Country Insights

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Playing Political Games, As the Economy Burns
ECUADOR - Report 23 Jun 2016
With his popularity and credibility falling to 35%, from 60% last year, and government corruption scandals erupting everywhere, President Rafael Correa is reverting to an old political strategy: targeting new enemies, in a strategy to regain lost support. The first target is Catherine Holli...

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Politics: A New Day for Fighting Corruption
MEXICO - Report 23 Jun 2016
Last week’s passage of laws that will effectively create a National Anti-corruption System is a development of enormous importance. For the first time Mexico has legally typified the sorts of activities that constitute acts of corruption, clearly defined those who are bound by the law and its fil...

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May 2016 households review: retail sales slump again
RUSSIA ENERGY / FINANCE - In Brief 21 Jun 2016
Rosstat published yesterday monthly economic data for May 2016. Somewhat surprisingly, retail sales were weak again last month. Sales were down 6.1% y-o-y (-0.8% m-o-m, sa) in May vs -4.7% y-o-y (-0.2% m-o-m, sa) in April. Foods sales (-1% m-o-m) continue to underperform non-food sales (-0.6% m-o...

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MPC: Now Comes the Tricky Part
TURKEY - Report 21 Jun 2016
The Monetary Policy Committee (MPC) cut the O/N lending rate by another 50 bps to 9% (simple) today, in line with our and the majority of market players’ expectations. The other two rates – O/N borrowing and weekly-repo – were left unchanged. The cumulative cut of the O/N lending rate since March...

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Week of June 20
BRAZIL POLITICS - Report 20 Jun 2016 1 response
In a new round of negotiations, governors and the Executive will try to come to an agreement on state debt. In the Senate, President Renan Calheiros will decide on the impeachment request against prosecutor Rodrigo Janot. The STF will analyze a new accusation against Eduardo Cunha, removed presid...

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Shortages, expectations and Dicom push inflation up
VENEZUELA - Report 20 Jun 2016
Available information hints at worsening supplies, a trend that may last at least until July assuming inputs for industry start arriving soon. Despite the decline in the price of the dollar in the parallel market and slowing demand because of falling real income and consumer credit slowdown, infl...

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June Monetary Policy Meeting
CHILE - In Brief 20 Jun 2016
As widely expected, in its June Monetary Policy Meeting, the Central Bank of Chile kept the Monetary Policy Rate (MPR) unchanged at 3.5%. The communiqué corroborates that the Central Bank is in a wait-and-see stance. Nevertheless, the tone has become more and more dovish. No doubt that the Brexit...

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May IP review: stagnation continues
RUSSIA ENERGY / FINANCE - In Brief 20 Jun 2016
May 2016 industrial production (IP) results haven't brought any surprises. Headline annual figure for May (+0.7% y-o-y) was slightly better than for April (+0.5% y-o-y) but on seasonally adjusted basis stagnation continues. We estimate that in May IP index was down 0.24% (m-o-m, sa) vs -0.38 (m-o...

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The Fiscal Adjustment Battle: First Moves
BRAZIL ECONOMICS - Report 20 Jun 2016
The government took an excellent first step toward the fiscal adjustment by sending to Congress a proposed constitutional amendment (PEC) establishing a cap on growth of the central government’s primary expenditures. But this is just the start of a long and arduous adjustment that will have to ex...

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Falling FX Reserves, Stable HUF
HUNGARY - Report 20 Jun 2016
The surprising weakness of manufacturing in Q1 was due mainly to a setback of output at Audi Hungária, which seems temporary. Already, substantial positive correction of industrial output was seen in April. Nonetheless, earlier stellar growth rates of the car industry are unlikely to return. The ...

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Consequences of Raghuram Rajan's departure
INDIA - Report 19 Jun 2016
Rajan's departure has been the subject of furious attention in the Indian tabloid press and on facebook/twitter. Millions of words will be written about this. The adverse impact of a Brexit upon India will be attributed as the adverse impact of Rajan's departure. We believe his departure does not...

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A Political and Econ Update
TURKEY - Report 16 Jun 2016
Because of pressing business affairs, we will not be able to issue a Weekly Tracker on Sunday. This note updates our readers on a few recent developments, in politics as well as in economics. Needless to say, we shall be back early next week… First, the good news. It now appears that AKP’s pr...

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Weakening Foreign Assets
VENEZUELA - Report 16 Jun 2016
Public sector foreign assets are falling and becoming less liquid. According to our calculations, these assets (excluding Pdvsa) closed at $19.7 billion on 31 May 2016, $6.0 billion lower than our December 2015 estimate ($25.7 billion).

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Machado plea bargain has limited impact on Temer
BRAZIL POLITICS - Report 16 Jun 2016
Sérgio Machado’s plea bargain deal citing Michel Temer creates embarrassment for the president, causing wear and discomfort. However, it is important to examine the content and its impact on Temer carefully.

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Not a tipping point yet
VENEZUELA - In Brief 16 Jun 2016
On June 14, violent riots and looting were reported in Cumaná, capital of Sucre state, the poorest and most chavista state in Venezuela. This comes after more than 100 lootings across the country in recent weeks.Guided by the 1989 "Caracazo", which put governance to a severe test, conventional wi...