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Country Insights

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Inflation, Exchange Rate and the COPOM
BRAZIL ECONOMICS - Report 26 Aug 2013
The COPOM will meet this week to decide on the new increment of the SELIC rate. A few days ago, in response to the upward shift in the yield curve reflecting the higher perceived probability of an impending hike of 75 basis points, Mr. Tombini hastily declared that “the yield curve has an excessi...

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Still Slowing, with Construction and Communications at the Force
ECUADOR - Forecast 26 Aug 2013
Executive Summary The GDP growth slowdown that began in Q3 2011 persists, as the government is receiving lower oil revenues, and the economy is absorbing public investment less efficiently. The economy grew 4.8% y/y in Q4 2012, and 1.2% q/q – but in Q1 2013, growth rose just 0.2% q/q, and 3.5% y/...

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Time to abolish PDAF
PHILIPPINES - In Brief 24 Aug 2013
With that statement, President Aquino may have hoped to head off a potentially high-strung "Million People March" set on on Monday against a decades-old practice of allocating funds in government's annual budget to legislators for their pet projects. Officially tagged Priority Development Assista...

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Guatemala: Keeping the Band-Aids On
CENTRAL AMERICA - Report 23 Aug 2013
Executive Summary Under our revised 2013-2014 outlook for the Guatemalan economy, real GDP is expected to grow 3%-3.5%; inflation will stay within the Bank of Guatemala´s target range of 3%-5%; and the quetzal will maintain a 7.9-8 per dollar value. The currency will be supported by a good intern...

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Referendum on peace negotiations to coincide with 2014 elections
COLOMBIA - In Brief 22 Aug 2013
President Santos presented a bill to Congress to call for a referendum allowing Colombians to vote in favor or against an eventual peace agreement with FARC. Even though such an agreement has not been announced yet (November is supposed to be the deadline), Mr. Santos has said that everything has...

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A master class of political muscle *
MEXICO - In Brief 22 Aug 2013
This week, the Mexican Congress is discussing in –an extraordinary session– the three secondary laws regarding the recent Constitutional amendments on education. These changes will bring tougher tests on teachers and will bring upon an autonomous institute in charge of evaluating their performanc...

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Labor Market: Contradictory Signals
BRAZIL ECONOMICS - Report 22 Aug 2013
In July the unemployment rate was 5.6%, higher than the 5.4% in the previous month. However, in the seasonally adjusted series the rate remained stable at 5.6%. After correction for variations in the participation rate (the portion of the working age population that is working or looking for work...

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No Fiscal Efforts in 2013
CHILE - Report 22 Aug 2013
The government presented in Congress this month an update of its macroeconomic outlook for 2013 and its evaluation of the impact of this update on expected fiscal policy in 2013. Expected fiscal balance for 2013 was reduced from an initial fiscal deficit of 0.8% of GDP to one of 1.2% of GDP (note...

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Stock Market Drop
PHILIPPINES - In Brief 22 Aug 2013
The Philippine Stock Exchange index dropped by 6 pc today, after the market closed for three days on account of flooding and a holiday, playing catch down with peers in the region. Jakarta, KL and Thailand indexes suffered cumulative declines of 8.8 pc, 3.8 pc and 6.8 pc over four days since the ...

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Party's Over
PERU - Forecast 22 Aug 2013
Executive SummaryExport decline plus lower growth rate of domestic demand led to H1 GDP growth slowdown, to 5.1% y/y, from 6.3% in the same period in 2012 (and an average of 6.5% over the decade). We expect slower private investment expansion in H2, given weaker business confidence. But public sp...

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The New International Environment, the Real Exchange Rate and Monetary Policy
BRAZIL ECONOMICS - Report 22 Aug 2013
The global scenario has changed. On the one hand, the more vigorous growth in the United States has brought signals that the Federal Reserve will soon start easing back on its asset purchases, while on the other there are clear indications of slower growth in China. Against this backdrop, there i...

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Slow and Gradual Economic Policy
VENEZUELA - Report 22 Aug 2013
Executive Summary With December municipal elections nearing, President Maduro and the PSUV face political challenges from within chavismo as well as from the opposition. Small allied parties are protesting for having been offered only 5 percent of the candidacies. The base is unhappy that no prim...

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Pdvsa 2035 show up in Sicad
VENEZUELA - In Brief 21 Aug 2013 2 responses
The BCV bond portfolio emerges as a source of funds for Sicad auctions. The BCV has called a $330 million bid which will be funded through the sale of Pdvsa 2035, without affecting its dwindling foreign reserves. The Sicad bond system differs from Sitme. In Sicad, importers will not acquire bonds...

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Mexico’s two earthquakes: one shook the capital, the other economic growth
MEXICO - In Brief 21 Aug 2013
Mexico suffered a mid-strong earthquake this morning, fortunately with no major consequences. That’s not the case with GDP growth figures for Q2 released yesterday by INEGI. They show a contraction of 0.74% compared to previous quarter and 1.5 % on annual basis. This came as a big surprise since ...

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Turkey’s new Middle East policy: Precious isolation
TURKEY - Report 21 Aug 2013
It is astounding how rapidly Erdogan alienates Turkey’s allies in the Middle East. The last two victims of his boundless rage are Egypt and Israel—for a third time. Once a contender for the role of king-maker in the region, aspiring to export its economic and political model, Ankara is increasing...