Country Insights

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Only Moderate Growth of Consumption, Despite Positive Signals
BRAZIL ECONOMICS - Report 21 Oct 2013
Growth of retail sales in the restricted sense (excluding cars and construction materials) was surprisingly strong again in August. Graph 1 shows that in the quarter through August, these sales expanded at an annualized pace of 10.5%, showing continued strong acceleration in relation to the first...

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Tariff Freeze Winners and Losers
RUSSIA ECONOMICS - Report 19 Oct 2013
Executive Summary Next year, for the first time in 15 years, the Russian government will freeze gas, electricity and rail transport tariffs. The so-called “inflation minus” formula will drastically alter the rules for setting regulated tariffs over the medium term. Although this could trigger a d...

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Battered from Many Fronts
SOUTH AFRICA - Forecast 18 Oct 2013
Executive Summary We maintain our previous forecast for subdued economic activity in South Africa over the medium-term, with inflation adjusted gross domestic product growth recording 2.0 percent in 2013 and 2.4 percent in 2014. The labor market is poised to remain weak as we expect companies to ...

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Continued Higher Remittance Growth
PHILIPPINES - In Brief 16 Oct 2013
The BSP reported today continuing above-forecast growth in remittances from Filipino workers overseas.  Personal remittances, which include transfers in cash or in kind, continued to exceed $2 billion for the fifth consecutive month in August, equivalent to a 7.4% yoy growth.  The bulk of this co...

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PKK leader Ocalan Criticizes Peace Process, but Fails to Order New Action
TURKEY - In Brief 16 Oct 2013
Despite the Id of Sacrifice, Turkish politics is in full swing.  A team of pro-Kurdish BDP representatives visited incarcerated leader Ocalan on 15 October who sounded extremely disappointed with the Reform Package and the progress of the Peace Process. Ocalan repeated his well-known demands.   M...

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Room for Improvement
MEXICO - Report 15 Oct 2013
Executive Summary The Chamber of Deputies is facing an October 20 deadline for passing its version of the 2014 Revenue Law. While no one can predict the final details of that bill, the extent of opposition to new tax proposals suggest that both the administration of President Enrique Peña Nieto a...

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Retail Sales in the Restricted and Augmented Senses with Different Behavior
BRAZIL ECONOMICS - Report 15 Oct 2013
In August, real retail sales in the restricted definition once again came as a positive surprise, with seasonally adjusted growth of 0.9% (+2.1% in July). However, sales in the augmented concept, which includes cars and construction materials, were much weaker. The 12-month rates constructed from...

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New Budget, Same Old Problems
DOMINICAN REPUBLIC - Report 15 Oct 2013
Executive SummaryAggressive tightening in September produced the desired result: interest rates stopped falling, the weakening currency rebounded to early August levels and inflation stopped accelerating. (September inflation was 0.49%; accumulated 2013 inflation through September was 3.57% and y...

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Economic Policy Changes: What is the Importance?
BRAZIL ECONOMICS - Report 14 Oct 2013
Executive Summary The Central Bank indicated there will be one more increase of 50 basis points in the SELIC rate. The 12-month forward-looking inflation expectations stand at 6.2%, and assuming a neutral real interest rate between 4% and 5%, the SELIC rate would have to be raised higher than 10....

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Political Insights: Week of October 14
BRAZIL POLITICS - Report 14 Oct 2013
In the House of Representatives, we highlight the vote on the bill to change the calculation of states’ debt. On Wednesday, Finance Minister Guido Mantega, speaks at the House of Representatives on government taxation. On Thursday, the Central Bank releases the minutes of the most recent Copom me...

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Sowing Seeds of Future Discontent
MEXICO - Report 14 Oct 2013
Executive Summary The demonstrations that held the Mexican capital in their grip for the better part of the past two months have finally died down, but for reasons that could contribute to future strife. The government wielded the proverbial political stick in mid September to drive public school...

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Has the Central Bank Increased its Degrees of Freedom?
BRAZIL ECONOMICS - Report 14 Oct 2013
At the COPOM meeting last week the Central Bank decided to raise the SELIC rate by 50 basis points, to 9.50%. This move had already been widely expected by the market, but the repetition of basically the same communiqué as issued after the previous meetings that were followed by 50-point increase...

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In Janet, We Trust
TURKEY - Forecast 13 Oct 2013
Executive SummaryAfter a difficult and volatile summer, Turkish assets were among the best beneficiaries of the tapering delays and the nomination of Janet Yellen to head the Federal Reserve, but viewing this respite as permanent, would be a mistake, in our view. With almost all the low-hanging f...

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Private Sector Likely to Cushion Investment Fall
PANAMA - Forecast 11 Oct 2013
Executive SummaryThe domestic economy is likely to have less impact on growth from 2013-2015, mainly due to the end of the government’s major investment plan, and the completion of Panama Canal expansion. But execution of major private investments in mining, energy, tourism, logistics and low and...

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Exports up by 20.2% in August
PHILIPPINES - In Brief 10 Oct 2013
August exports posted the highest growth rate so far for 2013 with a recorded uptick of 20.2% year-on-year, which amounted to $4.581 billion. This follows the June and July positive growth numbers of 4% and 2%, respectively. Nevertheless, the year to date growth was still down by 0.83 percent due...