• While second quarter (Q2 2025) Gross Domestic Product (GDP) data were weaker than expected, Fitch Solutions has maintained its growth forecast for 2025 at 1.4%, with the Q2 data not moving the needle on its outlook. Additionally, the weak Q2 growth figure is expected to have little impact on the Bank of Canada’s (BoC) interest rate calculus, given the strength of the economy. This leaves Fitch’s expectation that the BoC will lower the policy rate by 50bps by year-end 2025 intact.
• Canada’s real GDP contracted 0.4% quarter over quarter (QoQ) in Q2 2025 for a drop of 1.6% on an annualised basis, falling more than the consensus expectation of a 0.7% contraction. The lacklustre Q2 real GDP print was driven by deteriorating trade dynamics, with exports falling significantly (-7.5%), driven by contractions in both goods (-9.2%) and services (-1.4%) exports. Additionally, business investment fell for a second straight quarter, contracting by 0.6% on the back of heightened business and trade uncertainty, with a notable drop in machinery and equipment investment, which fell 9.4%.
• However, the downbeat headline growth figure masks a more resilient domestic economy. Final domestic demand grew by 0.9% in Q2, recovering from a weak -0.2% in Q1 and driven primarily by strong household consumption growth. Additionally, residential investment grew by 1.5% in Q2, up from -3.2% in Q1, contributing 0.12pp to the headline growth rate and offsetting the weakness seen in business investment that subtracted 0.11pp from the Q2 figure.
• Looking ahead, while a trade deal with the United States (U.S.) remains elusive, uncertainty in the trade relationship will continue to ebb, with Canada removing many of its reciprocal tariffs on U.S. goods and existing U.S. tariffs on Canadian goods only applying to a small subset of non-USMCA-compliant goods.
• Finally, with Fitch expecting both looser fiscal and monetary policy through the end of the year, the agency remains relatively upbeat that the Q2 contraction will be followed by steady, albeit uninspiring, growth. Of note, advance estimates of July’s growth figure show a 0.1% increase, with wholesale trade, real estate, and mining showing signs of strength, underpinning Fitch’s expectation of modest, but positive, growth in the second half of 2025 (H2 2025).

(Source: BMI, a Fitch Solutions Company)

• The Environmental Protection Agency (EPA) on Tuesday, September 9, 2025, proposed new measures aimed at speeding the construction of infrastructure needed for the rapid buildup of data centres for artificial intelligence that would enable companies to start building before obtaining air permits.
• The proposal comes six months after the EPA announced an initiative called Powering the Great American Comeback that prioritised the agency's focus on rapidly building power generation to meet soaring demand from data centres. “For years, Clean Air Act permitting has been an obstacle to innovation and growth,” EPA Administrator Lee Zeldin said. “We are continuing to fix this broken system."
• The EPA proposal will redefine the pre-construction requirements for power plants, manufacturing facilities and other infrastructure to enable companies to start some construction that is not related to air emissions prior to obtaining Clean Air Act construction permits.
• The Trump administration has been focused on winning the race to rapidly develop and scale up the use of AI across the United States (U.S.) and has already launched a package of executive actions aimed at boosting energy supply to power its expansion.
• Top economic rivals, the United States and China, are locked in a technological arms race to secure an economic and military edge. The huge amount of data processing behind AI requires a rapid increase in power supplies that are straining utilities and grids in many states. The Clean Air Act's New Source Review program will not allow construction of major facilities before they obtain air permits.
• Under the Trump administration, the EPA has launched what it calls the largest deregulatory actions in the agency's decades-long history, including a move to repeal the scientific and legal underpinning for regulating greenhouse gas emissions that most scientists and environmentalists agree is driving climate change.

(Source: Reuters)

• Scotia Group Jamaica Limited (SGJ) reported a marginal 1.8% year-on-year (YoY) increase in net profit of $5.55Bn for the third quarter ended July 2025 (Q3 2025). The relatively flat earnings reflect higher cost growth, which outpaced revenues.
• SGJ’s revenue grew 8.7% to $16.25Bn YoY. This growth was driven by improved performance across all business segments.
• Net interest income after expected credit losses rose by 7.1% to $11.77Bn, amid continued momentum across the bank’s core lending engines. Mortgage loans led the charge with a 22.0% surge, while consumer lending, through the Scotia Plan portfolio, grew 17.0%.
• Net insurance revenue rose 22.7% to $0.74Bn, driven by strong performance across the groups insurance subsidiaries. Scotia Jamaica Life Insurance Company’s (SJLIC’s) net insurance business revenue rose 6%, alongside an 8% rise in gross written premiums. Meanwhile, Scotia General Insurance Agency (SGIA) also delivered strong results, with gross written premiums up 65% and policy sales increasing 57% year-over-year, underscoring robust demand and effective distribution in the general insurance segment.
• Additionally, the group’s fee and commission income rose 13.8% to $1.91Bn and net gains on foreign currency activities rose 10.6% to $2.52Bn.
• Notwithstanding the healthy 8.7% revenue growth, operating expenses grew faster at 14.9% to $8.16Bn largely reflecting a 16.9% increase in salaries and staff benefits and a 14.2% increase in other operating expenses. Management pointed to increased billings and technology investments as they focus on improving digital capabilities for clients. While the cost-to-income ratio rose during the quarter due to front-loaded expenditure, these initiatives could deliver long-term productivity gains and strengthen cost discipline over time.
• While Q3 earnings growth was relatively subdued, for the nine months it increased by 5.5%, supported by strong performance in the first quarter.
• SGJ’s stock price has increased by 2.4% year-to-date, closing at $54.84 on Monday, September 8, 2025. At this price, the stock is trading at a price-to-book (P/B) ratio of 1.16x, which is in line with the Main Market Financial Sector’s average of 1.19x

