• On July 28, 2021, the IMF Executive Board completed the first review under the two-year Precautionary and Liquidity Line (PLL) arrangement for Panama which was approved on January 19, 2021 in the amount equivalent to US$2.7 billion (SDR 1.884 billion). 
• The PLL serves as insurance against extreme external shocks stemming from the COVID-19 pandemic, with access in the first program year equivalent to about US$1.35 billion (0.942 billion SDR). The authorities intend to continue treating the arrangement as precautionary. 
• According to the IMF, the performance under the program has been strong and Panama continues to meet the PLL qualification criteria. The authorities remain resolute in implementing the strong policies under the PLL.

(Source: IMF)

• Mexico's state oil company Petroleos Mexicanos (PEMEX) on Wednesday reported net profit of $722.5 million for the second quarter, swinging from a loss in the same period last year, thanks to higher crude prices and production. 
• The company said the 14.4-billion-pesos profit was driven by higher income from international sales, which doubled from a year earlier due to higher crude prices and a slight rise in oil volumes exported. 
• However, PEMEX's debt rose from the first quarter of the year, reaching $115.1 billion at the end of the April-to-June period due to the use of short-term financing. Despite this, PEMEX has said it will not resort to the bond markets this year for refinancing as it plans to receive capital injections from the government through the fourth quarter, which should lead to a net debt reduction, a long-standing but so far unfulfilled goal. 
• Given its weak liquidity, and negative free cash flow. which will rise in the next three years due to high debt maturities and lower operating cash flow derived from the expansion of its refining business, on July 27^th Moody’s downgraded PEMEX’s corporate family rating and the senior unsecured ratings on the company's existing notes, from Ba2 to Ba3 (S&P Equivalent: BB-). 
• The agency also maintained the negative rating outlook on PEMEX's Ba3 ratings primarily based on the negative outlook on Mexico's Baa1 rating given the importance of the sovereign's credit strength and ongoing support to PEMEX's ratings.

(Source: Reuters & Moody’s)

• The U.S. trade deficit in goods increased in June as imports continued to rise amid strong economic activity, suggesting trade likely remained a drag on growth in the second quarter. The U.S. economy has rebounded more quickly from the pandemic compared to its global rivals, thanks to massive fiscal stimulus, low interest rates and vaccinations against COVID-19. But bottlenecks in the supply chain have hampered manufacturers' ability to boost production, drawing in more imports. 
• "The widening in the advance nominal goods deficit in June is further evidence that net exports will be a drag on second- quarter GDP," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. 
• The goods trade deficit increased 3.5% to $91.2Bn last month, the Commerce Department said on Wednesday. Imports of goods advanced 1.5% to $236.7Bn. There were increases in imports of food, industrial supplies and capital goods. 
• However, imports of motor vehicles and consumer goods fell. While that could hint at a possible moderation in consumer spending in the months ahead, the drop could reflect a global shortage of semiconductors, which has weighed on the production of motor vehicles and some household appliances. 
• Spending during the pandemic shifted to goods from services, with Americans cooped up at home, but with nearly half of the United States population fully vaccinated against the coronavirus, demand for services is picking up.  That has raised optimism among some economists that fewer goods will be imported in the coming months and allow the trade gap to shrink. However, the Delta variant of the virus is driving a resurgence in new infections across the country, which could limit demand for services. 
• "We expect the overall trade deficit to narrow in the coming months as consumers rotate their spending towards services and greater vaccine diffusion abroad encourages stronger export growth," said Mahir Rasheed, a U.S. economist at Oxford Economics in New York. "However, risks from sticky supply chain disruptions and the rapid spread of the Delta variant could slow trade flows."

(Source: Reuters)

• The International Monetary Fund warned Tuesday that there’s a risk inflation will prove to be more than just transitory, pushing central banks to take pre-emptive action. 
• The issue is currently dividing the investment community, which has been busy contemplating whether a recent surge in consumer prices is here to stay. In the U.S., the consumer price index came in at 5.4% in June, the fastest pace in almost 13 years. In the U.K., the inflation rate reached 2.5% in June the highest level since August 2018 and above the Bank of England’s target of 2%. 
• Higher prices increase the chances that central banks will start to curb their ultra-accommodative monetary policies, such as a tapering of market-friendly stimulus like asset purchases. 
• Speaking earlier this month, U.S. Federal Reserve Chair Jerome Powell said the jobs market was “still a ways off” from where the central bank would like to see it before it reduces stimulus. He added that inflation would “likely remain elevated in coming months before moderating.” The IMF had already pointed out earlier this month that if the U.S. were to provide more fiscal support then this could increase inflationary pressures even further and lead to a hike in interest rates earlier-than-expected. 
• IMF Chief Economist Gita Gopinath said in a blogpost Tuesday that “more persistent supply disruptions and sharply rising housing prices are some of the factors that could lead to persistently high inflation. She also warned that “inflation is expected to remain elevated into 2022 in some emerging market and developing economies, related in part to continued food price pressures and currency depreciations.”

(Source: CNBC Economy)

• The GOJ created history, on July 23, 2021, with the successful completion of a catastrophe bond (CAT bond) issuance through the World Bank (International Bank for Reconstruction and Development (IBRD)) that secured US$185.0Mn in financial protection against major hurricanes. 
• The Jamaican government is the first in the Caribbean and the first island state in the world to independently access the CAT bond market. The bond was issued under the World Bank’s “capital at risk” notes program and will provide the GOJ with critical disaster insurance protection against losses from named storms across three Atlantic hurricane seasons up to December 2023. 
• This historic transaction transfers financial risk associated with tropical cyclones and hurricanes to the international capital market. Along with the other layers of disaster risk financing that have been put in place, the CAT bond strengthens Jamaica’s ability to finance the emergency costs of hurricanes and tropical cyclone, which improves the country’s economic resilience against these economic shocks.

