not targeting any specific level of the exchange rate, Bank of Jamaica will continue to ensure that further movements in the exchange rate do not threaten the inflation target. 
• These decisions to reduce the level of monetary policy accommodation were made by a unanimous vote by the Bank’s Monetary Policy Committee (MPC), and were based on the MPC’s assessment that, following the breach in August 2021, the risks of continued breaches of the inflation target, have intensified. 
• At its last meeting in August, the MPC had projected that inflation over the next two years would average 5.5% to 6.5% and would breach the upper limit of the Bank’s target over the first year, starting in the September 2021 quarter. The recent significant increases in international commodity prices and shipping costs have had a higher than expected pass through to local prices and have contributed to further increases in inflation expectations. Additionally, consumers will also be faced with higher prices for agricultural commodities as a result of the passage of tropical storms Grace and Ida in August 2021, which may also contribute to a worsening of inflation expectations. 
• Consistent with meeting its inflation target sustainably in the medium term, the Bank also signaled its intent, subject to inflation and other macroeconomic data evolving as projected, to continue to reduce the level of monetary accommodation at subsequent policy meetings by increasing the Bank’s policy rate.

(Source: Bank of Jamaica)