• The Bank of Jamaica (BOJ) is reporting a 16.8% increase in credit extended by deposit-taking institutions (DTIs) to private-sector businesses and households over the 12-month period to June 2019.
• Newly appointed Governor, Richard Byles, says this out-turn exceeded the 12.3% recorded at the end of June 2018.
• Byles, who was speaking at his first briefing since he assumed office on August 19, noted that the acceleration in private-sector credit expansion in recent months is consistent with previous BOJ accommodative policy actions.
• These actions, he pointed out, have seen a reduction, by 300 basis points, on Central Bank overnight policy rates for deposit-taking institutions between June 2017 and June 2019.

(Source: JIS)

• Initial media reports out of the Bahamas indicate that the country’s infrastructure has been severely damaged by the storm, particularly in the northern islands of Grand Bahama and Abaco.
• While it is too early at this point to update the real GDP growth forecasts for the Bahamas, the data from other countries in the wake of hurricanes Irma and Maria in 2017 suggest that the Bahamian economy is likely to contract significantly in 2019 due to disruptions to business activity particularly given damage to tourism infrastructure. This would be a significant revision from Fitch’s pre-storm forecast of 2.3% y-o-y real GDP growth for the Bahamas this year.
• The storm will also impact the political agenda in the Bahamas in the coming quarters. Minnis’ Free National Movement (FNM) government will likely shift its focus from implementing fiscal consolidation measures and passing economic liberalization policies to ramping up government spending to support activity after the hurricane.
• Moving forward, it is expected that the Bahamas will see a ‘V-shaped’ recovery, in line with those of other Caribbean economies affected by hurricane damage, with real GDP growth spiking sharply in the quarters following the storm due to reconstruction efforts and base effects. However, this outcome is contingent on the Bahamas receiving access to aid in the wake of the storm, given the country’s limited domestic financial resources.

(Source: Fitch)

• Now that the dust has settled from Prime Minister Boris Johnson’s dramatic Tuesday defeat, it’s time for Parliament to kick it up again.
• Johnson’s first test in a Commons vote ended poorly for him Tuesday as lawmakers voted to take control of the parliamentary schedule, an initial step toward forcing a delay to Brexit by three months.
• In response, Johnson made clear that the more than 20 Conservatives who defied him would be thrown out of the party and proposed a motion to trigger a general election, setting up even more turmoil in the months ahead.
• So what now? Lawmakers may vote on two measures Wednesday -- one to block a no-deal Brexit and then potentially one on whether to hold a general election.
• Meanwhile, it’s not the prospect of a rough divorce from the European Union that has some of Britain’s most affluent worried -- it’s the rising odds of a victory by Jeremy Corbyn’s Labour Party that is the more worrisome development.

(Source: Bloomberg)

• The next couple of weeks see major decisions at both the Federal Reserve and the European Central Bank.
• The list of ECB policymakers pushing back against a resumption of asset purchases is growing daily, with Francois Villeroy de Galhau the latest to add his skeptical voice to the choir.
• Incoming-President Christine Lagarde faced lawmakers in Brussels this morning and pledged to act with “agility” when she takes charge on Nov. 1.
• From the Federal Reserve, there have been mixed messages, with St. Louis Fed President James Bullard saying an aggressive 50 basis-point reduction is warranted, while Federal Reserve Bank of Boston President Eric Rosengren is unconvinced that the bank needs to cut rates at all at the upcoming meeting.

(Source: Bloomberg)

• iCreate Limited sunk deeper into losses for the six-month period ended June 2019. Losses for the period were $9.34Mn (EPS: $0.05) down from $3.65Mn (EPS: $7.31).
• The most significant contributing factors to the deterioration of the bottom line were a 46.2% (or $8.19Mn) increase in administrative expenses as well as a 288.0% (or $885.71k) increase in depreciation and amortization.
• The stock has fallen 29.4% since the start of the calendar year, closing yesterday’s trading session at $0.84. The stock currently trades at a P/B of 5.55x which is above the Junior Market average of 3.94x.

(Source: iCreate Institute limited)

• Fitch Solutions expects the Bank of Jamaica (BOJ) will maintain its record-low interest rate of 0.50% through 2019 in an effort to boost below-target inflation.
• The bank will enact two 25 basis point (bps) hikes in H220 as inflation gradually rises, bringing the rate to 1.00%.
• This is a revision of our previous forecast for the BOJ to cut rates to 1.00% in 2019 and hike to 2.00% by end-2020.
• Fitch has downwardly revised its 2019 and 2020 average inflation forecast from 3.7% y-o-y to 3.6% and 5.3% to 4.8%, respectively, due to weak commodity prices and sluggish economic activity.

 (Source: Fitch)

• According to the report on budgetary performance for the fiscal year 2018/2019: "Subsidies to public non-financial corporations expanded by $38.2m (12.3%) to $348.2Mn, vis-à-vis FY2017/18. Of this total, approximately $230.2Mn (66.1%) was allocated to the Public Hospital Authority (PHA).
• The report also said transfers to the University of The Bahamas and the Bahamas Technical and Vocational Institute grew by $5.8Mn and $3.1Mn, respectively, likely owing to the Minnis administration's free tuition and financial coverage policy. 
• "Subsidies to the national airline carrier and the water and sewerage utility company were marginally increased by $0.2Mn and $1.0Mn, respectively, whereas transfers to the National Health Insurance Scheme were relatively stable at $14.9Mn," said the report.
• The report also noted: "Subsidies to private non-financial enterprises were higher at $42.0Mn from $13.5Mn in the previous fiscal year, largely owing to arrears settlements with cruise line operators, of $21.6Mn, and the $5.5Mn spend for small business development as a part of the Government's $25Mn five-year commitment to support small businesses.

(Source: Tribune 242)

• On August 29, the Banco de México (Banxico) released the minutes from its monetary policy meeting on August 15, during which it decided to cut its benchmark interest rate to from 8.25% to 8.00%.
• Fitch Solutions believes the minutes help pave the way for another rate cut in 2019, potentially as soon as Banxico’s next meeting on September 26. The board members generally agreed that slack in the economy was substantial, with risks to economic activity continuing to point to the downside.
• It is expected that the August inflation print, which will be released on September 9, will show a continued slowdown in headline inflation towards the midpoint of Banxico’s 2.0-4.0% y-o-y target amid low global oil prices.
• Core inflation has been somewhat higher recently and may give pause to policymakers considering additional cuts.

(Source: Fitch Solutions)

• Chinese and U.S. officials are having difficulty agreeing on a date for the next round of trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend.
• Authorities in the Asian nation said they planned to file a complaint at the World Trade Organization against the U.S. moves.
• The fallout from the prolonged trade war is biting deeper into global factory production, with manufacturing PMIs from across the world yesterday showing increasing weakness.
• Although not everyone is gloomy on the outlook: Veteran market strategist David Woo says now is the time to bet on a deal.

(Source: Bloomberg)

• Parliament returns for its first post-holiday sitting today in London, and it looks like it’s going to be a very interesting one.
• A cross-party group is hoping to introduce a draft law which would force Prime Minister Boris Johnson to delay Brexit if he can’t broker a new deal with the EU by the current Oct. 31 deadline.
• Johnson reacted to the threat by saying he would rather have an election than see his negotiating position with Europe undermined.
• Sterling dropped to $1.1959 this morning, the lowest level since 2016, as the uncertainty takes its toll.

(Source: Bloomberg)