(Source: Ministry of Finance)

• Medical Disposables & Supplies Limited (MDS) has advised that the Company was appointed as the distributor for the following product lines: Simply and Benjamin’s Cosmetics Jamaica Black Castor Oil (JBCO). 
• Both Simply and JBCO are local brands. The Simply brand is a line of everyday essential products, manufactured in Jamaica, that fall within the categories of personal care, home remedies and flavourings. These include items such as Rubbing Alcohol, Olive Oil and Vanilla, etc. The JBCO personal care range of products are made with authentic Jamaican Black Castor Oil and other natural oils which promote healthy hair and skin. This includes JBCO Shampoo, Conditioner, Beard Oil, Beard Wax and Oils. 
• The addition of this distribution arrangement bodes well for the company’s thrust to grow revenues and increase its bottom-line.

(Source: JSE)

• While Trinidad and Tobago's expected fiscal consolidation and its sizable government assets will continue to support the investment-grade rating of 'BBB-‘, on July 27, 2021, S&P Global Ratings revised its outlook on the Republic of Trinidad and Tobago to negative from stable. 
• The negative outlook incorporates the risks that poor economic performance and only modest GDP growth prospects prevent Trinidad and Tobago from recovering the economic resilience lost in recent years, as measured by GDP per capita. 
• The ratings could be lowered over the next two years if S&P believes that GDP growth is insufficient to recover the economic resilience, as measured by GDP per capita, that was lost following five years of falling per capita income. 
• There could also be a downward revision if the external debt position or the government’s debt burden deteriorates beyond expectations, or if the agency believes that the government's policy choices have weakened support for long-term sustainable public finances or balanced economic growth. 
• On the other hand, outlook could be revised to stable during the next 12-24 months if strong economic performance and favourable long-term GDP growth prospects help stabilize the recent erosion of the sovereign's financial profile. 
• A more resilient and prosperous economy, along with improved fiscal outcomes that stabilize the rise in the government's debt burden and ease external pressures, could also lead to a stable outlook.

(Source: S&P Global Ratings)

• The Bahamian aviation industry was yesterday said to have been thrown “a curve ball” by the government’s tightening of COVID restrictions having regained just 40-50% of pre-pandemic business. 
• Anthony K Hamilton, Southern Air’s director of administration, and president of the Bahamas Association of Air Transport Operators, told Tribune Business that the industry will have “to roll with the punches” after the government reintroduced the PCR test requirement for all non-vaccinated travellers leaving New Providence, Grand Bahama and Eleuthera/Harbour Island. 
• He said the measures, brought in to counter the latest spike in COVID-19 cases that is threatening to overwhelm the public health system, will “certainly have an impact” on domestic aviation operators and the wider industry through “minimizing to some degree the traffic potential”. 
• The reintroduction of the COVID-19 PCR test requirement will raise travel costs, and the associated bureaucracy and red tape, for non-vaccinated passengers and may discourage them from travelling. Tribune Business yesterday received a video, said to have been filmed in Exuma at 10.35am yesterday, of around 30-40 persons sitting on a hillside in Exuma waiting to receive a COVID test so they can travel.

(Source: The Tribune)

• July 2021’s Purchasing Managers’ Index (PMIs) readings indicate that private sector activity lost further momentum in the US, UK and Japan, but not in the Eurozone.
• Despite remaining high by historical standards, the flash composite PMI for the US and the UK fell for a third consecutive month in July, dropping to 59.7 and 57.7 respectively, from 63.7 and 62.2 in June. Supply constraints (both labour and materials), rising infections and subdued customer demand were reported by US and UK businesses as the main factors weighing on private sector activity. Japan’s flash composite PMI fell further below the 50-mark that separate expansion from contraction, a sign that the economic recovery has lost further traction.
• By contrast, the indicator for the Eurozone rose to its highest level since July 2000, coming in at 60.6, an indication that growth may not have peaked yet although it is expected to in the coming months, especially if the resurgence of COVID-19 cases prompts governments to tighten mobility restrictions to stem the spread of the Delta variant.  

(Source: Fitch Solutions)

• U.S. consumer confidence improved for a sixth straight month in July to a fresh pandemic high as Americans grew more optimistic about current business and labour market conditions. The Conference Board’s index rose to 129.1 from a revised 128.9 reading in June, according to the group’s report Tuesday. Economists in a Bloomberg survey had called for a decline to 123.9. 
• The survey indicated that inflation expectations eased slightly though it remained elevated while buying plans strengthened. 
• The confidence gauge is nearing pre-pandemic levels, suggesting that consumers are growing more upbeat as economic activity resumes. Even so, concerns about rising consumer prices and the delta variant have climbed in recent weeks, which could weigh on sentiment in the coming months. 
• The Conference Board’s gauge of current conditions rose to 160.3, also a fresh pandemic high. The share of consumers who said jobs were “plentiful” increased to a 21-year high. Consumers’ view of present business conditions also improved slightly. Economic expectations were little changed. 
• “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. 
• Consumers said they were more likely to purchase cars, homes and major appliances in the next six months. The share of consumers who plan to buy appliances was at the highest level since the end of 2017.The report precedes the government’s first estimate of second-quarter gross domestic product on Thursday, which is forecast to show that personal consumption grew an annualized 10.5%.

(Source: Bloomberg)