Country Insights

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Offshore foreign exchange and the yuan
CHINA ADVISORY - Report 01 Jul 2019
The value of the Chinese currency depends to a great extent on Beijing’s ability to control capital flows. Over the past decade there have been numerous channels devised to bypass regulations, including false invoicing of manufactured goods, inflated service fees (expensive consultants abroad), t...

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COSTA RICA: Q1 data reaffirms a slow start
CENTRAL AMERICA - Report 01 Jul 2019
On June 28, the Central Bank published preliminary figures for Q1 GDP, Balance of Payments and External Debt. Results on the production front are neither encouraging, nor surprising: GDP grew only 1.8% y/y, after an increase of just 1.9% y/y in Q4-2018.

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Higher bond issuance underlines some fiscal slippage
ISRAEL - Report 01 Jul 2019
Economic growth appears to have slowed in 2Q2019. * The BOI composite index slowed to 0.1% y/y in May. * Employment growth has stalled in April-May. * Unemployment remains low (3.2% ages 25-64) on lower labor participation. * Chain store sales increased by 0.6% saar in March-M...

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Life after Osaka
TURKEY - Report 30 Jun 2019
Amidst a startling controversy about who said what during the Erdogan-Trump meeting, we change our baseline scenario on S-400s. Erdogan shall take delivery and the sanctions will go into effect latest by August, but they will be mild. Read on, this is not the end-game, which is at least 3-6 month...

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A new corruption scandal shakes the country and hits Medina’s government hard
DOMINICAN REPUBLIC - In Brief 28 Jun 2019
A new scandal has shaken the country. As a result of an investigation that lasted months on behalf of a network of journalists, international media revealed that Odebrecht paid bribes for almost USD 40 million to be favored with the award of the contract for almost USD 2 bn for the construction o...

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Panama is back in the gray list of GAFI: an expected result with unpredictable consequences
PANAMA - Report 27 Jun 2019
During the FATF (Financial Action Task Force, GAFI in Spanish) plenary meeting last week in Orlando, Florida , the Republic of Panama was added again to the gray list of non-cooperating countries in matters related to money laundering and financial transparency, despite the efforts made by the Ad...

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COSTA RICA: Weathering hard times
CENTRAL AMERICA - Report 26 Jun 2019
Costa Rica faces hard times, with consequences primarily for production and employment. After the first year of the new Carlos Alvarado Quesada administration, economic activity continues to be sluggish, and therefore cannot reduce unemployment. Expectations continue to play a key role, as they s...

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Russian growth at a snail's pace
RUSSIA / FSU POLITICS - In Brief 26 Jun 2019
In May 2019 growth was only 0.2% Y o Y. This is eight and a half times lower than April's annual growth. A new head of Rosstat (the Russian Statistical Agency) was appointed a few months ago to provide more accurate statistics. Unfortunately these statistics are too accurate and are acutely embar...

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​Rumors and policy signals
TURKEY - In Brief 26 Jun 2019 2 responses
Thanks to AKP’s habit of conducting its internal debates behind closed doors and not releasing any useful information to the public, the scuttlebutt is abuzz with rumors, only very few of which I can verify or share with you with some level of confidence. First, Mr. Erdogan has grasped that the e...

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The difficulties of signalling, old and new
INDIA - Report 25 Jun 2019
The NBFC (non-banking financial company) industry is in the midst of a stress test. Some firms such as HDFC are widely trusted by lenders, while others are not. The key puzzle for each healthy firm is about signalling to lenders that it is of high quality. Lenders have relied on three key sign...

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Dewan Housing default
INDIA - In Brief 25 Jun 2019
An important stressed firm in India today is Dewan Housing (DHFL). They are a balance sheet of about Rs.1 trillion. They seem to have stock market returns correlations with a few other important firms (Yes Bank, Indiabulls Housing), and the cluster adds up to about a Rs.5 trillion balance sheet.U...

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Always tricky: central bank policy is tighter than it looks
HUNGARY - In Brief 25 Jun 2019
Comparing today's policy statements with actual MNB activity, one might come to the conclusion that the central bank is secretly tightening its policy, in spite of its contrary talk.On the one hand, today's Monetary Council meeting, the key quarterly rate-setting event as declared by the Bank rec...

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Cabinet reshuffle unlikely to improve economic prospects
CHILE - Report 25 Jun 2019
When President Sebastián Piñera took office in March 2018, consensus expectations for 2019 GDP growth stood at 3.7%, up from 3% a year before. But expectations have been sinking since September 2018. Central Bank forecasts have registered similar falling optimism. Is this the end of the Piñera ef...

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​Istanbul elections: Wait until Wednesday
TURKEY - In Brief 25 Jun 2019 1 response
I had promised an update by Tuesday, which I shall defer to Wednesday.There are two reasons. First, Erdogan will meet the party caucus and administrative bodies today to assess election results. Secondly, there are a lot rumors I need to check for verification of accuracy. I hope there will be en...

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Proposed changes to Pension Reform and other weekly topics
BRAZIL POLITICS - Report 24 Jun 2019 1 response
In the Lower House, we highlight the attempt to vote on the Pension Reform in the Special Committee. Before the vote, the rapporteur, Samuel Moreira (PSDB-SP), is expected to present changes to his report. The 2nd Group of the STF analyzes Lula’s habeas corpus request. Demonstrations in defense o...