• 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to 3.4%, as external demand and commodity prices further stabilise, global growth plateaus, and pandemic stimulus is withdrawn.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)

• 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)