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Country Insights

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Vice President Jorge Glass Included in Criminal Case
ECUADOR - In Brief 28 Aug 2017 1 response
Last Friday, the absolute majority of the Assemblywith absolute majority approved the inclusion of Vice-President Jorge Glass in a criminal case related to corruption during his office under President Correa's mandate. The figure is that of "illicit association" --somewhat of lower level compared...

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Managing Financial Outflows with Cautions
CHINA - Report 28 Aug 2017
Growth remained generally stable in July. Industrial output was up 6.4% y/y, similar to previous months. But fixed asset investment, the key growth driver, climbed only 6.8% y/y in real terms, its lowest rate this year, and was down 1.5 pps from Q2. Its adjusted growth rate is less than 5%, which...

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Economic Recovery and the Credit Channel
BRAZIL ECONOMICS - Report 28 Aug 2017
With inflation expectations firmly anchored to the target and current inflation subdued, the size of the monetary easing cycle will be dictated by how fast activity recovers. Strong evidence of various types exists that the period of contracting GDP is over, but there are also many indicators tha...

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Politics: AMLO picks the Mexico City Candidate
MEXICO - Report 28 Aug 2017
Late last Thursday evening a key piece of the 2018 electoral puzzle fell into place as Morena leaders leaked the name of the party’s nominee to be the next mayor of Mexico City. The choice of Claudia Sheinbaum, a respected scientist and the head of government in the capital’s Tlalpan borough did ...

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No clear and present danger
TURKEY - In Brief 28 Aug 2017
We will start our official coverage next week, but seeing how EM currencies became suddenly popular once again after Yellen and Draghi speeches at Jackson Hole, I felt it was incumbent upon me to give a run-down on political risks to determine whether they could derail the TL rally. The brief ans...

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The MNB turned the strengthening forint back from EURHUF 302 this morning
HUNGARY - In Brief 24 Aug 2017
Well, we told you so. We have warned our readers repeatedly in recent reports that:- given the industrial recovery in the Euro Area and improving producer prices paid to domestic manufacturers, the MNB was likely to welcome some forint appreciation from the previous EURHUF 310-315 levels;- but an...

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Getting to know you?
PHILIPPINES - In Brief 23 Aug 2017
Over the course of 10 trading days in recent weeks, the peso lost P1.30 against the US dollar depreciating from P50.19/$ to P51.49/$ on August 22, its weakest so far. Analysts have been scratching their heads not so much over the direction of movement (which most had expected in light of weaker e...

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Week of August 21
BRAZIL POLITICS - Report 21 Aug 2017
The government must send Congress the announced fiscal adjustment proposals. The government must also present party leaders with the new text for the Refis provisional measure (MP 783/17). In the Lower House, the priority is the vote on Political Reform. Rep. Luiz Carlos Hauly (PSDB-PR) will pres...

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Fundamentals vs. Rabbits
TURKEY - Forecast 21 Aug 2017
A benign global backdrop and massive stimulus measures will produce another year of strong growth, it looks like, but this doesn’t change the discomforting fact that Turkish economy continues to live on borrowed time. Secular growth outlook remains cloudy, while the usual imbalances – a hefty cur...

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The Return of Growth, But Slow
BRAZIL ECONOMICS - Report 21 Aug 2017
The economic activity numbers for June drastically reduce the possibility of contraction of GDP in the second quarter. The shining light was the performance of retail sales, leading to an estimate of strong growth of household consumption in the three months through June. Thus, although doubts pe...

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Economics: New Wage Dynamics and Inflation
MEXICO - Report 21 Aug 2017
The disproportionate rise in formal sector employment since 2013 that has served as one of the main drivers of the internal market has not been matched by a similar rise in payroll compensation, which when deflated has registered a mere annual 0.5% increase since 2013. It fell 0.9% during the fir...

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Politics: PRI Doubles Down on Old Strategy
MEXICO - Report 21 Aug 2017
Heading into the PRI’s national assembly observers were especially anxious to see whether the party might resist any bending of rules to pave the way for an historically unpopular president to hand pick his choice of successor, or decide to offer something of substance in its vision for Mexico in...

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Bracing for an Anemic 2017
COLOMBIA - Report 21 Aug 2017 1 response
Growth projections of above 2% for 2017 now look rather remote, given Q2 results. Economic activity expanded by just 1.3%, similar to in Q1. H2 growth would have to top 3% for GDP to grow by the 2% the government forecasts, which now seems unlikely. This will probably lead to renewed congressiona...

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The General Government Reached a Surplus in H1 2017
HUNGARY - Report 18 Aug 2017
Robust economic growth continued in Q2, with GDP growth just marginally weaker than in Q1. The leading source of strength remains an uninterrupted recovery of manufacturing and construction output. In addition, retail trade is slowly gaining momentum again, and tourist services are picking up at ...

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Bond Default Recaps: Recapitalization Patterns
CHINA ADVISORY - Report 18 Aug 2017
As the economy slows and bad debt increases, the outcome of the current round of defaults, along with related programs like the debt-for-equity swaps, tell us a lot about what China will do and not just what it says it will do. We believe this initial pool of defaults provides a clue to how the s...