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COUNTRY INSIGHTS

Consumer sector metrics in China
CHINA ADVISORY · Report · 27 Jan 2021

As China moves into 2021, two key questions for the economy are: 1) Will consumer spending increase to match the gains in other sectors? 2) Will China be able to reduce the stimulus through state spending on fixed asset investment? The official data on retail sales for December 2020 and FY2020...

Japan and Russia negotiate on Arctic and food
RUSSIA / FSU POLITICS · In Brief · 26 Jan 2021

On January 15 Tokyo suggested to Moscow that the two nations collaborate on transporting goods along the Northern Sea Route (NSR), fisheries, kelp cultivation and comestible trade. The Japanese have long wanted the return of the Kurile Islands, which the USSR conquered in 1945. The Russian Consti...

Monetary Policy and Its Limits
BRAZIL ECONOMICS · Report · 26 Jan 2021

At its last meeting, the COPOM deleted the forward guidance – the commitment to keep the SELIC rate at 2% for an extended period – meaning that as soon as deemed necessary, the monetary authorities will proceed with monetary normalization. The current directors of the Central Bank have given stro...

Weathering the storm
CENTRAL AMERICA · Report · 26 Jan 2021

In El Salvador, we continue to perceive calm political conditions, a month before legislative and municipal elections. Despite serious fiscal problems, now aggravated by the pandemic, the absence of discussion of hot topics related to fiscal adjustment amazes us. As we’ve said in previous reports...

Finance Minister Ignacio Briones resigned
CHILE · In Brief · 26 Jan 2021

As expected, Finance Minister Ignacio Briones resigned on Tuesday to launch a presidential run. Briones’ political skills and common touch made him a valued addition to the government in the aftermath of the 2019 protests. His popularity has made him a natural choice as a presidential candidate f...

No policy change out of today's Monetary Council meeting.
HUNGARY · In Brief · 26 Jan 2021

The regular monthly rate-setting meeting of the Monetary Council today has resulted in a no-policy-change decision. Moreover, there has been very little novelty in the Council's statement as well, as that mostly repeated, or referred to, the MNB's recent statements, actions and predictions. All t...

Economics: Banxico shortfall adds to budget woes
MEXICO · Report · 26 Jan 2021

For months now we have warned that the 2021 budget package the government of President Andrés Manuel López Obrador proposed and ultimately passed last fall was marred by unrealistic revenue projections predicated on a similarly optimistic estimate of how much the Mexican economy is likely to gro...

Politics: The militarization of AMLO’s government
MEXICO · Report · 25 Jan 2021

The bizarre chain of events beginning with the arrest of Mexico’s previous minister of defense last October at Los Angeles International Airport, his subsequent release after US officials dropped charges to allow Mexico to prosecute the case, and his recent exoneration by Mexico’s Federal Attorne...

The Russian industry contracted by 2.9% in 2020, as the OPEC+ deal pulled mining down while manufacturing grew moderately
RUSSIA ECONOMICS · In Brief · 25 Jan 2021

The contraction in 2Q20 and 3Q20 (by 6.7% and 4.8% y-o-y, accordingly) was deeper. After the initial shock caused by the pandemic in 2Q20, production was catching up almost all across the board. Mining was still down by 8.4% y-o-y in 4Q20 (and by 7.0% in 2020 as a whole). Manufacturing was up by ...

The risk of institutional instability and other weekly topics
BRAZIL POLITICS · Report · 25 Jan 2021

This is the last week of the parliamentary recess. Candidates for the presidencies of the House and Senate should intensify their movements in the final leg of the campaign. In São Paulo, new restrictive measures are in effect to contain the spread of COVID-19 in the state. Unemployment data (Cag...

BoI FX purchases expected to neutralize positive shekel fundamentals
ISRAEL · Report · 25 Jan 2021

We view the BoI's committed FX purchases of 30bn USD in 2021 as significant, and basically neutralizing the CA surplus and net FDI. Recent economic indicators for the end of December and January point to deceleration due to the tightening of the lockdown. The upbeat development is the rapid vacci...

BoI FX purchases will most likely neutralize positive shekel fundamentals
ISRAEL · In Brief · 24 Jan 2021

We see the FX purchases neutralizing the CA surplus and net FDI. 2020 was an exceptional year with the CA surplus and FDI estimated at 40bn USD (double FX intervention of 21bn). We note that not all of the real inflows reach the FX market. Higher energy prices and a likely return of tourism in 2H...

Not much to write home about
TURKEY · Report · 24 Jan 2021

Despite the next domestic elections being two-and-a-half years away, and AKP-MHP showing no interest in early elections, Turkish politics is turning chaotic. We try to make sense of the rapidly changing dynamics, but confess that our explanations are subject to a wide band of error. It seems Pres...

Over 3000 arrested in protests for Navalny
RUSSIA / FSU POLITICS · In Brief · 24 Jan 2021 · 1 response

On January 23 large scale demonstrations erupted in several Russian cities. People demanded the release of anti-corruption campaigner Alexei Navalny. Social media platforms had posts advertising these protests taken down by the government.Navalny returned from Germany last week where he recovered...

US proposal on START appreciated by Moscow
RUSSIA / FSU POLITICS · In Brief · 22 Jan 2021

On January 20 the American suggestion to prolong the present nuclear arms control treaty was welcomed by Russia. START runs out on February 5. This is an unusual example of the two countries seeing eye to eye. The US suggested that the treaty be extended by 5 years, which Russia previously sugges...

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