• Bank of Jamaica (BOJ) announced its decision to hold the policy interest rate unchanged at 0.50% per annum on June 30, 2021. The policy rate is the interest rate that it offers to deposit-taking institutions on overnight placements with BOJ. 
• The decision to hold the policy rate unchanged was made by a unanimous vote by the Bank’s Monetary Policy Committee (MPC). This decision was based on the MPC’s assessment that, despite recent increases in international commodity prices, the existing stance of monetary policy remains appropriate to support inflation within the target range (4%-6%) over the next two years. The Bank’s accommodative monetary policy posture is also aimed at supporting a recovery in economic activity in Jamaica. 
• Based on the Bank’s forecast in May 2021, inflation is projected to average 4.8% over the next two years. The forecast anticipates that commodity price inflation will accelerate in the context of global supply chain disruptions and increasing demand as economies reopen, leading to higher domestic transport and processed food inflation.

(Source: BOJ)

• On June 30, 2021 STATIN released its official estimate of Q1 GDP performance for 2021 which points to a 6.7% contraction which is 100 basis points higher than PIOJ’s previous 5.7% estimate. The performance of the economy was a reflection of the continued impact of the novel Coronavirus and the measures adopted to contain its spread.   The impact was predominantly felt in the Services Industries which fell by 9.9% (which is higher than PIOJ’s 8.1% estimated contraction). The Goods Producing Industries, however, grew by 2.6% (which is slightly lower than PIOJ’s 3.0% growth estimate for the industry). 
• All industries within the Services Industries declined, with the exception of the Producers of Government Services which remained relatively unchanged. Declines were recorded for: Hotels & Restaurants (55.9%), Other Services (21.9%), Transport, Storage & Communication (7.8%), Electricity & Water Supply (6.9%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (5.1%), Real Estate, Renting & Business Activities (1.9%) and Finance & Insurance Services (1.2%). 
• The growth in the Goods Producing Industries was largely due to higher output levels in Construction (10.5%) and Mining & Quarrying (7.1%). However, there were declines in Agriculture, Forestry & Fishing (2.0%) and Manufacturing (1.1%). 
• When compared to the fourth quarter of 2020, total value added for the economy grew by 0.6%.  With the Q1 2021 outturn, the economy declined by 11.0% for the fiscal year 2020/2021 compared to fiscal year 2019/2020, reflecting the impact of COVID-19.

(Source: JIS)

• Robust external demand and a swift national vaccination campaign will underpin an economic rebound in the Dominican Republic over the coming quarters. 
• Economic activity has accelerated in the year through May, averaging a monthly 15.6% y-o-y expansion after returning to growth in March. This will support business confidence and hiring, particularly as the country’s fast vaccination campaign outpaces other Latin American and Caribbean markets. 
• As of June 27, 44.7% of Dominicans had received at least one COVID-19 vaccine dose and 26.1% have been fully vaccinated. This efficiency in administering vaccines has allowed the Dominican government to relax many of its public health restrictions, aiding a recovery in domestic commerce.  
• Furthermore, strong US growth in 2021 will sustain a surge in remittance inflows that will boost household incomes and consumer purchasing. Over 1.0Mn people of Dominican ancestry live in the US and from January through May 2021, inbound remittances totaled US$4.4Bn, a 60.5% y-o-y increase and 53.1% higher than from January-May 2019. 
• That being said, Fitch Solutions has revised its 2021 real GDP growth forecast to 6.0%, from 5.2% previously, due to a more upbeat outlook for the global economy and Dominican exports. The agency’s 2022 growth forecast of 4.7% is unchanged. 
• While it expects the Dominican economy will outperform other Caribbean markets in the coming years, the possibility of higher inflation or an abrupt tightening of monetary policy pose downside risks to longer-term growth.

