Country Insights

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Lowering growth forecasts
PHILIPPINES - Report 27 Aug 2015
We are downgrading our GDP forecasts to 5.7% in 2015 and 6.1% in 2016 (from 6.1% and 6.5%, respectively[1]). The revisions reflect both the just released GDP numbers, which show moderate 1H15 growth of 5.3% (see Box), and expected crop losses from a strengthening El Niño. Our revised forecasts im...

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Economics: New China Model’s Mexico Effect
MEXICO - Report 27 Aug 2015
To the already extensive list of negative factors of international origin adversely affecting the Mexican economy over the past ten months (plunging prices for oil and other locally produced commodities, uncertainty regarding the timing of the Federal Reserve’s long awaited interest rate liftoff,...

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From False Dawn to Sunset?
CHILE - Report 27 Aug 2015
The Chilean peso is fifth among the emerging market currencies that fell the most in 2015. We can divide this currency slump into two periods with different drivers and implications. The first is the period in which the US dollar appreciated vis-à-vis almost every currency in the world, and the s...

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Restructuring deal: four years’ maturity extension, 7.75 flat coupon rate, 20% haircut
UKRAINE - In Brief 27 Aug 2015 2 responses
Yesterday Ad Hoc creditors’ committee agreed for $18.0 billion Ukrainian debt restructuring. The agreement does not include loans of state-owned entities with sovereign guarantee, City of Kyiv Eurobonds and Ukrzaliznytsia Eurobonds. The deal presumes 20% haircut. Current Eurobonds will be exchang...

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Debt restructuring results might be announced today
UKRAINE - In Brief 27 Aug 2015
Media have been circulating message that Prime-minister Arseniy Yatsenyuk plans to announce some positive news today at 12:00 Kyiv time. In fact it is not a big secret that this news will be about debt restructuring. We do not know parameters of the agreement but, apparently, the agreement was re...

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Robust Growth and Low Inflation
DOMINICAN REPUBLIC - Forecast 26 Aug 2015
Growth was strong and inflation muted in H1, with GDP growth estimated at 6.4%, and accumulated inflation reaching just 0.64%. Low inflation resulted from lower oil prices, which drove down transportation prices -- but reduced pressure on the currency was a secondary factor. We expect an incre...

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Yuan Drop is a Correction
CHINA - Report 26 Aug 2015
Executive Summary Fixed asset investment increased 10.3% y/y in real terms in July, and industrial output rose 6% y/y. Both key indicators were lower than in previous months. Although a month’s slowdown doesn’t suggest a recovery falloff, there are potential risks. The government needs to ease...

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First predictions on new election results
TURKEY - In Brief 25 Aug 2015 1 response
First predictions on new election results It is official. Turkey will be heading for the ballot box on 1st of November, under the premiership of Prof Davutoglu, who is expected to announce his Election Government Cabinet on Friday. He is extending offers to CHP, MHP and HDP, but the first two wil...

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GDP Growth Takes a Hit
SOUTH AFRICA - Report 25 Aug 2015
Real (inflation adjusted) gross domestic product (GDP) at market prices decreased by 1.3% on a seasonally adjusted annualized rate in the second quarter of 2015 according to official figures reported by Statistics South Africa. This follows quarter one’s modest growth of 1.3%, meaning that the ra...

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Confidence Continues to Tumble
SOUTH AFRICA - Forecast 25 Aug 2015
A combination of unfavourable factors arising both locally and internationally are placing a strain on South Africa’s already fragile economy. This has led to compromised confidence in the country for both consumers and business. Overall, we expect lacklustre economic performance as factors such ...

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Don't take your eye off the big picture
CHINA FINANCIAL - In Brief 25 Aug 2015 2 responses
With all this excitement in the market it is important to remember the big picture: 1. GDP growth will continue to slow, either steadily, by 100-150 bps a year through the rest of the decade, or disruptively, with growth stabilizing at 6-7% for the next two or three years, and then, once China hi...

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No reason to buy
CHINA FINANCIAL - In Brief 25 Aug 2015 2 responses
There are four possible outcomes over the rest of this week. First, and this is highly unlikely I think, today’s measures could cause markets to stabilize Wednesday and start rising thereafter. This would do wonders for Beijing’s credibility, but I still think there are so many implied options an...

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When will it stop?
CHINA FINANCIAL - In Brief 25 Aug 2015
Tuesday the PBoC lowered lending and deposit rates by 25 bps, to 4.60% and 1.75% respectively, and lowered the required reserve ratio by 50 bps. On Monday the regulators announced that Chinese pension funds would be allowed to hold up to 30% of their assets in stocks. Will these measures matter t...

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Week of August 24
BRAZIL POLITICS - Report 24 Aug 2015
The decision by the Prosecutor General of the Republic, Rodrigo Janot, to formally accuse Rep. Eduardo Cunha and Senator Fernando Collor will be the main topic of conversation this week in Congress. The Senate will decide if it will confirm Janot’s appointment for another two years; it may also v...

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New Expansion of Credit from Public Banks?
BRAZIL ECONOMICS - Report 24 Aug 2015
The depth of the recession is causing increasing alarm by the government, which has started to react. After reducing the fiscal effort promised for 2015 and coming years, it announced that public banks – Banco do Brasil and Caixa Econômica Federal – will expand the supply of credit to certain sec...