Country Insights

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It is high time to change the course of MNB policy
HUNGARY - Report 15 Mar 2019
The uptrend of consumer inflation continued at an accelerated pace in February. CPI-inflation now exceeds the MNB’s medium-term target by all existing measures, including core inflation adjusted for indirect tax changes, the central bank’s favorite index. Importantly, inflation rose in the face o...

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How to think about Chinese medium-term growth prospects
CHINA FINANCIAL - Report 15 Mar 2019
Special points to highlight in this issue: • China’s two national political sessions last week set off a largely expected series of announcements and a huge amount of analysis, with nothing fundamentally changing. Beijing still faces the same constraints and the same set of adjustment scenarios....

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Private credit for state ends
CHINA ADVISORY - Report 15 Mar 2019
China is quietly privatizing much of its debt due to an increasing shortage of domestic capital. This will have several outcomes: * A rise in off-balance sheet financing. * An increasing division between state firms that obtain state capital and local infrastructure and private companie...

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High speed rail to Nizhny Novgorod needs finance
RUSSIA / FSU POLITICS - In Brief 15 Mar 2019
Prime Minister Medvedev ok'd the first part of the enlarged Moscow-Nizhny Novgorod high speed rail line. President Putin will have the final say though. This rail line is unlikely to make a profit. It will cost USD 9.5 billion. Only USD 3 billion dollars will come from Russian Railroads and the f...

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Most CCJ members support the government
BRAZIL POLITICS - Report 14 Mar 2019
​The Constitution and Justice Committee of the Lower House was installed on Wednesday, March 13, and has 66 members and an equal number of alternates. It will be responsible for analyzing the constitutionality of the Pension Reform proposal. This is the first stage of proceedings in the Lower Hou...

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Growth target downgraded
PHILIPPINES - In Brief 14 Mar 2019
Yesterday, economic managers downgraded their GDP growth target for 2019 from 7-8% to 6-7%, blaming the continuing delay in the passage of the national budget. The budget, which was supposed to have been transmitted for the President’s signature early this month, hit an unexpected snag when the S...

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Russian-Venezuelan bank under sanctions
RUSSIA / FSU POLITICS - In Brief 13 Mar 2019
On March 11 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Evrofinance Mosnarbank for its “assistance” to PDVSA and to the Maduro regime. However, the only example cited in the press release refers to the oil-backed cryptocurrency Petro. According to the ...

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Election fever, with Zelenskiy ahead; Hryvnia strong
UKRAINE - Report 13 Mar 2019 1 response
Election madness reigns in Ukraine, with nearly every day bringing a new shocking headline. The Constitutional Court has dropped the “illicit enrichment” provision; a defense procurements scandal has blown up; a decree raising natural gas rates has been rescinded -- and more. Against this wild...

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The government is proposing to make household bonds free of the income tax
HUNGARY - In Brief 13 Mar 2019
The finance minister yesterday handed in a proposal to the National Assembly, according to which the interest earned from household bonds, the special kind of government debt that is only available to domestic individuals, would be free of the flat 15% income tax, as regards any new series of suc...

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Coming soon: monetary easing
PHILIPPINES - In Brief 12 Mar 2019
In a one-on-one interview with the country’s best-known business journalist on television, the new BSP Governor Benjamin Diokno noted that falling local inflation plus the more dovish stance of developed economies’ central banks provide room for monetary easing, especially following last year’s 1...

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Vizcarra's new cabinet
PERU - In Brief 11 Mar 2019
A new cabinet was sworn in today after Premier Villanueva’s resignation.The new Premier is Salvador del Solar, who was Minister of Culture during Pedro Pablo Kuczynski’s tenure. Mr del Solar is an actor and film director, and is also a lawyer who studied international relations in the US. Seven n...

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Pemex accelerates its fall in 4Q2018
MEXICO - Report 11 Mar 2019
Pemex’s fourth quarter results surpassed the worst fears as to how quickly the company is being driven operationally and financially into the ground, pulling public finance along with it. Following decades in which the government treated the oil company as a cash cow with which to plug budget hol...

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Slow recovery and the impulse from the Pension Reform
BRAZIL ECONOMICS - Report 11 Mar 2019 1 response
In the projections formulated here we assume that a pension reform near the original version proposed by Minister Guedes will be approved, creating the necessary conditions, in the second half of the year, for the Central Bank to administer an additional monetary stimulus dose, cutting the SELIC ...

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Pension Reform negotiation tools and other weekly topics
BRAZIL POLITICS - Report 11 Mar 2019
The CCJ should be installed in the Lower House, the first step for Pension Reform. Lower House President Rodrigo Maia meets with party leaders to define a voting agenda for the semester. Economy Minister Paulo Guedes speaks to the Senate about the Pension Reform proposal. President Bolsonaro meet...

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When, and under what conditions, can the SELIC rate be reduced?
BRAZIL ECONOMICS - Report 11 Mar 2019
In face of the an extremely slow cyclical recovery and inflation below the target, soon enough we will hear clamors for a new monetary easing cycle. Curiously, there is clear evidence that the current SELIC rate is already providing a good dose of monetary stimulus. As we showed in our report of ...