• Fitch Ratings has downgraded Costa Rica's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B' from 'B+'. The Outlook is Negative.
• The downgrade of Costa Rica's Long-Term Foreign-Currency (LT FC) IDR to 'B' reflects increased risks of near-term financing stress due to widening fiscal deficits, a steep amortization schedule and borrowing constraints, against a background of economic contraction caused by the effects of the coronavirus pandemic.
• The Negative Outlook reflects further downside risks to debt sustainability amid uncertain prospects for post-crisis fiscal consolidation, economic growth and borrowing costs.
• Fitch expects Costa Rica's economy will contract by 4% in 2020, with risks tilted to the downside. Containment measures will lead to a sharp contraction in households' and firms' disposable income, which will affect domestic demand and unemployment.

(Source: Fitch)

• The United States on Tuesday reported a record $738 billion budget deficit in April as an explosion in government spending and a shrinking of revenues amid the novel coronavirus pandemic pushed it deeply into the red.
• The Treasury Department said the budget deficit in April was the first to reflect the enormity of government spending that has been authorized to try to mitigate the economic impact of the crisis. The previous record budget deficit for any month was $235 billion in February 2020.
• The fiscal year-to-date deficit surged to $1.48 trillion compared to a $531 billion deficit in the comparable period in 2019, blasting past the previous monthly deficit record of $870 billion in April 2011.

(Source: Reuters)

• Britain’s economy shrank by a record 5.8% in March as the coronavirus crisis escalated and the government shut down much of the country, according to official data that point towards an even bigger hit to come.
• In the first three months of the year, GDP contracted by 2.0% from the last three months of 2019, the biggest drop since the depths of the financial crisis in late 2008, the Office for National Statistics said.
• The Bank of England said last week that the contraction of the economy in the April-June period could approach 25% and lead to the largest annual decline in more than three centuries.

(Source: Reuters)

• Pulse Investment Ltd. reported unaudited net profit of $728.17Mn (EPS:12¢) for the nine month period ended March 31, 2019, representing a 121.3% (or $399.16Mn) increase relative to the prior year.
• This outturn was as a result of an increase in fair value appreciation on investment property of 230.6% (or $304.28Mn) as well as a 37.0% (or $127.75Mn) increase in revenues. 
• The stock has declined 62.5% since the start of the calendar year. Pulse closed Thursday’s trading session at $2.25 and currently trades at a P/E of 4.8x earnings which is below the Main Market average of 15.9x.

 (Source: Pulse Financials)

• The Bank of Jamaica (BOJ) has commenced work to develop an enabling framework for the regulation of Payment Service Providers (PSPs).
• This is to facilitate the entities’ designation under the Proceeds of Crime Act (POCA), Deputy Governor in charge of Market Operations and Currency, Natalie Haynes, has said.
• Additionally, Mr. Byles said that in establishing the Sandbox, the BOJ has joined its regulatory counterparts globally, “in seeking to understand the opportunities that can be presented by financial technology, particularly in the delivery of payment services and consumer protection.”
• “We view the Sandbox as one of the tools which is helping to respond to the advances in the market where the regulatory paradigm may not move as quickly. The OUR is keen to support the development of innovative products through cooperation with, and participation of the telecommunications sector,” Mr. Hewitt said.

 (Source: JIS)

• The economic hardship caused by Covid-19 and Barbados’ limited fiscal space to cushion the negative impacts of the disease will reduce public support for Prime Minister Mia Mottley.
• However, given the Barbados Labour Party’s (BLP) overwhelming majority in the House of Assembly and that the next election is not constitutionally mandated until 2023, Fitch expect Mottley to remain committed to fiscal consolidation.
• An extended economic downturn poses downside risks to Mottley’s public support and social stability in Barbados.

 (Source: Fitch)

• The Covid-19 crisis will prompt a sharp downturn in economic activity in Mexico over 2020, with the country's industrial sector being most exposed.
• Social distancing and movement restrictions will crimp industrial productivity and service sector activity, investment will suffer amid deteriorated sentiment, and exports will contract from a tightening in global demand.
• As pandemic risks subside, and movement restrictions are eased, Fithc believes that there is greater scope for Mexico’s labour market to recover and benefit from FDI into its automotive industry, as automakers look to bring their supply chains closer to home in order to comply with the US–Mexico–Canada Agreement and reduce their dependence on Chinese manufacturing.
• This is because Mexico offers an attractive operating environment for automakers, scoring a strong 63.2 out of a possible 100 in our Autos Production Risk/Reward Index, due to its strong industrial policy, ability to manufacture complex goods and its proximity to the US and Canada.
• Mexico's costs of employment are particularly competitive, having one of the lowest wages and highest levels of productivity in the wider Latin American region.

 (Source: Fitch)

• The impact of the coronavirus-induced economic shutdown tore through the U.S. labor market in April at historic levels, slashing 20.5 million workers from nonfarm payrolls and sending the unemployment rate skyrocketing to 14.7%, the Labor Department reported Friday.
• Both numbers easily smashed post-World War II era records and help reflect the profound damage done through efforts used to combat the virus.
• Economists surveyed by Dow Jones had been expecting payrolls to shed 21.5 million and the unemployment rate to go to 16%. April’s unemployment rate topped the post-war record 10.8% but was short of the Great Depression high estimated at 24.9%. The financial crisis peak was 10% in October 2009.

 (Source: CNBC)

• Oil prices gained on Friday as more countries began relaxing restrictions put in place to halt the coronavirus pandemic, raising hopes that demand for crude and its products will start to pick up.
• Brent crude was up 23 cents, or 0.8%, to trade at $29.70 per barrel, having fallen nearly 1% on Thursday. U.S. oil gained 25 cents, or 0.85%, to trade at $29.70 per barrel, after a decline of nearly 2% in the previous session.
• On the supply side, North American oil companies are cutting production quicker than OPEC officials and industry analysts expected and are on track to withdraw about 1.7 million barrels per day of output by the end of June.

 (Source: CNBC)

• In February, the Government of Jamaica had agreed to an Action Plan with the Financial Action Task Force (FATF) to address longstanding deficiencies in Jamaica’s anti-money laundering framework .The process of a Government providing such a national commitment to FATF is generally known as being “grey-listed” by FATF.
• Despite these deficiencies FATF has primarily focused on countries where the economy’s size is above a certain threshold – having US$5 billion of financial assets using a monetary measure known as M2. In 2019, FATF changed this measure to what is known as M3, which is a broader measure of the economy. This change meant that, for the first time, Jamaica exceeded the US$5 billion threshold, which meant Jamaica would be included in the list of countries that FATF would focus on and monitor, a process known as 'greylisting’.
• The European Union has a law, passed in the European Parliament, that requires the automatic black-listing of any country that has been grey listed by FATF regardless of the reason. Once a country has been grey-listed by FATF, therefore, a black listing by the European Union is a non-negotiable response.
• Jamaica has until late 2021 to complete its Action Plan. Once this is done, Jamaica will be removed from FATF’s grey-list and the reversal of the EU’s action will also occur.

 (Source: MOF)