No agreement was reached on payroll tax relief in the Senate, Lula’s statement yesterday worried the market regarding commitment to the fiscal framework, and the CCJ may vote on the Central Bank PEC
BRAZIL POLITICS · Report · 17 Jul 2024

As expected, no agreement was reached on the compensatory measures for payroll tax relief. Consequently, the vote on the bill was postponed until August 30. According to Senate President Rodrigo Pacheco (PSD-MG), the idea is to refine the details of this issue by then. Yesterday, Lula said, “You ...

Uzbekistan's law on foreign undesirables
RUSSIA / FSU POLITICS · In Brief · 17 Jul 2024

The Uzbek Parliament will pass a law that will allow the government to ban people from entering the country who have offended Uzbekistan or deport those who have already entered. The aim of the law according to its preamble is to protect the sovereignty and territorial integrity of Uzbekistan. An...

Electioneering for 2026 starts early; economy expands into Q2 2024, and government plans for a larger fiscal deficit; we expect the BCRP to resume cuts in October
PERU · Report · 16 Jul 2024

In this report, we discuss three topics. We observe that the campaign program for the 2026 elections has been brought forward. We then explain that the economic rebound that started in April 2024 was sustained into Q2. Finally, we discuss the drivers of the decision by the Board of the Banco Cent...

Anchoring exchange-rate expectations for further inflation slowdown
ARGENTINA · Report · 16 Jul 2024

During the last few weeks there has been very good news on the course of inflation. But two sets of side effects of the stabilization policy create doubts about its sustainability: the widening of the gap between the blue-chip swap rate (CCL) and the official exchange rate (which many observers i...

The dark political web
ECUADOR · Forecast · 16 Jul 2024

The constant confrontation between the executive and legislative powers sometimes distracts attention from other developments that might have important consequences for the political stability of the country and its future. New members of the Council of Citizen Participation and Social Control...

Zelensky open to talks with Russia for first time since 2022
RUSSIA / FSU POLITICS · In Brief · 16 Jul 2024

On July 15 Zelensky said that he wants Russia delegates to attend a peace summit to be held in August 2024 probably in Qatar. Qatar and Saudi Arabia have brokered prisoner exchanges and the return of Ukrainian children taken to Russia without parental permission. Zelensky said the summit should r...

The government insists on a tax increase for companies, the Senate may vote on the payroll tax compensations bill, and a leaked audio recording worsens Bolsonaro’s legal situation
BRAZIL POLITICS · Report · 16 Jul 2024

Yesterday, after a meeting between President Lula, ministers, and government leaders in Congress, it was decided that the government will insist on an increase of up to 1% in the CSLL for companies. According to the Minister of Institutional Relations, the measure is on the table. The compensatio...

Economics: Internal credit sustains growth so far in 2024, especially in its consumer component
MEXICO · Report · 16 Jul 2024

Although it continues to grow at a fast pace in response to the momentum of consumer credit, both from bank and non-bank sources, so far in 2024 financing to the non-financial private sector is showing a slight deceleration. In contrast, external financing has been contracting since 2022 and, due...

An update to yesterday's forecast report - the MNB spoke again
HUNGARY · In Brief · 16 Jul 2024

Just as we were releasing our fresh forecast report yesterday, reports came in that the MNB spoke again, by Mr. Virág, the usual public face of the Monetary Council, appearing at a conference. He said that inflation (= the headline rate of CPI inflation) is more likely to be closer to 4% than 5% ...

Tax Reform in the Senate and other weekly topics
BRAZIL POLITICS · Report · 15 Jul 2024

This is the last week of legislative activity in Congress before the recess. The House has not scheduled a deliberative session. In the Senate, the focus is on payroll tax relief and compensatory measures. In August, there will be two weeks of concentrated voting effort in both Houses of Congress...

The economy is weak going into the Third Plenum
CHINA FINANCIAL · Report · 15 Jul 2024

Special points to highlight in this report: * The Third Plenum opened today and will go on through Wednesday. Today also saw the release of June and second quarter economic data. * Today’s data release (along with inflation and trade numbers at the end of last week) confirms trends that w...

Politics: Power grab by controversial PRI leader perceived as potential party death knell
MEXICO · Report · 15 Jul 2024

Last week PRI National President Alito Moreno of the PRI had more to say about the dwindling number of members of who continue to resist his control over the party. At a PRI leadership event from which dissidents were barred and where a unanimous show of hands waved through by-law changes to allo...

Tighter Than It Seems
BRAZIL ECONOMICS · Report · 15 Jul 2024

The labor market suggests that the economy is operating close to or, more likely, above its potential. At the same time, aggregate demand has reacted to the fiscal impulse, largely associated with income transfers, which, together with increasing labor income, maintain high consumption levels. Ad...

PM Orbán has raised the stakes again
HUNGARY · Forecast · 15 Jul 2024

In the following quarterly update of our macro forecast, a few important revisions are introduced, even though our view regarding the basic trends remains unchanged. First, the speed and intensity of the ongoing economic recovery appears to be contained by the current poor performance of the indu...

Core inflation accelerates on higher housing rental prices
ISRAEL · In Brief · 15 Jul 2024

No inflation surprises this time June’s CPI print (0.1% m/m, 2.9% y/y) came in according to market expectations (and ours as well). There were no significant surprises, although we note the acceleration of housing rental prices (OER) to 2.6% y/y from 1.9% y/y last month. This follows a downward t...