Country Insights

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Domestic Investment Booms amid Scarce FDI: Agriculture and State Investment Drives Growth
UKRAINE - Special Report 22 Mar 2017
In 2016, investment in fixed assets began to recover quickly, growing +18.0% y/y through the year, with 2H 2016 especially strong. More specifically, investment in fixed assets increased 27.2% y/y in 3Q 2016 and 20.8% y/y in 4Q 2016. All this happened amid a meager ...

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The Current Account Deficit Contracts in 2016
SOUTH AFRICA - Market Brief 22 Mar 2017
Following an increase during the third quarter of 2016 (to 3.8% of GDP), the deficit on the current account narrowed markedly during the fourth quarter of 2016 to register 1.7% of GDP. In a similar manner, the current account deficit for 2016 as a whole declined to ...

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Lenin Moreno leads electoral polls
ECUADOR - Note 22 Mar 2017
Four pollsters published electoral forecasts yesterday and all of them give an advantage to the official candidate Lenin Moreno that is around 4% to 5% of valid votes. The trend, however, seems to favor Moreno which makes it quite difficult for Lasso to turn this re ...

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After the National People’s Congress
CHINA FINANCIAL - Monthly Report 21 Mar 2017
Special points to highlight in this issue: • There have been many arguments proffered over the past several years in favor of both depreciating and stabilizing the RMB and in favor of both raising and lowering Chinese interest rates. • From a purely economic poi ...

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A Sleepy Summer
CHILE - Monthly Report 21 Mar 2017
The economy was off to a better-than-expected start in 2017. In the 12 months to January, the Monthly Index of Economic Activity (Imacec) expanded 1.7%. Yet activity is still weak. Correcting for the number of business days, the Imacec in January grew by a modest 1. ...

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Week of March 20
BRAZIL POLITICS - Weekly Trends 20 Mar 2017
The government will announce cuts to the Federal Budget and will indicate the need for tax increases to meet the year’s R$ 130 billion deficit target. The requests for inquiries presented by General Prosecutor of the Republic Rodrigo Janot will be received by the ra ...

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The GDP Gap and the Behavior of Potential GDP
BRAZIL ECONOMICS - Market Brief 20 Mar 2017
Why has inflation been falling? The explanation rests in the combination the power of monetary policy, whose effects can be belated, but will not fail to occur, and the large and persistent negative output gap. Not only is the unemployment rate now below the NAIRU ( ...

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The Surplus Budget Is Back in Early 2017
HUNGARY - Monthly Report 19 Mar 2017
Following a massive spending campaign in December, the central government’s cash budget turned back into a seasonally unjustified, significant surplus in the first two months of 2017. The monthly surplus of February was especially notable, as it had no precedent in ...

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Political and Economic Update
TURKEY - Weekly Trends 19 Mar 2017
There was dearth of new branded polls last week, which is rarity for Turkey. Several pollsters commented that because of the high ratio of undecideds they have chosen not to publish results.Less reliable evidence confirms our finding that the race is a dead heat. We ...

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The IMF shifts Executive Board meeting on Ukraine
UKRAINE - Note 19 Mar 2017
Interesting turn of events. Just one day before the IMF Executive Board meeting on Ukraine, scheduled previously on March 20th, the meeting was cancelled. Finance Ministry immediately published explanation claiming that the IMF requested estimates of macro-economic ...

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PRI Electoral Dilemmas
MEXICO - Weekly Trends 16 Mar 2017
The PRI’s recent celebration of its 88th anniversary embodied all the organization’s existential woes as it heads into a crucial showdown in the State of Mexico and prepares for the 2018 presidential elections. One of the most uninspired, disorganized and poorly att ...

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Mixed Data on Consumption
MEXICO - Weekly Trends 16 Mar 2017
Private consumption grew at a real 12 month rate of 3.3% during 2016, the strongest percentage increase since 2012 and an extension of a growth trend dating back to 2015. The report also reaffirmed this demand component’s role as the Mexican economy’s main growth dr ...

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Dominguez’s tax reform?
PHILIPPINES - Note 16 Mar 2017
When President Duterte was asked in Tuesday’s press briefing whether he supported the tax reform bill, his answer was an unequivocal “Yes.” When pressed further about whether he also supported the increases in excise taxes on oil and automobiles embedded in the Depa ...

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More “Temporary” Tightening, As Expected
TURKEY - Market Brief 16 Mar 2017
The Monetary Policy Committee raised the Late Liquidity Window (LLW) rate by 75 bps today, to 11.75%, while keeping all other short term rates intact (see chart). The move, which is a compromise of sorts -- because it raises rates temporarily through liquidity opera ...

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Official Ban on Cargo Traffic with Donbas
UKRAINE - Note 15 Mar 2017
Forceful dismantling of one of the block-posts, which prevented coal supplies from Donbas, triggered quite dangerous developments. Few parliamentary parties Samopomitch (led by Mayor of Lviv Andriy Sadovyy) and UKROP (funded by oligarch Igor Kolomoyskiy) made very h ...