• Britain's economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecasted, finance minister Rishi Sunak said on Wednesday, while announcing an extension of emergency aid to get it through its lockdown.
• The economy will remain 3% smaller in five years' time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions, he said.
• Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.
• Announcing forecasts by the Office for Budgetary Responsibility (OBR), Sunak said the economy was likely to grow by 4% in 2021, slower than a forecast of 5.5% made in November.
• Looking further ahead, the OBR forecast gross domestic product would grow 7.3%, 1.7%, and 1.6% in 2022, 2023, and 2024 respectively. In November, the OBR had forecast growth in those years of 6.6%, 2.3%, and 1.7%.

(Source: Reuters)

• The Bank of Japan must lay out a new strategy for hitting its elusive 2% inflation target at this month's policy review, board member Goushi Kataoka said, warning the drag to growth from the COVID-19 pandemic could prolong price stagnation.
• Kataoka said the pandemic's hit to demand will likely delay Japan's economic recovery and weigh on inflation expectations, which have been falling since the end of 2019.
• "If we see a repeated rise in infections, that would negatively affect both the output gap and inflation expectations. This, in turn, will prolong price stagnation," Kataoka said in a speech to an online meeting with business leaders on Wednesday.
• The BOJ plans to conduct a review of its policy tools in March to make them more sustainable and flexible to weather what had become a prolonged battle to reflate growth and achieve its price goal. Governor Haruhiko Kuroda has stressed the review will not lead to an overhaul of its stimulus program.
• Kataoka, seen as the most dovish policymaker in the BOJ's nine-member board, has lobbied unsuccessfully for cutting interest rates and strengthening the BOJ's commitment to take stronger steps to fire up inflation. He repeated his calls for the BOJ to more strongly committed to keeping rates low for a prolonged period.

(Source: Reuters)

• Bank of Jamaica (BOJ) Governor, Richard Byles, says plans are advanced to develop and implement the use of a Central Bank Digital Currency (CBDC) locally. Speaking during the BOJ’s digital quarterly briefing on Friday, Mr. Byles said that over the last couple of months, the Bank undertook the requisite preliminary work relating to assessments and protocols for approval of the proposed digital currency through the government process.
• “So we are, hopefully, going to Cabinet for approval very shortly and will [thereafter] start a pilot in the second or third quarter of this year,” he informed.
• Byles advised that the pilot will “run for a couple of months” and “hopefully, conclude by about the end of this year”. Thereafter, he added, “we will be able to… publicly launch the digital currency in early 2022”.
• CBDC is a form of Central Bank-backed currency and is, therefore, legal tender. It is a fiat currency, which means it can be exchanged, dollar for dollar, with actual cash, and is issued to licensed deposit-taking institutions on a wholesale basis. Individuals, households and businesses can use it to pay for goods and services, as obtains with cash.

(Source: JIS News)

• Widespread vaccination is the key to overcoming the COVID-19 pandemic and bolstering economic recovery in Latin America, says Fitch Ratings in a special report. Some countries have re-imposed mobility restrictions, albeit more localized and less severe than during the initial outbreak, following the second wave of coronavirus cases and deaths in the region.
• The virus resurgence will adversely affect economic activity in Q1 2021, and the scope and pace of the recovery in H2 2021 will depend on the speed and effectiveness of vaccine rollouts. Social distancing measures are likely to be eased but not fully removed until H2 2021 or even 2022.
• Vaccination has begun slowly in much of the region, and limited vaccine supply and weak distribution networks pose challenges. Mexico, Peru, and Chile appear best placed in terms of vaccine agreement coverage as a share of their populations.
• A key risk for economic recovery is the prevalence of new variants that may be more contagious, have higher mortality, or be more resistant to the existing vaccines. Slower-than-expected distribution or production bottlenecks (some evidence of this exists in the EU) would further slow the vaccine rollout and delay the recovery.

