• Bank of Jamaica (BOJ) has reported that the pilot for the local Central Bank Digital Currency (CBDC), which commenced in June, remains on schedule. This includes the minting of Jamaica’s first batch of CBDC on August 9, totaling $230Mn, which will be issued to deposit-taking institutions and authorized payment service providers.
• Deputy Governor, Natalie Haynes, has indicated that one financial institution, National Commercial Bank (NCB), has been engaged as the initial wallet (account) provider under the pilot, which ends in December. She told journalists that CBDC will be issued to NCB in September at which time the bank is expected to initiate its rollout to customers.
• NCB is first targeting “friends and family”, which would be staff and their families, after which, it would be rolled out to other NCB account holders, before moving to other non-NCB account holders.
• Both Governor, Richard Byles, and Ms. Haynes have noted that there has been positive feedback so far to the CBDC’s introduction. Mr. Byles said there was some degree of skepticism up to a year ago, but stakeholders were now more positively oriented to the CBDC implementation. Ms. Haynes said that further details of the CBDC customer take-up would be forthcoming in October.

Source: (JIS News)

• Executive Director of Jamaica Vacations Limited (JamVac), Joy Roberts, has stated that craft traders and other small-business interests operating within the tourism resilient corridor stands to benefit significantly from cruise passenger arrivals, once established COVID-19 protocols are adhered to.
• Roberts, whose engagements incorporate airlift and cruise activities, added that this was evident with the arrival of a Carnival Sunrise cruise ship in Ocho Rios, St. Ann, on August 16. She further noted that there was not a single case of COVID-19 among the passengers and the captain and Carnival officials, were all pleased with Jamaica’s level of preparedness and adherence to international protocols and standards.
• One of the many conditions of the engagement was that pre-booked tours include stops at craft markets to ensure equity in the overall undertakings.
• At the same time, Assistant Vice-President for Marketing and Communications at the Port Authority of Jamaica (PAJ), Kimberly Stiff, indicated that during a recent impromptu visit to the Chukka White River Valley attraction, staff and guests were seen fully adhering to the protocols. She acknowledged that they are aware of the international health and safety standards, and it is imperative that they do their part in Jamaica.
• Jamaica Country Manager for Chukka Caribbean Adventures, Lisa Gomes, acknowledged the company’s cruise dependence and highlighted the importance of bonding together in the interest of the country and the economy.

(Source: JIS News)

• The Venezuelan economy is expected to post 0.8% real GDP growth in 2021, the first annual expansion since 2013. Economic activity contracted by an estimated 30.5% in 2020 due to the COVID-19 pandemic.
• This continued a multi-year decline, as chronic economic mismanagement, hyperinflation, a collapse in the oil sector and US sanctions had previously caused real GDP to fall by more than 75.0% since 2013.
• The forecast reflects Fitch’s view that Venezuela's economic contraction bottomed out in 2020 and will improve due to rising oil production and liberalization of economic policy. Nevertheless, real GDP will remain far below 2013 levels until US sanctions are lifted and there is a sustainable shift in economic policy in the country.
• Economic data from the Observatorio Venezolano de Finanzas (OVF), an opposition-aligned research group, show that the country has posted month-on-month growth in six of the seven months between September 2020 and March 2021, with estimates for Q221 suggesting this trend continued in more recent months. This reflects a rebound from the worst period of the COVID-19 crisis, in line with most other markets in Latin America.

(Source: Fitch Solutions)

• Fitch Solutions revised its Panamanian real GDP growth forecast to 11.2% in 2021, from 12.2% previously, to reflect ongoing public health restrictions that will hamper domestic demand. It forecasts 5.8% growth in 2022, meaning that real GDP will not recover from the COVID-19 pandemic until 2023.
• While a steady rebound of industrial activity and strong export growth will make Panama a regional growth outperformer, this largely reflects base effects from a 17.9% contraction in 2020.
• Fitch highlights downside risks to its short- and long-term growth forecasts due to the potential for future global economic disruptions from the Delta variant and any fiscal adjustments carried out by the Panamanian government in the coming years that may weaken public investment.

(Source: Fitch Solutions)

• The US Congress has approved a $3.5Tn budget blueprint, setting the stage for Democrats to enact President Joe Biden's ambitious economic agenda. The rule that passed on Tuesday allows Democrats, who narrowly control both chambers, to move ahead with key policy proposals.
• The resolution's fate was unclear as late as Tuesday morning, amid a standoff between progressive and centrist House Democrats. The Democrats are enacting a process called budget reconciliation to approve President Biden's larger spending package - and passage of the budget blueprint Tuesday is the first step.
• A group of 10 moderate Democratic lawmakers had threatened to withhold votes on the blueprint unless the House first approved a $1tn bipartisan infrastructure bill. That package includes funding for roads, bridges, the power grid, public transport, and internet.
• To win a compromise after over 24 hours of debate, top House Democrats have assured moderates that the infrastructure bill will be discussed on 27 September, when the House is back in session. "Passing this rule paves the way for the Building Back Better plan, which will forge legislative progress unseen in 50 years," Speaker of the House Nancy Pelosi said ahead of the vote. The top Democrat added that delays only threaten the economic plan and other bills.

