• U.S. consumer confidence improved for a sixth straight month in July to a fresh pandemic high as Americans grew more optimistic about current business and labour market conditions. The Conference Board’s index rose to 129.1 from a revised 128.9 reading in June, according to the group’s report Tuesday. Economists in a Bloomberg survey had called for a decline to 123.9. 
• The survey indicated that inflation expectations eased slightly though it remained elevated while buying plans strengthened. 
• The confidence gauge is nearing pre-pandemic levels, suggesting that consumers are growing more upbeat as economic activity resumes. Even so, concerns about rising consumer prices and the delta variant have climbed in recent weeks, which could weigh on sentiment in the coming months. 
• The Conference Board’s gauge of current conditions rose to 160.3, also a fresh pandemic high. The share of consumers who said jobs were “plentiful” increased to a 21-year high. Consumers’ view of present business conditions also improved slightly. Economic expectations were little changed. 
• “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. 
• Consumers said they were more likely to purchase cars, homes and major appliances in the next six months. The share of consumers who plan to buy appliances was at the highest level since the end of 2017.The report precedes the government’s first estimate of second-quarter gross domestic product on Thursday, which is forecast to show that personal consumption grew an annualized 10.5%.

(Source: Bloomberg)

• Prime Minister, the Most Hon. Andrew Holness, says that the construction sector is experiencing a major boom, which is a clear sign of economic recovery. “We are now seeing a very strong resurgence in building and construction. During the pandemic it increased and it is a good sign for the country that persons are taking the financial risk to construct,” he said. 
• In June, the Planning Institute of Jamaica (PIOJ) reported that growth in the construction sector was being driven by housing starts, aided by higher disbursement of mortgages, and while the economy contracted by 5.7% for the January to March quarter, the industry grew by 12.6%. Data from the PIOJ show a 32.8% increase in sales for construction inputs, while sales of wholesale construction materials, hardware, and plumbing input went up 65.2%, and retail sales of paint and glass saw a 7.4% increase. 
• Holness further stated that “People would have to have great confidence, not only in the short-term but in the long-term direction of the country. So, as a government, we take heart that investors, who are very important economic beings, see a bright future in the short- and long-terms,”

(Source: JIS)

• Jamaica's total public debt burden is expected to rise relative to GDP in the short term due to falling revenue and emergency pandemic spending. However, by FY2021/22 Fitch Solutions forecasts that Jamaica's debt will resume its pre-COVID downward trajectory, falling to 58.8% of GDP by 2030. 
• After defaulting on its sovereign debt in 2010 and 2013, Jamaica has significantly improved its fiscal position via IMF-prescribed fiscal consolidation measures. In November 2019, the government exited its second IMF programme, with debt on a steady downward trajectory. 
• The government cut expenditure from 36.6% of GDP in FY2009/10 to 29.0% in FY2019/20, lifting the budget balance from -10.5% of GDP to 0.9% over the same period. However, the COVID-19 pandemic reversed much of Jamaica's gains, as collapsing revenue and increased public health expenditure resulted in the primary surplus shrinking from 7.3% of GDP in FY2019/20 to an estimated 1.7% of GDP in FY2020/21. 
• The GOJ will continue to decrease its share of the country's total economy over the coming years as a result of ongoing fiscal consolidation. Government final consumption as a percentage of GDP fell from 16.3% in 2012 to 13.5% in 2018. It is expected that further restraint on spending by the Jamaican government will see this figure remain around 14.0% of GDP over the coming decade, particularly as real GDP growth picks up.

(Source: Fitch Solutions) 

• The Bahamian government has declared new coronavirus health protocols, which would come into effect from 26 July 2021. A daily curfew will be imposed from 10 pm to 5 am for the New Providence, Grand Bahama and North and South Eleuthera, Harbour islands.  
• The decision was taken to control the spread of the deadly COVID-19 mutant. As per the new health protocols, RT PCR testing will now be needed for travelers who are not fully vaccinated against the COVID-19 mutant for travel from New Providence, Grand Bahama and North and South Eleuthera, including Harbour Island. 
• The protocol includes social gathering limit of 5 people, provided that all persons are fully vaccinated. In addition, the government has further informed the citizens to note that the operation of a bar, night club & any cultural or entertainment facility remains prohibited. 
• The reintroduction of strict containment measures will further dampen the Bahamas’ growth prospects over the near term as it will weigh on revenues and tourism activity.