(Source: Fitch Solutions)

• Puerto Rico will continue to run wide current account surpluses in the coming years, fueled by strong federal aid inflows. 
• It is forecasted that the surplus will narrow in FY2021 (July 2020 – June 2021) as goods and services exports have contracted sharply, which will likely reverse in FY22 in line with economic re-openings. 
• Fitch Solutions forecasts the current account surplus will reach 11.3% of GDP in FY21, from 17.3% in FY20, before rebounding to 17.7% in FY22.

(Source: Fitch Solutions)

• After the unprecedented pandemic-driven swings in global financial markets last year 2021 was never going to be dull, and so it has proved. Vaccine programmes and some of the biggest fiscal and central bank stimulus ever seen have made for compelling viewing. 
• Oil’s 45% surge will be its best start to a year since 2009, world stocks are on course for their second best H1 since 1998. World equities have recorded an 11% gain but mainstay U.S. and German government bond markets have had their toughest H1 since 2013 despite a better last few months. 
• Bank of America analysts estimate that U.S. President Joe Biden’s spending plans take the running tally of global fiscal and monetary stimulus over the last 15 months to $30.5 trillion, an amount equivalent to China and Europe’s economies combined. 
• Central banks alone have bought $0.9 billion of financial assets an hour. That has fueled a $54 trillion surge in global equity values, but also means U.S. inflation is now annualizing 8% compared to an average of 3% over the last 100 years.

(Source: Reuters)

• Britain is starting to plan for a COVID-19 vaccine booster campaign starting later this year after top vaccine advisers said it might be necessary to give third shots to the elderly and most vulnerable from September. 
• The government said that a final decision on whether a vaccine booster campaign was needed had not been made, but officials had advised that preparations should begin on a precautionary basis. 
• The Joint Committee on Vaccination and Immunization (JCVI) advised that there should be a plan to offer COVID-19 booster vaccines from September, starting with people 70 years old, care home residents and those who are immunosuppressed or vulnerable. 
• Britain has given 85% of adults a first COVID-19 shot, with more than 60% receiving two doses. The success of the vaccine rollout has seen Prime Minister Boris Johnson pledge to lift lockdown restrictions on July 19, even as cases of the highly transmissible Delta variant rise. 
• Data suggests that the current vaccines provide protection for at least six months, with more studies about the length of immunity and the effectiveness of booster shots expected in the coming months. 
• "We will continue to review emerging scientific data over the next few months, including data relating to the duration of immunity from the current vaccines," said Wei Shen Lim, COVID-19 Chair for JCVI.

(Source: Reuters)

• It is projected that Jamaica will run a current account surplus in the quarters ahead as remittance inflows and rebounding tourism activity widen the country’s secondary income surplus and services trade surplus, respectively. 
• A sluggish economic recovery will constrain Jamaican demand for imported goods, slowing the goods trade deficit’s return to pre-pandemic levels. 
• As such, Fitch Solutions has revised its 2021 current account surplus forecast to 1.0% of GDP, from its previous forecast of a 1.4% deficit, and its 2022 forecast to a 0.5% surplus, from a 1.4% deficit, due to the continued strength of remittance inflows and the 2020 deficit being narrower than previously expected. Remittances trended upward throughout 2020 increasing by 25% to reach its highest annual total of US$2,678.80Mn. This trend has continued in 2021 thus far rising by 70.0% in March 2021 to US$305.2Mn relative to March 2020.

(Source: Fitch Solutions & BOJ)

