• Jamaica will see stronger economic performance over the coming years following a reform program which will put the country on a more sustainable growth trajectory.
• After poor economic governance led to two sovereign debt defaults since 2010, Jamaica is now closely coordinating policy with the IMF in a bid to improve its business environment, rein in government spending, diversify its economy, and reduce its external vulnerabilities.
• As a result of recent and upcoming initiatives, Fitch is forecasting that real GDP growth will average 2.0% over the next decade, compared to an average of just 0.2% over the past ten years.
• Following difficult reforms including streamlining the government and reducing public outlays, Jamaica's fiscal deficit has turned into a modest surplus, and this to continue over the coming decade.
• Although Jamaica has lowered its corporate tax rate - part of its ongoing efforts to improve the business environment and incentivise investment - the government has worked to simplify its consumption tax framework and eliminate tax breaks for some industries, which will lead to increased revenues over the longer term.

(Source: Fitch)

• Honduran President Juan Orlando Hernández’s association with criminal activity will ensure that political tensions remain high over the coming quarters.
• Although demonstrations have ebbed since violent nationwide protests broke out in April 2019, persistent poverty and high levels of violent crime underpin risks to social stability.
• Fitch has revised down Honduras’ score in its Short-Term Political Risk Index to 41.7 out of 100.0, from 42.9 previously, as widespread dissatisfaction with the political elite increases the risk of significant policy change following the 2021 election.

(Source: Fitch)

• China on Thursday announced that it will halve tariffs on hundreds of U.S. goods worth about $75 billion.
• Retaliatory tariffs on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, according to a statement from China’s Ministry of Finance. The adjustments will take effect from 1:01p.m on Feb. 14, Beijing time.
• The cuts apply to about $75 billion worth of imports from the U.S. that was slapped with tariffs on Sept. 1, 2019, according to a separate statement on the ministry’s website.
• After the cut, duties on U.S. crude will be reduced to 2.5%, from 5%, and the tariff on soybeans will be trimmed by 2.5%.

(Source: CNBC)

• Oil futures rose for a second day on Thursday boosted by potential OPEC+ action to counter oil demand loss from the coronavirus outbreak and by optimism that trade tensions between the world’s two biggest economies were easing.
• A technical committee advising the Organization of the Petroleum Exporting Countries and its allies led by Russia, known as OPEC+, may reach consensus on Thursday on the need to further cut oil output by at least 500,000 barrels per day (bpd), two sources told Reuters.
• Brent futures rose by 17 cents to $55.45 a barrel, having risen 2.4% in the previous session. U.S. West Texas Intermediate futures gained 46 cents to $51.21 a barrel after rising 2.3% on Wednesday.

(Source: Reuters) 

• Jamaica Teas reported unaudited net profit of $27.70Mn (EPS: $0.04) for the first quarter December 2019, a fall-off of 44.4% (or $22.10Mn) from the $49.80Mn reported one year prior. 
• The main contributor to the performance was increased expenses: sales and marketing cost increased by 30.6% (or $3.23Mn) while administrative expenses climbed 87.4% (or 36.22Mn).  This jump in administrative costs was attributable to increased staff costs and professional fees coupled with a foreign currency transaction loss at QWI of $21.0Mn.
• The stock has declined 3.8% since the start of the calendar year. JAMT closed Tuesdays’ trading session at $6.03 and currently trades at a P/E of 11.9x earnings which is below the Junior Market Manufacturing Sector Average of 19.3x.

(Source: JAMT’s Financials)

• Market expectations for Brazil’s first monetary policy meeting of the year oscillated significantly over the six weeks since the Dec 11 gathering.
• A slightly hawkish, though rather vague, central bank statement then had left markets torn between bets on a hold or a small cut in the policy rate.
• Growth frustrations and rising concerns on the economic impact of the coronavirus outbreak have tipped our and the consensus expectation to a 25-basis-point cut to a record-low 4.25%.
• monetary policy dashboard shows that, while there still is room for an accomodative policy, the space for additional cuts has narrowed in recent months.

(Source: Bloomberg)

• Mexico’s president vowed not to raise taxes, but they’re creeping up anyway as the government struggles to boost revenue in a stagnant economy.
• From Jan. 1, Mexicans started to pay increased levies on gasoline and sugary drinks. Taxes on cigarettes, in the meantime, went up 41%. And soon digital platforms such as Airbnb Inc. and Netflix Inc. will also start collecting value-added and income taxes from users.
• Ask President Andres Manuel Lopez Obrador’s team and they will say these are mostly inflation-adjusted hikes, and that the government has kept its promise to steer clear of tax increases.
• Mexico’s economic slowdown is throwing water on his campaign pledge that more-efficient state contracts and a crackdown on corruption would be just enough to cover for spending.

(Source: Bloomberg)

• The U.S. trade deficit fell for the first time in six years in 2019 as the White House’s trade war with China curbed the import bill, keeping the economy on a moderate growth path despite a slowdown in consumer spending and weak business investment.
• The report from the Commerce Department on Wednesday also showed the Trump administration’s “America First” agenda decreased the flow of goods last year, with exports tumbling for the first time since 2016. President Donald Trump, who has dubbed himself “the tariff man,” has pledged to shrink the deficit by shutting out more unfairly traded imports and renegotiating free trade agreements.
• Trump has argued that substantially cutting the trade deficit would boost annual economic growth to 3% on a sustainable basis. The economy has, however, failed to hit that mark, growing 2.3% in 2019, which was the slowest in three years, after expanding 2.9% in 2018.

(Source: Reuters)

• Oil prices jumped by more than 3% on Wednesday on media reports that scientists have developed a drug against the fast-spreading coronavirus that continued to weigh heavily on global economic activity.
• News that the Organization of the Petroleum Exporting Countries and its producer allies are considering further output cuts to counter a potential squeeze on global oil demand further supported that had collapsed by more than 20% since early January.
• Both Brent crude oil futures and U.S. West Texas Intermediate (WTI) crude jumped by more than 3% in morning trade. By 1220 GMT Brent was up $1.35, or 2.5%, at $55.31 a barrel and (WTI) was up $1.25, or 2.5%, at $50.86.

(Source: Reuters)

• Fitch expects Real GDP growth in Jamaica to continue to decelerate over the coming quarters as Sluggish activity in the mining, construction and agricultural sectors outweigh steady growth in private consumption.
• The 2019 real GDP forecast was revised from 2.1% to 1.6% and  the 2020 forecast from 1.8% to 1.4%. Low unemployment and infighting among the opposition People’s National Party have the increased possibility that Prime Minister Andrew Holness will call an election in H120.
• IMF-backed reforms, including fiscal consolidation, inflation targeting and a more liberalised exchange rate regime, will likely outlive the September conclusion of the current Stand-By Arrangement. The government will also focus on combating rising crime rates, which pose a threat to social and economic stability, bolstering the agricultural sector and deepening domestic capital markets.     
• Fiscal consolidation will remain a government priority, but Fitch notes that policy fatigue will likely limit the scope for future cuts. Revenue growth will be supported by rising economic activity and an updated tax regime, while expenditures are contained.  
• External account stability is unlikely to be challenged by a sustained current account deficit in the coming years. Improved reserves and capital inflows will likely be sufficient to ensure stability.

(Source: Fitch)