(Source: Fitch Ratings)

• Following a historic contraction in 2020, the Peruvian economy will be one of the fastest-growing markets in Latin America in the coming quarters as rebounding private consumption and a surge in investment drive a recovery. 
• While Fitch Solutions is also upbeat on Peru's longer-term growth outlook, it highlights downside risks from the country's COVID-19 vaccine rollout and the April 2021 general election, particularly if the next government vows to re-evaluate the longstanding market-friendly status quo. 
• Fitch Solutions has revised its real GDP growth forecasts to 7.2% y-o-y in 2021 and 4.3% in 2022, from 6.3% and 4.2% previously. In 2020, the economy contracted 11.1%

(Source: Fitch Solutions)

• China’s Clover Biopharmaceuticals, a developer of coronavirus vaccines, has raised $230 million from investors, including Singapore’s state investment firm Temasek Holdings, it said on Tuesday, as it develops vaccines for variants.
• Clover, which has been developing a vaccine using an immune response-boosting ingredient made by U.S.-based Dynavax Technologies Corp, plans to start mid-to late-stage clinical trials in the first half of 2021.
• “We are working on broadly protective coronavirus vaccine approaches for variant strains of interest,” a spokeswoman said, without identifying the specific strains of SARS-CoV-2 to be targeted by the firm’s new candidates.

(Source: Reuters)

• Prime Minister Boris Johnson unveiled a map out of lockdown for England on Monday that would keep some businesses shuttered until the summer, saying caution was necessary to ensure there were no reversals on a “one-way road to freedom”.
• After imposing one of the strictest lockdowns in the western world in January to counter a highly contagious variant of the coronavirus, Johnson said Britain was now in a position to enjoy the fruits of one of the world’s fastest vaccine programs.
• Starting in two weeks with the reopening of schools, the phased plan will go through four stages, with at least five weeks in between each stage. The final step, when most restrictions will be lifted, will not start until June 21 at the earliest.

(Source: Reuters)

• According to the Statistical Institute of Jamaica (STATIN), consumer prices fell by -1.6% in January. The decline in the first month of the year resulted in the 12-month point-to-point inflation rate of 4.7%, down from 5.2% in the 12-months to December 2020.
• A  4.6% decline in the index for the heaviest weighted division, ‘Food and Non-Alcoholic Beverages’ and a 0.8% decrease in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division were behind the reduction in consumer prices.
• However, an increase of 0.7% in the ‘Transport’ index due to increased petrol prices tempered the overall decline in the CPI.
• The decrease in the food and Non-Alcoholic Beverages’ division was due primarily to the 17.8% fall in the index of the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ as a result of lower prices for some agricultural produce aided by a recovery in production after the damaging effects of heavy rains in October and December 2020.
• Considering this, inflation for the fiscal-year-to-date (April 2020 – January 2021) was 3.4%.
• At 4.7%, inflation remained within the BOJ’s 4%-6% target range for the 7th consecutive month.

(Source: STATIN)

• Bank of Jamaica made the decision to hold the policy interest rate (the rate offered on overnight balances at Bank of Jamaica) unchanged at 0.50% per annum for the 18^th consecutive month.
• The decision to hold the policy rate unchanged reflects BOJ’s assessment that inflation will average 5.0% over the next two years and remain within the target range. This forecast is broadly in line with previous projections.
• The macroeconomic outlook continues to be characterized by significant uncertainties within the context of the ongoing COVID-19 pandemic. With inflation contained within the target range, the BOJ has remained accommodative in its monetary policy stance with the aim of supporting recovery in economic activity.

(Source: BOJ)

• The pace of Venezuela’s economic contraction will slow in 2021, as oil exports rise moderately and the government expands opportunities for the private sector in some sectors, though activity will remain a fraction of pre-2014 levels.
• Fitch Solutions forecasts Venezuela’s economy will contract 2.9% y-o-y in 2021, from a 26.6% contraction in 2020, with growth reaching positive territory in 2022.
• In the long term, it expects US sanctions will remain in place. Combined with the Venezuelan economy’s myriad other structural weaknesses, there is limited upside for economic activity moving forward.

(Source: Fitch Solutions)