(Source: West Indies and Caribbean news & NCBCM Research)

• President Irfaan Ali will implement expansionary fiscal policies in Guyana over the coming quarters to finance development projects and raise household incomes. Ali, who took office in August 2020, has pledged to raise spending as his centre-left People’s Progressive Party/Civic (PPP) government holds a one-seat majority in the National Assembly. 
• It is anticipated that the Ali government will sustain higher spending in the coming years, capitalizing on the country’s offshore oil boom and its transformational impact on public revenues. The 2021 budget raises total expenditures by 16.1% and concentrates much of the spending increases on transfer payments to low-income Guyanese households and those adversely impacted by the pandemic. 
• Due to efforts to sustain social stability, Fitch Solutions maintained Guyana’s score of 54.4 in its Short-Term Political Risk Index (STPRI), putting the country in 24th position among 26 Caribbean economies in the STPRI. 
• However, the political environment between the PPP and opposition A Partnership for National Unity (APNU) will remain tense, particularly as the PPP pushes to remove electoral officials linked to allegations of fraud during the March 2020 election. 

(Source: Fitch Solutions)

• The real yield on U.S. 10-year debt fell to a record low as concerns mounted over the outlook for economic growth. The rate, which strips out inflation, fell almost six basis points to minus -1.269%. The move was compounded by a lack of trading liquidity, with the 10-year breakeven rate - a market proxy for the average annual rate of consumer prices over the next decade edging higher at 2.36%. 
• This points to souring investor sentiment amid the rapid spread of the delta variant that threatens to derail the economic recovery and it comes as investors piled into haven assets after a surprise hit to Germany’s business confidence. 
• “We are in a regime of growth deceleration in the U.S, as the recovery becomes more mature and broad based, at the same time as inflationary pressures build,” said Peter Chatwell, head of multi-asset strategy at Mizuho International Plc. 
• S. stocks started the week on shaky ground, with the S&P 500 Index swinging between gains and losses as investors assessed the outlook for growth in a week full of corporate earnings. 
• Market jitters are also building ahead of Wednesday’s Federal Reserve decision, when officials will discuss the outlook for further monetary stimulus. Traders are slashing forecasts for policy tightening into the meeting, even after inflation accelerated at the fastest pace in over a decade last month on an annual basis. 
• Real yields could touch new lows if the Fed remains committed to keeping monetary policy unchanged, Michael Kushma, chief investment officer for Morgan Stanley Investment Management, said in an interview on Bloomberg TV. “The more they push out their forward guidance of when they’re going to and how fast they’re going to raise rates, the more yields can stay low and, if inflation stays high, real yields can continue to remain very low”.

(Source: Bloomberg)

• The Canadian fiscal deficit will narrow to 7.8% of GDP in FY2021/22 and 7.3% in FY2022/23, yet remain significantly wider than pre-2020 levels. In 2020, the pandemic and economic downturn caused public revenues to fall 10.4%, while Prime Minister Justin Trudeau’s government passed a series of countercyclical spending measures to ease the economic strain on households and businesses.
• Due to significant expansions in the Canada Emergency Response Benefit (CERB) and Canada Emergency Wage Subsidy (CEWS) programs, public expenditures increased 80.1% in FY2020/21 (April 2020 – March 2021), which widened the budget deficit to an estimated 13.5% of GDP. While Fitch is increasingly upbeat on the Canadian economy in 2021 and 2022 and expects public revenues will strengthen over the coming quarters, sustained stimulus will keep the deficit wide in the short-to-medium term. 
• Public spending will remain elevated, at 22.3% of GDP in FY2021/22, but will decrease from 27.1% of GDP in FY2020/21. Improving economic conditions will help reduce public expenditures on transfer payments and limit the amount of subsidies paid out to Canadians impacted by COVID-19, which drove the substantial increase in spending in FY2020/21. That being said, the government’s FY2021/22 budget, which passed in April, extended short-term unemployment schemes and subsidies on wages and rent. 
• Long-term public spending will remain structurally higher than pre-pandemic levels as the government expands and implements several progressive programs.

