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COUNTRY INSIGHTS

The climate of the presidential succession and other weekly topics
BRAZIL POLITICS · Report · 12 Jul 2021

Congress may vote on the Budget Guidelines Law. Once approved, the formal recess for Congress begins on July 18 and ends on July 31. President Jair Bolsonaro will sanction the law on the capitalization of Eletrobras on Monday, July 12. Also on Monday, Minister Marco Aurélio Mello retires from the...

Net Exports, Investments and Oil Platforms
BRAZIL ECONOMICS · Report · 12 Jul 2021

Spurred by the strong growth of global exports, the rising commodity prices and the weak real exchange rate, Brazil’s exports have been expanding. Despite the increase of imports, particularly raw materials and intermediated goods for industry, we estimate that the trade surplus at the end of thi...

Likely change in the inflation target
ISRAEL · In Brief · 12 Jul 2021

Governor Yaron spoke today at a conference on July 12 regarding inflation targeting. The idea to revise the inflation target came up actually before Covid, probably one year before. This was due to several years of undershooting the target, which I think the BoI is uncomfortable about on a credib...

Turkey Covid Watch - July 12, 2021
TURKEY · Report · 12 Jul 2021

Covid cases rose to 5.3K and vaccinations are up sharply, with third shots now being offered to the population that previously received two Sinovac shots. Mobility in Turkey is roughly back to pre-pandemic levels. Given the delta variant’s prevalence in Europe and Russia, summer tourism poses a r...

Recovery consolidates, but with high inflation and a higher fiscal deficit
DOMINICAN REPUBLIC · Forecast · 12 Jul 2021

Economic recovery consolidated in May. The monthly index of economic activity reached a y/y growth rate of 21.2%, which makes it more likely that growth for the year will exceed 7%. Greater dynamism has been accompanied by a persistent rise in prices that has placed interannual inflation at 10...

Congress will focus on approving the LDO, Bolsonaro should appoint the Attorney General of Brazil to replace Minister Marco Aurélio, and a busy week in the Pandemic CPI
BRAZIL POLITICS · Report · 12 Jul 2021

The opposition will likely question the constitutionality of the privatization of Eletrobras. Bolsonaro’s nominee for the STF will have to be confirmed in the Senate. In the House, the “super salaries” bill and the privatization of Correios are expected to be analyzed this week. In the Senate, bi...

A declining fiscal deficit will likely support lower bond issuance
ISRAEL · Report · 12 Jul 2021

The fiscal deficit continued to decline, reaching 10.1% GDP LTM from 12.1% in March, due to strong revenues and lower Covid spending. We expect domestic bond issuance to continue to contract, reaching 5bn ILS per month by year-end. The CBS business sector survey reflects strong orders both domest...

Finance minister optimistic about growth, despite problems with EU and Covid
HUNGARY · In Brief · 12 Jul 2021

This morning, finance minister Varga was quoted in the press as saying that the domestic economy is set to grow by 6.5% this year (more than the 4.8% on which this year's budget was originally based, the 4.3% predicted in late April or the 5.5% set as a target a few weeks ago) according to latest...

At the shores of Rubicon
TURKEY · Report · 11 Jul 2021

The economy survived the shock stemming from the sudden change of Governor at the CBRT in late March, without a very major market turmoil so far, contrary to our huge concerns at the time. One key reason is that the most obvious policy mistake, that of a deep and premature rate cut, was avoide...

A declining fiscal deficit will likely support lower bond issuance
ISRAEL · In Brief · 11 Jul 2021

The fiscal deficit declines in June The fiscal deficit in the past 12 months declined to 10.1% GDP from 10.5% last month and 12.1% in March. This positive trend is due to strong revenues and declining emergency Covid fiscal support. The BoI expects a fiscal deficit this year of 7.1% GDP, we envis...

Turkish inflation: 20% is the new 10%?
TURKEY · Report · 09 Jul 2021

In this brief note, we estimate a few simple models of core inflation in Turkey, with a view to gauging its direction through the end of this year. The forecasts vary depending on the model and the sample period, but post-2010, a simple Vector Autoregression model and a Philips Curve specifica...

Current account is strong in 1H21 implying Russia remains net creditor to the rest of the world
RUSSIA ECONOMICS · In Brief · 09 Jul 2021 · 1 response

The Central bank reported that Russia’s current account surplus reached $43.1 bn. It slightly narrowed in 2Q21 to $19.9bn compared to $23.2bn in 1Q21 despite higher exports. It largely happened as the deficit of the income balance widened. Increased imports also helped reduce the surplus, but in ...

Bolsonaro’s positive ratings remain stable, the Ministry of the Economy will consider lowering the tax on investment funds in the Tax Reform proposal, and the Federal Budget Law should be approved next week
BRAZIL POLITICS · Report · 09 Jul 2021

The polarization between Lula and Bolsonaro remains strong. The government will continue to pay emergency aid until October. Tensions are rising between the Pandemic CPI and the Armed Forces. Minister Marco Aurélio turns 75 on Monday and will be forced to retire; Bolsonaro will likely nominate th...

​GULF WEEKLY: IMF reports on Oman and Saudi, Sharjah issues sukuk, MBS’s brother visits DC
GULF COUNTRIES · Report · 09 Jul 2021

A skimmable summary overlaid with our analysis and links. Headlines: * There was no visible progress on the OPEC+ impasse but oil has come off its mid-week high. * Also no progress towards a US-Iran deal but more tensions as Iran increased its uranium metal enrichment. * Kuwait surpassed Oma...

Green energy and global warming: a double whammy for Russia
RUSSIA / FSU POLITICS · In Brief · 09 Jul 2021

On July 8 the Finance Minister said that Russia has to tighten its belt because green energy is leading to a radical reduction in the need for fossil fuels. Carbon pricing and carbon taxes are a major headache for Russia, which earns 40% of state revenue from hydrocarbon exports. It is the bigges...

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