(Source: JSE & NCBCM Research)

• The Jamaica Stock Exchange (JSE) has announced the appointment of Mr. Livingstone Morrison, OD, as its new Chief Executive Officer, effective September 8, 2025. Mr. Morrison succeeds Dr. Marlene Street Forrest, CD, who is retiring after more than two decades of exceptional and transformative leadership.
• Mr. Morrison brings to the role a distinguished record of executive leadership and regulatory expertise within the Caribbean’s financial sector. He most recently served as Advisor to the Governor of the Central Bank of Belize and previously held the position of Deputy Governor at the Bank of Jamaica for over a decade. A Chartered Accountant, he is also a former Deputy Chairman and Director of the JSE and served as Chairman of its Regulatory & Market Oversight Committee.
• The Board acknowledges the trailblazing leadership of Dr. Street Forrest, who joined the Jamaica Stock Exchange (JSE) in 2000 and was appointed Managing Director in 2017, following thirteen (13) years of distinguished service as General Manager. In recognition of her exceptional contribution to the development of Jamaica’s capital markets, Dr. Street Forrest will be conferred with the prestigious Order of Jamaica on October 20, 2025. This national honour affirms her visionary leadership and enduring impact on the nation’s financial landscape. She was previously conferred with the Order of Distinction (Commander Class) in 2016 for her outstanding role in advancing the growth of the JSE.
• Her legacy is marked by transformative achievements, including the demutualisation of the Exchange, the establishment of the Junior Market, the modernisation of trading platforms, and the expansion of investor access and participation. Under her stewardship, the JSE was twice recognised by Bloomberg, in 2015 and 2018, as the world’s best-performing stock exchange.

(Source: JSE)

• Brazilian President Luiz Inacio Lula da Silva said on Monday that more trade and financial integration among the BRICS group of developing nations would help mitigate the effects of protectionism.
• A virtual meeting, which lasted 1-1/2 hours, brought together leaders from Brazil, Russia, India, China, South Africa, Egypt, Indonesia, Iran, the United Arab Emirates, and Ethiopia, Brazil's government said. The group discussed the risks posed by the resurgence of unilateral measures, particularly in international trade, and explored ways to strengthen mechanisms for solidarity, coordination, and trade among BRICS nations.
• The 50% levies on most Brazilian exports are linked to U.S. trade measures affecting Brazil. U.S. tariffs on Indian goods were doubled last month to as high as 50% in response to India's continued imports of Russian oil. India's Prime Minister Narendra Modi noted that increasing barriers and complicating transactions would not help, nor would the linking of trade measures to non-trade matters, according to a speech shared by India's Foreign Ministry.
• Chinese leader Xi Jinping said during the meeting that certain countries had launched trade and tariff wars, impacting the world economy and international trade rules.

(Source: Reuters)

• Guyana's Irfaan Ali of the People's Progressive Party on Sunday was sworn in for a second term as president of the oil-rich South American nation after his victory was ratified by the electoral commission.
• Having channelled revenues from the country's relatively recent oil wealth into popular social programs, Ali vowed on Sunday that he would build a diversified economy that would create jobs, raise incomes and secure prosperity.
• In the September 1 election, the People's Progressive Party/Civic won 36 seats, three more than in the previous one, official records showed. The We Invest in Nationhood party won 16 seats, A Partnership for National Unity got 12, and the Forward Guyana Movement secured one. Ali's government, which took office in 2020, has invested in the construction of roads, schools, and hospitals, and has made tuition at the state university free.
• "Our oil and gas sector will continue to grow, expanding production and revenue for our people," Ali said. "But why stop there? We'll press forward with new exploration on a stronger production sharing agreement, ensuring that the benefits are greater, the gains are wider, and the wealth is truly for the people."

