• Creditors holding Ecuador's sovereign debt issued a statement on Friday saying they commended to the government for its approach to restructuring $17.4Bn worth of bonds, but the terms need to be improved and strengthened for the equal treatment of all investors.
• The statement was issued by two groups of investors. The Steering Committee (SC) for more than 25 global institutional investors who hold various sovereign bonds is being advised by BroadSpan Capital and UBS, while the ad hoc group of investors who hold Ecuador 2024 notes is being advised by Quinn Emanuel Urquhart & Sullivan LLP.
• Finance Minister Richard Martinez said in a press conference on July 6^th that, existing debt capital would be reduced to $15.8Bn from $17.4Bn; interest rates would come down to an average of 5.3% from 9.2. Maturities are to be lengthened 12.7 years on average from 6.1 years on average. This will be done by extending the maturity of some bonds to 2040. Currently, the longest maturity is 2030.
• A grace period was achieved both for capital and interest payments so for the next five years, Ecuador will not make any capital payments.

(Source: Latinfinance)

• Fitch Solutions has reduced its global growth forecast slightly since its June publication, and now anticipates a contraction of 3.9% for the global economy (from 3.6% previously). This change is largely on the back of revisions to economic growth in countries such as Belgium (-8.0%), the UK (-7.7%), South Africa (-7.0%), Thailand (-5.4%), Poland (-4.1%) and Australia (-3.3%).
• However, the agency does note several risks to this view. Firstly, the return to normality looks quite difficult given the second waves of infections. While they may not result in blanket lockdowns, the authorities in China and the US have imposed multiple localized lockdowns, while Australia has closed its internal borders to stop the spread of the infection. This suggests that the return to normality might prove to be quite challenging, which could sap momentum from the nascent recovery.
• Secondly, another wave of infections and a weak pace of recovery could result in a second wave of layoffs by businesses, since profitability would remain under pressure. This in turn could keep unemployment elevated for a sustained period, which would be negative for private consumption and headline growth.

(Source: Fitch Solutions)

• Britain’s economy could shrink by more than 14% this year if there is lasting damage from the coronavirus, a scenario that would push government borrowing to nearly half a trillion dollars, budget forecasters said on Tuesday.
• The base scenario, with only moderate long-term damage, showed a 12.4% fall in output, with a 14.3% decline if the scarring is deeper. In the downside scenario, borrowing in the current financial year could hit £391Bn ($490Bn), and in the upside scenario- £263Bn, with output falling 10.6%.

(Source: Reuters)

• State Minister for Industry, Commerce, Agriculture and Fisheries, Hon. Floyd Green, says the Government is committed to supporting farmers during the coronavirus (COVID-19) pandemic and safeguard the country’s food security.
• He noted that among the initiatives implemented was a $240 million stimulus package to purchase excess fruits and vegetables from those farmers, who lost their markets, largely due to the closure of hotels as a result of the pandemic.
• “There was significant demand and the access is what caused the breakdown in the supply chain so we had to help farmers to get through this period and also still be able to plant,” he noted.
• Green cited the additional $1billion that has been allocated to the Ministry’s Productivity Incentive Programme (PIP) for this financial year, to assist small farmers, as further indication of the Government’s intent to strengthen the country’s food network.

 (Source: JIS)

• Barbados’ economy is expected to contract in 2020, as previous quarantine measures limit private consumption and a global recession reduces demand for Barbadian exports.
• The persistence of global cases will impede the pace of a domestic recovery, despite the reopening of the local economy and resumption in tourism activity.
• Fitch Solutions maintains its 2020 real GDP forecast for Barbados of -4.1% y-o-y, with risks weighted to the downside.

(Source: Fitch)

• The El Salvadoran economy is expected to contract substantially in 2020 as strict lockdowns measures continue to undermine private consumption and a sharp recession in the US weighs on remittance inflows and exports.
• Fitch solutions has revised its 2020 real GDP growth forecast to -6.2% y-o-y, from -2.5% previously, due to delays in lifting coronavirus restrictions in El Salvador and the continued spread of the disease in the US.
• Risks to the forecast remain weighted to the downside, as a substantial worsening of the outbreaks in El Salvador or the US would further delay the recovery in economic activity.

 (Source: Fitch)

• Japan’s economy will shrink at the fastest pace in decades in the year through March 2021, forcing the government to compile another stimulus package to cushion the blow from the coronavirus pandemic, a Reuters poll showed on Friday.
• The world’s third-largest economy is forecast to contract 5.3% this fiscal year, a July 3-9 poll of over 30 economists shows, the most it has shrunk since comparable data became available in 1994. It will rebound 3.3% next year, according to the poll.
• The economy will grow at an annualized 10.0% pace in the current quarter of the calendar year 2020 after having shrunk 23.9% in the second quarter ended June, the poll shows.

 (Source: Reuters)

• The U.S. Federal Reserve’s holdings of bonds and other assets shrank for a fourth straight week, sliding below $7 trillion, and use of one key emergency liquidity measure dropped to zero in the latest sign that financial stresses that erupted early in the coronavirus pandemic have eased.
• The Fed’s total balance sheet size declined by about $88 billion to $6.97 trillion as of July 8 versus $7.06 trillion a week earlier, data released on Thursday by the central bank showed.
• It was the largest weekly drop in more than 11 years, and the main driver was the balance of outstanding repurchase agreements - or repos - which fell to zero from $61.2 billion a week earlier. It was the first time in 10 months that banks have not tapped the Fed for this key source of short-term funding.

 (Source: Reuters)

• Before the advent of COVID-19, following significant fiscal and economic reforms, the Jamaican economy was characterized by macroeconomic stability evidenced by a substantial reduction in the debt to GDP ratio, 19 consecutive quarters of economic growth and a record low unemployment rate of 7.2 per cent.
• The Covid-19 pandemic has negatively impacted Jamaica. Containment measures taken globally and locally, to slow the spread of the coronavirus brought economic activity to a halt and resulted in significant falls in economic output. The adverse impact of the pandemic included reduced inflows of foreign exchange, declines in government revenues, and an increase in unemployment.
• PIOJ anticipates that Real GDP will recover within two to four years, and Employment levels within one to three years. It is not anticipated that the economic recovery from COVID-19 will be as long as the recovery period following the global economic recession in 2008-2009, given the relative strength of the Jamaican economy and the stimulus packages implemented both locally and globally.
• From the Government of Jamaica’s preliminary review of the development targets under Vision 2030 Jamaica– National Development Plan, it is anticipated that based on projections for the Jamaican and wider global society and economy, there will be slippages achieving the targets in several indicators.  Jamaica remains committed to pursuing the long-term goals, articulated in Vision 2030 Jamaica– the avenue through which the SDGS are implemented.

 (Source: PIOJ)

• Brazil’s retail sales rose more than expected as commerce started reopening in May, although they remained well below last year’s levels as a raging coronavirus outbreak continues to weigh on consumption in Latin America’s largest economy.
• Sales increased 13.9% from April, more than double what economists expected and the largest monthly jump in a series dating back to January 2000. From the prior year, sales dropped 7.2%, the national statistics agency reported on Wednesday.
• The figures reflect the reopening of some stores as public authorities ease restrictions imposed during the pandemic and also the extremely low comparison basis of April.

(Source: Bloomberg)