• Brazil's fiscal deficit is expected to widen to a historic 18.2% of GDP in 2020 and narrow gradually over the coming years, to 10.0% in 2021.
• Fitch Solutions has revised down its forecasts, from 14.9% in 2020 and 9.1% in 2021 previously, as the Bolsonaro administration has embraced a more open-ended commitment to maintaining elevated social spending in order to maintain his popular approval.
• The government's weakening commitment to fiscal reforms is likely to undermine market confidence in its long-term fiscal sustainability, raising its borrowing costs and potentially creating pressure for consolidation in the medium term.

(Source: Fitch Solutions)

• Fitch Solutions expects Peruvian President Martín Vizcarra to survive the ongoing impeachment effort launched by members of Congress on September 11 and remain in office.
• That said, congressional tensions with Vizcarra and his cabinet members will significantly limit policy formation through the end of the government’s term in July 2021. Fitch Solutions adjusted Peru’s score in its Short-Term Political Risk Index to 58.3 out of 100, from 59.4 previously, to reflect higher risks.
• Though it is not the core view, if Congress does remove Vizcarra from office, it would likely fuel public unrest and threaten longer-term policy continuity, weakening the country’s political institutions that have withstood a series of crises over the last four years.

(Source: Fitch Solutions)

• The Bank of England gave the clearest signal yet that it may consider cutting interest rates below zero for the first time in its history as the economy gears up for a period of unusual uncertainty. The pound fell.
• With multiple threats to the outlook looming, the BOE will begin “structured engagement” with U.K. bank regulators on how it might implement negative rates. While officials had previously said they were reviewing the case for such a move, and Governor Andrew Bailey has not ruled it out, the preparation goes beyond anything is seen before.
• The comments in the minutes of Thursday’s policy decision prompted investors to bet that the next 10 basis points of easing will come in May, with another cut of the same magnitude to follow in November 2021. The pound weakened and was trading down 0.5% at $1.2905 at 12:34 p.m. in London.

(Source: Bloomberg)

• The way Federal Reserve Chair Jerome Powell sees it, the U.S. labor market has a long way to go to meet the central bank’s maximum employment goal and a lot of boxes to tick along the way.
• In his most extensive effort to explain how the Fed will measure progress toward a goal prioritized last month under the Fed’s new framework, Powell was clear on Wednesday that he and other policymakers were not focused on any single number, such as the unemployment rate.
• “Maximum employment is not something that can be reduced to a number the way inflation can,” Powell told a news conference after the Fed announced its commitment to keep interest rates low until they are convinced of the job market’s strength and that inflation is on track to run above the Fed’s 2% goal for some time.

(Source: Reuters)

• Limners and Bards Limited reported a 54.4% (or $38.00Mn) increase in net profit to $107.81Mn (EPS: $0.11), for the nine months ended July 31, 2020, relative to the corresponding 2019 period.
• The improvement in the bottom-line was supported by a 41.1% (or $199.87Mn) increase in revenues primarily driven by growth in media placement (up 60.5% or $136.30Mn), advertising agency (up 72.7% or $58.10Mn), and production (up 3.0% or $5.30Mn) year over year.
• Further, the company saw benefits from its 2019 listing on the Junior Market as it started to reap the benefits of the tax exemptions, incurring no tax expenses for this period relative to $18.82Mn reported last year.
• Management has expressed that it will focus on product and service innovation as they actively work on improving efficiencies as they head into the 4th quarter.
• The company’s stock price has declined by 4.0% since the start of the year, closing Tuesday’s trading session at $2.89. At this price, the stock currently trades at a P/E of 20.6x earnings, which is below the Junior Market Others Average of 57.8x.

(Source: LAB Financials)

• The All Jamaica Consumer Price Index for August 2020 was 105.9, indicating an inflation rate of 0.2%. This increase was largely driven by the 1.2% increase in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division.
• The groups ‘Transport’ and ‘Recreation, Sport and Culture’ also recorded increases of 0.3% and 1.2%, respectively. However, these increases were moderated by a 0.5% decline in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ due mainly to lower prices for vegetables for the review period.
• For the review period, the calendar year-to-date inflation rate was 3.4%, point-to-point 5.1%, and the fiscal year-to-date was 2.1% as of August 2020. At 5.1%, the inflation rate remains within the 4%-6% range targeted by the BOJ.

(Source: STATIN)

• The sharp contraction in tourism activity due to the Covid-19 pandemic will reduce Barbados’ large service trade surplus and lead to a substantial widening of its current account deficit.
• Sizeable international reserves and support from multilateral lenders will reduce risks to Barbados’ overall external account stability.
• Fitch Solutions revised down its 2020 and 2021 current account deficit forecasts to 6.3% of GDP and 4.7%, respectively, from 4.0% and 4.1% as it expects the decline in service exports will outweigh the slowdown in goods imports.

(Source: Fitch Solutions)

• Increased spending to offset the economic and public health impact of Covid-19 and falling revenues amid a deep recession will increase Guatemala’s budget deficit well above historical averages.
• Fitch Solutions revised its 2020 budget deficit forecast to 5.2% of GDP, from 3.8% previously and the 2021 forecast from 3.6% to 4.8% amid accelerated expenditure growth and the government’s 2021 budget that proposes a slow narrowing of the deficit.
• The debt to GDP forecast for 2020 has also been revised to 33.33%, from 27.3%, due to the sharply larger fiscal deficit.

(Source: Fitch Solutions)

• The global economy appears to be recovering from the coronavirus slump faster than thought only a few months ago thanks to improving outlooks for China and the United States, the OECD said on Wednesday.
• The world economy is on course to contract 4.5% this year, the Organization for Economic Cooperation and Development said, which - though unprecedented in recent history - was up from the 6% contraction that it forecasted in June.
• Provided the virus is kept from spreading out of control, the global economy will bounce back into growth next year by expanding 5%. This expectation was trimmed from a June forecast of 5.2%, the Paris-based policy forum said.

(Source: Reuters

• Fitch Solutions anticipates that a Joe Biden presidency would take a more measured, multilateral approach towards confronting China and attempt to enlist democratic allies and parties whose interests align with the US in this respect. 
• Biden would likely find building a counter-China ‘coalition’ a difficult process, given the economic clout Beijing wields in Asia, and he would be forced to consider an issue-by-issue approach to make it more palatable for Asian states to support his agenda.
• The agency also expects greater US economic engagement with Asian nations should Biden become president, and believe that he would begin negotiations for the US to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, in a bid to reduce China’s economic influence over the region.
• Meanwhile, it sees two scenarios for US policy towards Asia for a second Trump term, depending on whether Trump becomes status quo-oriented or continues to implement more dramatic changes to US foreign policy as part of his legacy.

(Source: Fitch Solutions)