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COUNTRY INSIGHTS

Fiscal and Monetary Effects of the COVID-19 Outbreak: First Estimates
BRAZIL ECONOMICS · Report · 20 Apr 2020

To defend against the economic effects of the pandemic, all countries – including Brazil – have been expanding public spending on health and income transfers to less advantaged people. This is a fully justifiable fiscal expansion, above reproach. In the Brazilian case, the country’s fiscal situat...

The Indian economy: Taking stock and looking forward
INDIA · Report · 20 Apr 2020 · 1 response

The early evidence about the impact of Covid-19 upon the economy is now visible. The leading indicator of business cycle conditions dropped from -2.2% in Oct-Dec 2019 to -39.9% in Jan-Mar 2020. The employment rate dropped from 40% to 27% in the lockdown. Indexes of consumer sentiment show an unpr...

Lower rental prices will push inflation negative
ISRAEL · Report · 20 Apr 2020

In March, inflation (0.0% y/y) surprised slightly on the upside as housing rental prices increased by 2% y/y. Looking ahead, we expect inflation to reach -0.3%, with housing prices expected to decline on weaker demand and growing inventory. The BoI appears committed to maintaining low yields by p...

The Se7en Weeks Theory
TURKEY · Report · 19 Apr 2020 · 2 responses

Health Minister Mr. Fahrettin Koca expects Turkey to wrap the epidemic up in about seven weeks. While this is not so unreasonable based on the declining case numbers, several tail risks ought to be kept in mind. We review evidence that the epidemic may not be that easy to tame. One piece of ne...

Declining rental prices will support deflation
ISRAEL · In Brief · 19 Apr 2020

Highlights of our weekly macro report:The Bank of Israel research dept. expected GDP growth to decline by 5.3% this year (while the IMF sees -6.3%) but increase by 8.7% in 2021. This assumes: PC will decline by 5.0%, investments by 11% and exports by 15%. Public consumption will increase by 5%. U...

Aeroflot stops selling tickets for foreign flights
RUSSIA / FSU POLITICS · In Brief · 19 Apr 2020

On April 17 Aeroflot the Russian national airline declared a moratorium on selling tickets on international flights. This will last till August 1 at least. Coronavirus is galloping in Russia with the 8th consecutive record breaking daily increase in cases on April 17. The government banned all fo...

Russian Central Bank hints at rate cut
RUSSIA / FSU POLITICS · In Brief · 18 Apr 2020

On April 17 the Russian Central Bank (CBR) offered an inkling that it will reduce interest rates. The Governor of the CBR said that a cut would be on the agenda at the board's meeting on April 24. Easing monetary policy is one possible strategy to help boost the economy she said. They key rate is...

Russia makes citizenship easier to obtain
RUSSIA / FSU POLITICS · In Brief · 18 Apr 2020

On April 17 the Russian Parliament passed a law reducing the residency to attain Russian citizenship to 5 years. The spouses and children of Russian citizens will not have to wait at all. Dual citizenship is now permitted for those seeking to acquire Russian citizenship. This will have an effect ...

GULF WEEKLY: Oil falls, Saudi issues $7bn, March data drips out and forecasts are bleak
GULF COUNTRIES · Report · 17 Apr 2020

The weekly is a skimmable summary of key developments by country, overlaid with our analysis, the outlook and links to further information. Headlines include: * Despite OPEC+ finalizing its cuts, Brent oil fell back to $28 amidst a 29m b/d demand shock. * The World Bank and IMF released forec...

Teich takes over as Minister of Health amid political friction
BRAZIL POLITICS · Report · 17 Apr 2020

Nelson Teich took office today as the new Minister of Health. He replaces Luiz Henrique Mandetta. In his speech after taking office, Teich, without giving further details about his action plan to combat the coronavirus, said that the Ministry´s activities will be focused on people. For the time, ...

Ukrainian 2020 Budget
RUSSIA / FSU POLITICS · In Brief · 17 Apr 2020

On April 13 the Ukrainian Parliament passed its 2020 budget. This anti-crisis budget is predicated on the following predictions: 3.9% drop in GDP, 8.7% inflation and 9.4% unemployment. The deficit will probably increase threefold to USD 11 billion.The Ministries of Health will get an increase of ...

The Q1 fiscal balance number is out, and it is not very nice
HUNGARY · In Brief · 17 Apr 2020

The central government's cash deficit reached HUF 832bn or 7.2% of GDP in Q1, sharply up from HUF 142bn or 1.3% of GDP one year earlier. At this point, only partial information is available, the detailed figures are due in two weeks' time.Note: Data in HUF bn; Sources: Finance Ministry, KSH, own ...

​Russia’s pandemic update: CBR hints rate may be cut next week
RUSSIA ECONOMICS · In Brief · 17 Apr 2020

Today, the CBR Chairperson Mrs. Nabiulina made several statements during her press-conference, which seem to be supportive for the ruble bond market. In particular, she mentioned that the base case scenario for the next Board of Directors meeting would be a potential key rate cut, and the size of...

Q1 GDP growth was down nearly 10% from last quarter
CHINA FINANCIAL · Report · 17 Apr 2020 · 1 response

Special points to highlight in this issue: • The terrible first quarter numbers that China posted were not unexpected. What did interest me was to try to understand the extent of the increase in household savings available for what Chinese social media has taken to calling “revenge” consumption....

External committee of the fiscal rule activates countercyclical spending clause
COLOMBIA · In Brief · 17 Apr 2020 · 1 response

The external committee of the fiscal rule met on April 16th to review the fiscal situation in the context of the COVID-19 pandemic. There was great expectation around the outcome of this meeting, as the government has been forced to make decisions with considerable fiscal implications on the fly,...

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