• GWEST reported net profit of $21.19Mn (EPS: $0.05), a significant improvement when compared to the $47.50Mn (EPS: -$0.10) net loss incurred over the same period last year. This is also the first time that the company is reporting a net profit in three years. Investors reacted positively, as the stock appreciated by 20.0% following the release. 
• The positive outturn was due to an increase in other gains (+85.1% or $43.33Mn), coupled with contractions in admin expenses (-19.4% or $13.24Mn), other operating expenses (-16.1% or $15.73Mn) and finance costs (-18.3% or $8.30Mn). The company also recorded a significant increase in tax credit, which moved from $6.40Mn in 2019/20 to $19.26Mn in 2020/21, helping to bolster its bottom-line. 
• The strong bottom-line performance occurred despite a contraction in overall revenues (12.4%) given a significant fall-off (35.9% or $27.09Mn) in revenues from medical services, which outpaced the growth achieved (+20.7% or $11.09Mn) in revenue from lease rental. 
• The increase in other gains was fueled by fair value gains on investment property which amounted to $101.46Mn relative to $65.76Mn in 2020. Meanwhile finance costs declined due to lower interest on bank loans, lease liabilities and bank overdraft interest. 
• GWEST stock price has appreciated by 36.1% since the start of the year, and closed Tuesday’s trading session at a price of $1.02 per share. At this price, the stock trades at a P/E ratio of 20.4x earnings, which is below the junior market sector average of 24.1x earnings.

(Source: Company Financials)

• Fitch has shifted its monetary policy outlook for Latin America as several major central banks in the region have either begun to hike their benchmark interest rate, or have primed markets for H2 2021 tightening through changes in their forward guidance. 
• In 2020, Latin American central banks slashed interest rates to all-time lows in response to the economic impact of the COVID-19 pandemic. Central banks across the region further eased credit conditions by cutting reserve requirements and launching extraordinary lending facilities to ensure the smooth flow of credit to household and businesses, with the aim of preventing financial instability amid the health and economic crises. 
• At the beginning of 2021, Fitch expected nearly all central banks in Latin America would keep interest rates at historic lows through the end of the year, with the lone exception of the Banco Central do Brasil (BCB). However, it now expects that central banks in Chile, Colombia and Mexico will tighten monetary policy in 2021, and as such has revised up its end-year interest rate forecast for the BCB to 6.25%, from 5.00% previously. 
• The BCB has already hiked its benchmark rate by 225 basis points (bps) to 4.25% in June in response to above-target inflation and volatile market sentiment. A similar, though less aggressive, story has played out in Mexico, in which the Banco de Mexico (Banxico) carried out a surprise, 25bps hike at its June meeting after an inflation print for the first half of the month came in well-above target. 
• While these forecasts represent a significant change in Fitch’s monetary policy outlook for the region, it sees further upside risks to the forecast. The continued acceleration of inflation in the US could push the US Federal Reserve to bring forward its monetary policy normalization, which would likely prompt capital outflows from risky assets. Latin American central banks would likely respond with more hikes than is currently anticipated in an effort to stem outflows.

(Source: Fitch Solutions)

• Pan American Health Organization (PAHO) Director Dr. Carissa F. Etienne praised the Government of the United States on the imminent delivery of millions of doses of COVID-19 vaccines to countries in the Caribbean and Latin America in the coming days though COVAX. The PAHO Revolving Fund is facilitating these deliveries in close collaboration with recipient country governments. 
• “Latin America and the Caribbean are the epicenter of this pandemic globally, and donations like these are the most effective path to get vaccines that are unavailable through the market to the arms of people that desperately need them now.” 
• “We are advocating for access to vaccine donations through COVAX and directly,” added Dr. Etienne. “Working with the COVAX Facility, governments, producers and other partners, we have been able to deliver more than 21 million doses to 31 countries in Latin America and the Caribbean, but the reality is that we still face a glaring gap in access to vaccines”.
• In addition to the U.S., the Director has also thanked the government of Spain for donating 5 million COVID-19 vaccine doses for the region, as well as the government of Canada for its $50 million Canadian dollars commitment to expand access to COVID-19 vaccines in the region. 
• Countries in Latin America and the Caribbean are consistently reporting some of the highest case counts in cases and deaths around the world, with hospitals at their limit. Only just around 11% of the entire population of the Caribbean and Latin America combined have completed their vaccination schedule, with some countries still not being able to vaccinate more than 1% of their populations. Therefore, additional donations of vaccine doses will help countries in the region, including Jamaica, to inoculate more of their population and ease restrictions and bolster greater commercial activity.

(Source: PAHO)