The Panamanian economy will likely contract in the coming quarters due to increasing government restrictions to combat the spread of the Covid-19 outbreak and slumping global trade flows through the Panama Canal.
Panama’s fiscal deficit will widen in the coming quarters as stimulus measures designed to mitigate the economic impact of the Covid-19 pandemic and subdued revenues weigh on the fiscal balance.
The ongoing push for constitutional reform in Panama will underpin political uncertainty in the country, as the process may split President Laurentino ‘Nito’ Cortizo from his Partido Revolucionario Democrático (PRD) or spark public protests.
Panama will continue to run wide current account deficits as its negative goods trade balance exceeds its services trade surplus.
The economic shock represented by the coronavirus pandemic will lead to a severe recession in Mexico in 2020. A recovery starting in 2H20 will likely be held back by the same factors that have hampered recent economic performance, which has lagged rating and income level peers.
Even in the absence of a debt-financed fiscal response to the economic recession, general government debt/GDP is likely to jump by at least 6pp of GDP to almost 50%, the highest since the 1980s.
The credible monetary policy framework built around a flexible exchange rate and inflation targeting remains a rating strength and will help the economy absorb the external shock, while minimizing current account external imbalances.
The extent of the economic contraction and scope for recovery starting 2H20 will be dictated by prospects in the U.S., Mexico's main trading partner, as well as the duration of the virus shock domestically.
The International Monetary Fund (IMF) announced on Wednesday that its executive board had approved creation of a new short-term liquidity line to help member countries with strong fundamentals deal with the new coronavirus pandemic.
IMF Managing Director Kristalina Georgieva said the facility would provide a revolving and renewable backstop for member countries with very strong policies and fundamentals, who needed short-term and moderate support with their balance of payments.
She said the instrument would allow the Fund to provide revolving access of up to 145 percent of a country’s quota, filling “a critical gap in the Fund’s toolkit.”
Oil prices were broadly stable on Thursday after sharp losses in the previous session, with investors hoping that a big build-up in U.S. inventories may mean producers have little option but to deepen output cuts as the coronavirus pandemic ravages demand.
With official data showing U.S. inventories surging the most on record, U.S. West Texas Intermediate fell on Wednesday to its lowest since February 2002, with Brent losing more than 6%.
Brent crude gained 86 cents, or 3.1%, to trade at $28.57 per barrel. WTI was up 26 cents, or 1.3%, at $20.12 per barrel.
Jamaica will play a key role in restoring global tourism when the coronavirus (COVID-19) pandemic ends, says Tourism Minister, Hon. Edmund Bartlett.
He said that the country is not only working on recovery efforts locally, but is also reaching out to assist its counterparts in the Caribbean region and elsewhere.
“Jamaica is not just talking about itself…Jamaica is not just talking about how we build back our product…Jamaica also has an international role that we are playing in helping to build back global tourism,” the Minister noted, while addressing a digital media briefing on Thursday (April 9).
Bartlett informed that the Global Tourism Resilience and Crisis Management Centre established in Jamaica, is being called upon “to provide global responses.”
Spanish-owned companies that hold investments in Jamaica have donated US$200,000 to the Government to aid in the fight against the coronavirus (COVID-19).
The donation is being made through the Spanish-Jamaican Foundation, which was established by the group of Spanish investors in Jamaica to channel their corporate social responsibility activities through a single entity.
Spanish Ambassador to Jamaica, His Excellency Josep Bosch Bessa, announced this during a digital press conference hosted by the Ministry of Tourism on Thursday (April 9).
He noted that as part of their desire to help in combatting COVID-19, the investors decided to support the Ministry of Health’s efforts through the Spanish-Jamaican Foundation, adding that “almost every dollar that is now in their account, has been allocated for a special donation to the Ministry of Health”.
The global Covid-19 pandemic will hit the Caribbean region hard in the coming months, as the tourism industry grinds to a halt and domestic activity contracts given restrictions on travel and commerce.
Fitch has sharply revised down its 2020 real GDP growth forecasts across the region, using historical benchmarks such as the Global Financial Crisis and major hurricanes to estimate the likely impact.
While it is expected the region will begin to recover in late H220 as the coronavirus is contained globally, risks to this view are high, potentially pushing a recovery into 2021.
A structural drop in crude oil prices and economic uncertainty in Guyana will keep its current account balance in deficit in the near term, which will be financed by robust capital inflows.
In the medium-to-long term, surging crude oil production will turn Guyana’s current account balance to surplus, even as increasing real GDP growth sustains high demand for imports.
Fitch expects Guyana's current account deficit will narrow to 20.3% of GDP in 2020, from an estimated 32.1% shortfall in 2019, though weak energy prices will cap export growth.
The global economy is expected to shrink by 3.0% during 2020 in a stunning coronavirus-driven collapse of activity that will mark the steepest downturn since the Great Depression of the 1930s, the International Monetary Fund said on Tuesday.
The IMF, in its 2020 World Economic Outlook, predicted a partial rebound in 2021, with the world economy growing at a 5.8% rate, but said its forecasts were marked by “extreme uncertainty” and that outcomes could be far worse, depending on the course of the pandemic.
A longer pandemic that lasts through the third quarter could cause a further 3% contraction in 2020 and a slower recovery in 2021, due to the “scarring” effects of bankruptcies and prolonged unemployment.
Oil prices edged lower on Tuesday, with investors apparently unconvinced that record supply cuts could soon balance markets pummeled by the coronavirus pandemic, though a predicted plunge in U.S. shale output provided some support.
Brent futures fell 52 cents, or 1.6%, to $31.12 per barrel after settling up 0.8% on Monday. U.S. West Texas Intermediate crude was down $1.06, or 4.7%, to trade at $21.38 per barrel, having dropped 1.5% in the previous session.
The Organization of the Petroleum Exporting Countries (OPEC), along with Russia and other producing countries - a grouping known as OPEC+ - agreed over Easter to cut output by 9.7 million barrels per day (bpd) in May and June, equating to about 10% of global supply before the coronavirus outbreak.