(Source: Fitch Solutions)

• Prime Minister, the Most Hon. Andrew Holness, says that the COVID-19 Subcommittee of Cabinet will meet over the weekend to review the coronavirus situation in the country. The meeting comes as the island sees an uptick in cases of the virus. Mr. Holness, who was addressing the House of Representatives on Wednesday (July 21), said that the meeting will, among other things, determine whether they may need to tighten some of the current COVID-19 measures prior to their expiration on August 10. 
• Holness further stated that the nation will be notified via press conference, “possibly Tuesday, if we do intend to make any new changes to the Orders”. 
• He noted that Jamaica recorded 122 new cases of COVID-19 on Tuesday, “our single highest day in terms of numbers in over eight weeks since May 2021”. He noted that there has also been an increase in the positivity rate. “Our average positivity rate for the last seven days was 8.8%. For week 29, the positivity rate, so far, is 9.9%. This puts us in the high-transmission range. You will recall that our target is to get our positivity rate down to 5.0% or below; we are almost doubling that now,” he pointed out. 
• The reimplementation of strict measures to contain the spread could stall the country’s economic recovery in the coming months, until the government is able to secure an adequate amount of vaccines to fast track inoculation.

(Source: JIS & NCBCM Research)

• The alpha variant of the coronavirus, which is estimated to be between 40% and 80% more transmissible than the original, has been confirmed to be present in The Bahamas, according to the Pan American Health Organization (PAHO). 
• During its weekly briefing, PAHO Regional Advisor for Viral and Emerging Diseases Dr Jairo Andres Mendez-Rico was asked whether the organization had confirmed additional variants in The Bahamas since the onset of the pandemic. Local health professionals have long speculated the presence of additional variants, but had not publicly confirmed based on samples sent to labs. 
• “So far, there is no evidence of delta variant circulation in The Bahamas; nevertheless, the genomic surveillance should be maintained to timely detect the possible introduction and spread of delta or any other variant.” According to Johns Hopkins data, the alpha variant was first detected in southern England last year, with patients of alpha facing a greater risk of hospitalization and death. 
• An Oxford study showed that after adapting to covariables, patients receiving primary care and infected with the alpha strain were more likely to die in 28 days than those infected by other strains of the virus. The alpha, beta, delta and gamma have been classified as variants of concern, which denotes evidence of an increase in transmissibility; more severe disease, including increased hospitalization or death; and reduced effectiveness of treatments or vaccines. 
• The nation has administered around 100,000 COVID-19 vaccines, with 39,366 fully vaccinated — around 9% of the population. The COVAX program, of which The Bahamas is a part, will see 3.7 million more vaccine doses sent to countries in the Americas region through the end of July, said PAHO Assistant Director Jarbas Barbosa.

 (Source: Eye Witness News)

• In 2020, real GDP contracted by an estimated 17.9%, and unemployment averaged 27.0%. This elevated unemployment is the main driver behind Barbados’ score of 65.0 out of 100 in the ‘social stability’ subcomponent of Fitch’s Short-Term Political Risk Index (STPRI), its lowest subcomponent score in the index. 
• Moving forward, Fitch Solutions forecasts that real GDP will rebound to 1.8% growth in 2021 and 4.0% in 2022 as the tourism sector re-opens, which the agency expects will lower unemployment to 14.0% in 2021 and 12.1% in 2022. An improving labour market will in turn reduce social stability risks. 
• That being said, Barbados’ economic recovery will limit risks to social stability in the quarters ahead, while the ruling, centre-left Barbados Labour Party (BLP)’s significant legislative majority will boost policymaking. As a result, Fitch Solutions assigned Barbados a score of 80.0 out of 100 in its Short-Term Political Risk Index, which is above the Caribbean average of 70.7. 
• Medium-term risks to Prime Minister Mia Mottley’s re-election prospects are the unpopular fiscal consolidation measures, which will likely be implemented in the quarters leading up to the May 2023 parliamentary elections.

 (Source: Fitch Solutions)