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COUNTRY INSIGHTS

OMAN: Surprise surplus in Jan-Apr, but don’t get too excited yet
GULF COUNTRIES · Report · 22 Jun 2020

Official statistics show a fiscal surplus of 1.5% of GDP in Jan-Apr 2020. However, this is misleading given one-off transfers and temporary spending cuts. The underlying fiscal balance is more likely a deficit of at least 6% of GDP. Even so, there are encouraging signs of spending cuts in some ar...

PGR identifies transfers to finance anti-democratic demonstrations; Flávio Bolsonaro tries to minimize wear
BRAZIL POLITICS · Report · 22 Jun 2020

Federal deputies Guiga Peixoto (PSL-SP), Aline Sleutjes (PSL-PR), General Girão (PSL-RN) and Bia Kicis (PSL-DF) used funds from the parliamentary quota to finance anti-democratic acts. The transfers, totaling R$30 thousand, were identified by the Prosecutor-General´s Office (PGR). The funds were ...

Politics: Complicated path to an effective opposition bloc
MEXICO · Report · 22 Jun 2020

For all practical effects the opening salvo in the electoral competition that will conclude with voters going to the polls on June 6, 2021, has already been fired as President Andrés Manuel López Obrador has launched a strategy to reposition his image and policies. He has spent the last two weeks...

Bolsonaro under pressure and other weekly topics
BRAZIL POLITICS · Report · 22 Jun 2020

The Senate will try to vote on the postponement of the municipal elections this Tuesday. There is no consensus on the issue, and some of the Centrão want to postpone the elections until 2022. Another important item on the agenda is the Sanitation Law. Provisional Measures will be analyzed in the ...

A smaller initial setback is to be followed by a protracted recovery
HUNGARY · Report · 22 Jun 2020 · 1 response

The real shape of the ongoing economic crisis is increasingly clearly revealed by most recent events and data. These suggest that the initial setback will most likely be deep but somewhat smaller than expected. However, this setback is likely to be followed by a protracted recovery, possibly inte...

What Is the “True” Recession Depth?
BRAZIL ECONOMICS · Report · 22 Jun 2020

The market expected the IBC-Br to shrink by 11% in April, but the real decline was 9.73%. Could it be that “the recession will not be as bad as many people projected”? Before the pandemic, industry had not yet recovered from the recession of 2017, and indeed was still falling. The recovery, restr...

Belarus' president faces major opposition in re-election
RUSSIA / FSU POLITICS · In Brief · 22 Jun 2020 · 2 responses

On June 19 over 100 opposition activists were arrested. President Lukashenka is seeking election for the sixth time. For the first time he faces a strong challenge. His main opponents have been arrested.Lukashenka claims that a planned revolution has been thwarted. He said foreign countries were ...

Azerbaijan reintroduces lockdown
RUSSIA / FSU POLITICS · In Brief · 22 Jun 2020

On June 21 Azerbaijan announced that most of the country was returning to quarantine until August 1 at least. The country ended most lockdown measures on May 24. There was an alarming rise in coronavirus cases. The government has therefore changed course.

Low demand for 1-year REPO can push OFZ yields higher
RUSSIA ECONOMICS · In Brief · 22 Jun 2020

Today the CBR held its first long-term REPO auction and offered commercial banks 1-year loans up to R400 bln at a floating rate (equal to the key rate plus 25 bps). The aggregate demand was only R5.1 bln, which is definitely below market expectations. GKEM Analytica can offer several possible exp...

Economics: An extended road to recovery
MEXICO · Report · 22 Jun 2020 · 1 response

As we have known for some time, the economic fallout from Covid-19 will be felt on the external front as the global outlook remains highly uncertain, including on the level of the US economy, with which Mexico is so tightly linked. Its effects are also mounting in the strictly domestic sphere, wh...

More aggressive bond purchases likely
ISRAEL · Report · 22 Jun 2020 · 1 response

Recent indicators point to further improvement in activity, but the level remains about 10% below that of pre-Covid. May's low CPI (-1.6% y/y) underlines mostly the sharp downward demand shock due to the crisis. Low inflation will strengthen the doves on the MPC (although a rate cut is not our ba...

Essential CIS Politics: June 2020
RUSSIA / FSU POLITICS · Report · 22 Jun 2020

* Russia’s economy has been battered but rising energy prices and a new OPEC+ deal have given cause for hope. * The Russian government stimulus is modest but the economy is reopening as the country faces a constitutional reform referendum in July. * Ukraine has been buoyed by a...

The Deputy Governor sees more aggressive monetary policy only if the crisis worsens
ISRAEL · In Brief · 22 Jun 2020

Deputy Governor Abir last week said that the Bank’s high foreign exchange reserves are what enable aggressive monetary actions in the bond and FX market, and that they are a strategic asset for the Israeli economy. In addition, if the crisis worsens, the Bank has the ability to increase the exist...

No country for old analysts
TURKEY · Report · 21 Jun 2020 · 1 response

As we were finishing our final draft in the early morning hours in Istanbul, Egyptian President Sisi ordered his Armed Forces to prepare to intervene in Libya. While such a move could trigger clashes between Egypt and Turkey, we assign fairly low odds to a significant incident. Heads up, neverthe...

More aggressive bond purchases likely
ISRAEL · In Brief · 21 Jun 2020

Highlights of Weekly Israel Wrap Up May's CPI surprised on the downside, reaching -1.6% y/y. Inflation declined by 0.3% m/m compared to expectations of +0.1%. Apparel prices declined sharply, reaching -10.5% y/y from -3.8% in April. Core inflation (exc. energy and fresh produce) declined by -0.5%...

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