(Source: Reuters)

• August’s labour market data are broadly consistent with expectations of a gradual cooling in the United States (U.S.) labour market conditions through year-end. The unemployment rate edged up to 4.3% in August, from 4.2% in July, its highest level since October 2021, placing it on track to reach Fitch’s year-end forecast of 4.5%.
• The broader U-6 measure¹, which includes discouraged workers and those working part-time for economic reasons, also rose, reaching 8.1% from 7.9% in July. Nonfarm payrolls increased by just 22,000 in August, a sharp deceleration from (the upwardly revised) 79,000 in July. This slowdown reinforces the narrative of a cooling labour market. Job openings fell by 176,000 in July to 7.2Mn, marking the lowest level since September 2024 and undershooting market expectations of 7.4Mn.
• The continued softening of the labour market suggests that the Federal Reserve (Fed) is likely to lower the Federal Funds rate by 25bps at its upcoming meeting on September 17. Although Fitch expects that inflation will accelerate from 2.7% year-on-year (y-o-y) in July to 3.3% by December (partly due to tariff pass-through effects), the labour market appears to be deteriorating more rapidly than anticipated.
• This development appears to have shifted the Fed's balance of risks away from inflation and toward concerns over a more pronounced slowdown in economic activity. This shift was reflected in Chair Jay Powell’s August 22 speech at Jackson Hole, where he noted that “with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
• Powell’s remarks have contributed to a rally in risk assets, as markets increasingly price in a more accommodative policy path. Futures markets now fully price in at least a 25bps cut in September, bringing the policy rate to 4.25%. Moreover, markets currently price in an 80% probability of an additional cut before year-end. These market expectations are broadly aligned with Fitch’s baseline view, namely the anticipation of two rate cuts this year, beginning in September, with the federal funds rate reaching 4.00% by the end of 2025.

__________________________
¹ "U-6" refers to the U.S. Bureau of Labour Statistics' broad measure of unemployment, which includes the total unemployed, plus all marginally attached workers (those who want a job but haven't looked for one recently) and all those who are working part-time for economic reasons but want to work full-time.

(Source: BMI, a Fitch Solutions Company)

• Britain said on Monday, September 8, 2025, it could cut the number of visas granted to countries that do not accept the return of migrants with no right to remain, after talks with allies, including the United States, on how to assert more control over borders.
• Britain's new interior minister, Shabana Mahmood, said counterparts from the United States, Australia, Canada and New Zealand, a decades-old intelligence-sharing partnership collectively known as Five Eyes, agreed to the principles at a meeting in London.
• Prime Minister Keir Starmer appointed Mahmood to the role on Friday in a shake-up of his government as he faces mounting public criticism over immigration and the arrival of migrants via illegal small boat crossings. "This announcement sends a clear message to anyone seeking to undermine our border security. If you have no legal right to remain in the UK, we will deport you. If countries refuse to take their citizens back, we will take action," Mahmood said in a statement.
• S. Secretary of Homeland Security Kristi Noem, who has been a leading figure in the Trump administration's crackdown on illegal immigration, said that the countries agreed to share background information on any criminal history of migrants, and work against cartels "utilising social media and technology companies to push their message". "We need to be just as aggressive in partnering together to push back on those kinds of new developments," she told reporters on the sidelines of the meeting.

(Source: Reuters)

• On June 13, 2025, CariCRIS reaffirmed the issuer ratings of GraceKennedy Limited (GKL) at CariA for both local and foreign currency on the regional scale, and jmAA on the Jamaica national scale. The Group’s bond issue of up to J$3Bn was rated CariA (Local Currency Rating) on the regional rating scale and jmAA (Local Currency Rating) on the Jamaica national scale. A stable outlook was assigned, reflecting no immediate expectations for rating changes.
• Factors that could lead to an upgrade in ratings on GK include an improvement in the creditworthiness of the Government of Jamaica, along with stronger financial performance by GKL. Specific metrics include a profit after tax (PAT) margin of 5.5% or more, an operating profit margin of at least 7.5%, and a return on assets (ROA) above 5%, all sustained over two consecutive years. That said, for the financial year ended December 31, 2024, GK’s PAT and operating margins amounted to 5.3% and 7.5%, respectively, while ROA stood at 16.2%.
• Conversely, the ratings may be downgraded if there is a significant and sustained decline in revenue, specifically, more than 10% over two years, or if the operating profit margin falls to 5.0% or lower. Additional risks include trade disruptions or tariff increases that could cause the gross profit margin to fall below 35%.
• A decline in the parent company’s debt service coverage ratio (DSCR) to below 1.33x; an effective Debt-Service Coverage Ratio (DSCR) below 1.5x; a Debt to EBITDA ratio above 4.0x, and a deterioration in the Government of Jamaica’s creditworthiness are all factors that would negatively impact the ratings.

(Source: CariCRIS)

• Brazil's Treasury on Tuesday made its third foreign debt sale of the year, marking the first time since 2014 that Latin America's largest economy has conducted more than two external bond sales in a single year.
• The country launched a new 30-year note and reopened an existing five-year benchmark, the Treasury said in a statement, lauding the transaction as "successful" and a sign of investor confidence in its economic management.
• The operations were aimed at boosting liquidity in Brazil's dollar yield curve abroad, providing benchmarks for corporate issuers, and pre-financing upcoming foreign currency debt maturities.
• The new 30-year benchmark had a yield of 7.5%, but the Treasury said it would disclose only on Wednesday the amount raised. News service IFR reported that the transaction reached $1 billion. The reopening of the five-year sovereign bonds, meanwhile, totaled $750 million at a yield of 5.20%, the Treasury said.
• Brazil had already tapped global markets this year with a $2.5 billion sovereign bond sale in February and a $2.75 billion issue in June.

(Source: Reuters)