• U.S manufacturing activity plunged to an 11-year low in April as the novel coronavirus wreaked havoc on supply chains, suggesting the economy was sinking deeper into recession.
• The survey from the Institute for Supply Management (ISM) on Friday added to a raft of grim data this week, including a collapse in consumer spending in March and a surge to 30.3 million in the number of Americans who have filed claims for unemployment benefits in the last six weeks.
• The ISM said its index of national factory activity dropped to a reading of 41.5 last month, the lowest level since April 2009, from 49.1 in March. The monthly decline in the ISM index was the biggest since October 2008. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11% of the U.S. economy.

 (Source: Reuters)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the newly established COVID-19 Economic Recovery Task Force will be working assiduously to ensure the restoration of jobs lost as a result of the coronavirus (COVID-19) pandemic.
• The Minister said layoffs and job losses have occurred in a number of sectors and subsectors. These include tourism and attractions, the airline industry, entertainment, manufacturing, retail, security, entertainment, early childhood, and private education services.
• Of note, Dr. Clarke said data from the SET Cash applications suggest that more than 75 per cent of the applicants are under age 40, pointing out that these are “persons who are starting out in life [and] have obligations”.
• The Minister described this scenario as “very painful”, particularly in light of the significant level of job creation and reduction in unemployment occurring in recent years.

 (Source: JIS)

• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the first Supplementary Estimates for 2020/21 should be tabled in the House of Representatives within two weeks.
• “That supplementary budget will recast [projected] revenues in light of the [coronavirus] COVID-19 pandemic… it will involve a reallocation of expenditure to be consistent with the realities that we face at this time… and will ensure that the expenditure we intend to enact for the COVID Allocation of Resources for Employees (CARE) Programme, goes to the Houses of Parliament,” Dr. Clarke said.
• The Government’s initial Budget of $852.7 billion was adjusted to $853.5 billion to reflect an additional $792 million to fund the operations of the Petroleum Corporation of Jamaica (PCJ), which is being integrated into the Ministry of Science, Energy and Technology.

(Source: JIS)

• Fitch Ratings has affirmed El Salvador's Long-Term Foreign- Currency Issuer Default Rating (IDR) at 'B-' and revises the Outlook to Negative from Stable.
• The Negative Rating Outlook reflects deterioration in debt sustainability metrics as a result of the widening of the fiscal deficit and economic contraction as well as financing constraints stemming from increased reliance on short-term debt, limited scope for additional local market financing and uncertain access to external market financing given high borrowing costs. However, multilateral funding can help ease borrowing constraints this year.
• The rating agency projects a deep economic contraction of 4.8% in 2020 due to the extended national quarantine to combat the coronavirus pandemic as well as 20% fall expected in remittances, representing nearly 20% of GDP,that will hit domestic demand sharply. However, its expects a strong rebound of 5% in 2021 but risks are to the downside in both 2020-2021.

(Source: Fitch)

• Fitch expects real GDP growth in Guyana will surge in 2020 as crude oil production and increased investment outweigh the downside growth pressures from the Covid-19 pandemic.
• That said, low global energy prices, sustained investor risk aversion and domestic political uncertainty will likely weigh on foreign investment in Guyana and may cap its economic potential.
• Fitch maintains its 2020 and 2021 real GDP growth forecasts of 20.8% y-o-y and 17.4% respectively, up from an estimated 4.7% expansion in 2019. 

 (Source: Fitch)

• Oil rose towards $27 a barrel on Friday as OPEC and its allies began a record output cut to tackle a supply glut weighing on the market due to the coronavirus crisis.
• Output cuts of 9.7 million barrels per day by the Organization of Petroleum Exporting Countries, Russia and other producers, known as OPEC+, began on Friday. Even so, there are doubts the reduction, the largest ever agreed, will be enough.
• Brent LCOc1 for July rose 37 cents, or 1.4%, to $26.85 by 1205 GMT. U.S. crude CLc1 for June added 83 cents, or 4.4%, to $19.67. Both benchmarks rallied sharply on Thursday. Brent rose 12% and U.S. crude gained 25%.

(Source: Reuters)

• The Federal Reserve’s balance sheet increased to a record $6.7 trillion this week as the central bank used its nearly unlimited buying power to soak up assets to keep markets functioning amid an abrupt economic free fall due to the coronavirus pandemic.
• It is now the equivalent of roughly 31% of the size of the U.S. economy before the crisis struck, and will certainly grow larger in the weeks ahead as the Fed keeps piling on assets and the economy shrinks.

(Source: Reuters)

• For the year ended December 31, 2019, Seprod Limited reported audited net profits of $973.33Mn (EPS: $2.33), which represents an 8.4% (or $88.72Mn) decline relative to the same period in 2018.
• This contraction was mainly driven by a 139.9% (or $421.94Mn) increase in net loss from discontinued operations which is connected to the July 2019 closure of its Golden Grove sugar manufacturing operations. That said, net profit from continued operations increased 24.3% (or $333.22Mn) year-over-year. 
• Seprod’s stock price has fallen 13.6% since the start of the calendar year, closing Wednesday’s trading session at $44.05. At this price, the company trades at a P/E of 18.9x earnings, which is above the Main Market Distribution & Manufacturing Average of 15.2x.

 (Source: Seprod’s Financials)

• According to Fitch, Jamaica’s current account deficit will widen to 5.8% of GDP in 2020, from an estimated 2.5% of GDP in 2019, as the coronavirus pandemic disrupts the country’s main export activities.
• Historically, large remittance inflows have produced sizeable secondary income surpluses, which, in turn, have helped contain Jamaica’s overall current account deficits. However, as the US economy enters a recession in 2020, it will cause a significant spike in unemployment, weighing on household incomes of Jamaican-Americans and reducing the funds they are able to send back to Jamaica.
• However, steady foreign direct investment inflows and sizeable international reserves will reinforce Jamaica’s external account stability. According to Fitch durable FDI inflows—which are less prone to volatility than other investments—is expected to support Jamaica’s external financing needs over the coming quarters.
• While FDI inflows will likely slow in the coming quarters as both sectors contract, Jamaica’s international reserves, which were USD3.2bn in March 2020, equivalent to 4.8 months of imports, will offer moderate support in the event of a short-term imbalance in its external accounts.

(Source: Fitch Solutions)

• The International Monetary Fund (IMF) has approved $508 million in emergency financing for Costa Rica to respond to the coronavirus pandemic, Costa Rica's central bank said on Wednesday.
• The five-year loan, granted through the IMF's Rapid Financing Instrument (RFI), carries a spread of 150 basis points over the IMF's special drawing rights (SDRs), equal to an interest rate of 1.55% per year.
• Costa Rica requested the loan when an IMF delegation visited the country on April 16-17.
• The IMF also approved the disbursement of $65.6 million in emergency financing for Dominica, Grenada and Saint Lucia to help cover balance of payment needs during the coronavirus pandemic.

(Source: Latin Finance)