(Source: BBC News)

• Oil prices rose 3% on Tuesday after Mexico suffered a large production outage due to a fire on an oil platform and full U.S. regulatory approval of vaccines for COVID-19.
• Oil is up more than 8% for the week, clawing back the 7.6% lost last week, the biggest weekly decline in more than nine months.
• Investors took a more upbeat view on the continued fight against the virus after the U.S. Food and Drug Administration on Monday issued full approval for the Pfizer/BioNTech two-dose vaccine, having authorized it for emergency use last December.
• Analysts said China's apparent success in fighting the Delta variant of the coronavirus also boosted demand sentiment with no cases of locally transmitted infections in the latest data.

(Source: Reuters)

• Bank of Jamaica (BOJ) Governor, Richard Byles, says the country’s growth outturn for the fiscal year 2021/22 is likely to be higher than previously anticipated. The BOJ is currently projecting that real GDP growth for this fiscal year will be in the range of 7.0%-10.0%, up from the 5.0%-8.0% it indicated in May 2021.
• Pointing to this rebound are leading indicators, such as GCT flows and electricity consumption. The Governor also added that key drivers of this rebound are the tourism and related sectors due to the stronger than expected improvements in the economies of Jamaica’s main trading partners from the fallout sparked by the COVID-19 pandemic, largely driven by successful vaccination programmes.
• The BOJ anticipates continued strong growth in the construction sector while noting that risks to the growth forecast were balanced. A faster pace of growth is possible if tourist arrivals and related activities rebound faster, due to the pent-up demand that exists.
• The main downside risks relate to the domestic spread of the COVID-19 virus, the emergence of new variants, and the accompanying measures to control it. The BOJ Governor noted that if Jamaica’s stringency measures are tightened and protracted, it could influence a slowdown in travel and disruptions in the production and distribution of goods. He maintained, however, that the macroeconomic outlook pointed to “even stronger improvement” in real economic activity.

Source: (JIS News)

• The Bank of Jamaica (BOJ) has announced its decision to hold the policy interest rate, which is the rate offered to deposit-taking institutions on overnight placements with BOJ, unchanged at 0.50% per annum.
• The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (MPC) in September 2021 and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
• While the Bank does not target any specific level of the exchange rate, BOJ will also seek to ensure that movements in the exchange rate do not threaten the inflation target. Monetary policy decisions taken by the BOJ are aimed at ensuring that inflation remains within the Bank’s inflation target of 4.0% to 6.0%.
• These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year, starting from as early as the September 2021 quarter, inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. Inflation is projected to remain at 5.0% over the medium term, conditional on the gradual tightening of monetary accommodation.

(Source: JIS News)

• Fitch is expecting that a rebound in private consumption and investment in Peru will underpin a 10.2% real GDP growth in 2021 and 4.7% growth in 2022. In Q2 2021, real GDP grew 41.9% y-o-y and 6.5% q-o-q, with the Q2 results outlining a broad H121 recovery in private consumption (14.0%), public consumption (19.5%), fixed capital formation (82.3%), and exports (17.5%), though imports also rose 20.7% in the first half of the year.
• As Peru's national vaccination campaign progresses, it will allow for greater economic activity and fewer public health restrictions, underpinning Fitch’s expectation for a broad economic recovery in the short-to-medium term, especially as Peru's national vaccination campaign progresses. As of August 21, 29.2% of Peruvians had received at least one COVID-19 vaccine dose and 22.5% had been fully vaccinated.
• While the agency’s growth forecasts imply that Peru will fully recover from the pandemic in 2022, less favourable government policies and tighter monetary policy will cause growth to decelerate in the medium-to-long term, averaging 3.2% from 2023 to 2025.
• In addition, downside risks to the short- and long-term forecasts include the spread of COVID-19 variants in Peru and globally, in addition to elevated concerns over policy direction under leftist President Pedro Castillo.

(Source: Fitch Solutions)

• Fitch Solutions forecasts that Argentina will post a current account deficit of 0.7% of GDP in 2021 and 1.5% in 2022 (from a surplus of 0.9% in 2020), narrow shortfalls relative to recent years as multi-year high soybean prices support export earnings.
• Fitch Solutions have revised its real GDP growth forecast for Argentina to 6.2% for 2021, from 5.6% previously, due to a stronger than anticipated Q2 2021 and expected stimulus efforts in H2 2021. This will see the country exiting the three-year recession, but remaining subdued by an ongoing crisis of confidence among households and firms.
• The 2022 growth forecast was revised down to 3.3%, from 5.7% previously, as political headwinds will likely prevent a sustained rebound in consumption and investment.
• Several factors underpin this view, including the fact that the government will likely need to scale back its deficit spending as a condition of renegotiating its debt repayments to the IMF, as well as the expectation of multi-year high commodity prices (particularly soybean), which will leave the government with fewer resources to support its stimulus efforts.
• The forecasts imply that the Argentine economy will not return its peak size (reached in 2017) until 2025, among the slowest recoveries in the region.

(Source: Fitch Solutions)