• The latest GDP reports show that of the U.S. fell by 2.3% in 2020, while China’s grew by 2.3% amid the coronavirus pandemic.
• The divergence means China will likely overtake the U.S. as the world’s largest economy a few years earlier than anticipated, economists said.
• However, they pointed out the two countries have different economic structures, and China’s per capita GDP is still far below that of the U.S.

(Source: CNBC)

• Prime Minister, the Most Hon. Andrew Holness, says the Government will be reviewing proposals submitted by stakeholders regarding the resumption of the entertainment sector.
• “The Minister of Culture, Gender, Entertainment and Sport; the Minister of Local Government and Rural Development, and the Minister of Health, will be meeting next week to review the proposals … and at the end of that review, we will come back to Parliament and report as to what might be possible,” he said.
• Until then, Mr. Holness noted that the restriction on all events remains in effect.

(Source: JIS)

• IMF Executive Directors noted in the most recent consultation on The Bahamas that the recovery to pre-pandemic levels will likely take years and downside risks loom large, reflecting the uncertain evolution of the pandemic and the country’s vulnerability to natural disasters.
• Directors agreed that the near-term priority is to save lives and livelihoods and postponing the achievement of the public debt target by another two years in response to the pandemic is appropriate.
• However, putting debt on a clear downward path over the medium‑term and rebuilding buffers will require significant fiscal effort.
• Directors called for tax policy and administration reforms and expenditure prioritization to ensure a robust and equitable consolidation once the pandemic abates.

(Source: IMF)

• An increase in COVID-19 cases in Barbados poses downside risks to public support for Prime Minister Mia Mottley and the ruling, center-left Barbados Labour Party (BLP), as the recent surge of cases will likely delay the country’s economic recovery.
• The continued spread of the disease also implies that the Mottley government will look to implement significant fiscal consolidation measures in the medium term to comply with the country’s IMF program.
• The combination of a national lockdown in February 2021, economic hardship, and the continued spread of COVID-19 increase the risk of widespread protests in the coming months.
• As a result, Fitch Solutions has revised down Barbados’ score in its Short-Term Political Risk Index (STPRI) to 71.5 out of 100, from 72.1 previously.

(Source: Fitch Solutions

• The German government on Wednesday slashed its growth forecast for Europe's largest economy to 3% this year, a sharp revision from last autumn's estimate of 4.4%, caused by a second coronavirus lockdown.
• Chancellor Angela Merkel and state leaders agreed last week to extend the lockdown until mid-February as Germany, once a role model for fighting the pandemic, struggles with a second wave and record daily numbers of COVID-19 deaths.
• The economy shrank by a smaller-than-expected 5% last year. That still marked the second-biggest economic plunge in post-war history, surpassed only by the record -5.7% in 2009, during the financial crisis.

(Source: Reuters)

• China will likely avoid setting a 2021 growth target, dropping the closely watched measure for a second straight year on concerns that maintaining one could encourage provincial economies to ramp up debt, policy sources told Reuters. 
• The world's second-biggest economy eked out 2.3% growth last year despite the ravages of the pandemic that emerged in the central city of Wuhan and will rebound by a sharp 8.4% this year thanks to Beijing's aggressive COVID-19 response and global recovery, according to a Reuters poll of economists.
• Government advisers who call for scrapping the gross domestic product (GDP) target again this year appear to be gaining the upper hand, while policymakers may again signal a goal implicitly by targeting employment and other indicators, said the sources, who asked not to be identified because the discussions are confidential.

(Source: Reuters)

• The Unemployment Rate for October 2020 was 10.7% which was 3.5 percentage points higher than the rate of 7.2% for October 2019.
• The unemployment rate for males increased by 2.7 percentage points to 8.6% and for females, it increased by 4.4 percentage points, to 13.0%.
• The Employed Labour Force for October 2020 was 1,155,800 persons, which was 92,600 (7.4%) fewer persons compared with the 1,248,400, recorded in October 2019.
• In October 2020, the largest declines in the number of persons employed by industry groups were in ‘Arts, Entertainment, Recreation, and Other Services’ (36,900 or 27.9%), ‘Accommodation and Food Service Activities’ (23,400 or 22.1 %), and ‘Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles’ (15,800 or 6.6 %) compared to October 2019.

(Source: STATIN)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the prospects of Jamaica rebounding from the economic fallout of the coronavirus to record growth within the range of 3-8% for the 2021-22FY are “very realistic”.
• He believes this will be possible if we can roll out our vaccine program in April 2021, and our markets to the north continue with their vaccine roll-out.
• The Bank of Jamaica (BOJ) and International Monetary Fund (IMF) are among the institutions forecasting the turnaround from the 10-12% economic contraction projected for the fiscal year 2020-21.
• Clarke stressed that the nature of the decline in 2020, which was as much as 18% during the April to June quarter “is not a result of any structural deficiencies in Jamaica, or elsewhere that we have imported,” but rather COVID-19.

(Source: JIS News)

• Puerto Rico will continue to run wide current account surpluses in the years ahead, as exports recover from the COVID-19 shock and federal aid inflows remain high.
• Fitch Solutions forecasts Puerto Rico’s surplus will widen to 11.0% of GNP in the Fiscal Year 2021 (FY21; July 2020-June 2021), from an estimated 8.6% in FY20.
• Risks to the agency’s view have diminished, as the transition to the Biden administration and a Democrat-controlled Congress should remove obstacles to aid disbursement.

(Source: Fitch Solutions)

• Fitch Solutions expects the Argentine government will continue to rely on currency and capital controls to manage external accounts pressures due to a crisis of confidence in the peso, limited access to external credit, and diminishing reserves.
• However, the current account deficit will widen in 2021 as stabilising economic activity drives an uptick in imports.
• It forecasts a current account deficit of 1.5% of GDP in 2021, from a surplus of 0.9% in 2020, a revision of its prior forecast for a deficit of 0.5% in 2020 and 2.0% in 2021.

(Source: Fitch Solutions