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Country Insights

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CBR keeps rates unchanged, no signs of future tightening
RUSSIA ENERGY / FINANCE - In Brief 11 Sep 2015
As we have expected, CBR decided today to stay on hold and keep interest rates unchanged. The bank left key rate at 11% after five consecutive cuts since February. The decision was widely expected as current situation presents dilemma for monetary authorities. RUB declined more than 25% against U...

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Inflection points
VENEZUELA - Forecast 11 Sep 2015
We extend our forecast horizon to 2017. We envision a short-term policy path that’s unsustainable. Hence dramatic forks (“inflection points”) lie somewhere in the road ahead, at which regime change, major policy reform, and default on the sovereign debt become real possibilities. When Venezuela w...

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Dilma Rousseff Government
BRAZIL POLITICS - Report 10 Sep 2015
The government reacted with dissonance to the news of Standard & Poor’s downgrade of Brazil’s investment grade rating. The Ministry of Finance lamented the rating agency’s decision and is trying to find alternatives to counteract the negative impact of the announcement. In an interview with TV...

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Economics: A Pass-through Effect to Come
MEXICO - Report 10 Sep 2015
The increase in producer prices as tracked by Mexico’s national Producer Price Index (PPI) suggests that the higher costs will eventually translate into a higher rate of consumer inflation. We should note the need to analyze the rise in producer prices from various angles. One of these is rela...

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Politics: Government Re-launch Fails to Lift Off
MEXICO - Report 10 Sep 2015
Hopes that this year’s State of the Nation Report and President Enrique Peña Nieto’s accompanying nationwide address might signal a major change of approach and policies were dashed last week as seemingly self-critical introductory remarks quickly gave way to self-serving and questionable claims ...

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On Q2 Growth: “Damn the Torpedoes…”
TURKEY - Report 10 Sep 2015
The Turkish economy grew by a higher than expected 3.8% in Q2, y/y, thanks to a sharp increase in domestic demand (6.8%, y/y), which made a 6.7 pps contribution to overall GDP growth in Q2. The contributions of net exports and inventories were negative, broadly in line with expectations, shaving ...

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August inflation increased 15.8% y-o-y; CBR will stay on hold in September
RUSSIA ENERGY / FINANCE - In Brief 09 Sep 2015
Inflation reached 15.8% y / y (+0.4% m / m) in August, despite the seasonal decline in prices for fruit and vegetables (-9.8% m / m). The main reasons for the acceleration of inflation are related to the dynamics of the ruble exchange rate. In particular, in August, non-food products rose by 0.8%...

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Industrial Production and Weakening of the Real
BRAZIL ECONOMICS - Report 08 Sep 2015
The steep drop of industrial output in July (Graph 1) threw another bucket of cold water on the estimate of GDP for the third quarter, which will almost certainly show further contraction. On the demand side, neither household consumption nor gross fixed capital formation changes this scenario. T...

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Week of September 8
BRAZIL POLITICS - Report 08 Sep 2015
Despite the holiday, this will be a busy week. Vice President Temer and PMDB leaders meet with governors to discuss the financial situation of the states. Congress analyzes the presidential vetoes. The Senate may vote on the repatriation bill. The Sugar-Alcohol sector discusses CIDE with governme...

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Guatemala: High turnout but heading for a runoff
CENTRAL AMERICA - Report 07 Sep 2015
There was a high turnout in yesterday´s general elections. According to preliminary results, the turnout was slightly above 70% of registered voters, a figure relatively high given the political situation of the last five months, which clouded the electoral campaign, and also the call for "no vot...

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Stalking Elusive Recovery
PERU - Forecast 07 Sep 2015
In our scenario, business confidence will strengthen only a bit in coming months, then rally after the April 2016 general elections. We believe the next government will pursue market-friendly policies, and build alliances in Congress geared to passing urgent structural reforms. That would also pa...

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Continued Struggles on Old Fronts
RUSSIA / FSU POLITICS - Report 07 Sep 2015
Russia’s security challenges in the North Caucasus region continue as the federal law enforcement and local elites dispute control over the situation. In some republics, the federal center has more power while in others it is forced to rely entirely on the local leadership. However, in both cases...

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Christine Lagarde impressed with Ukraine’s progress.
UKRAINE - In Brief 07 Sep 2015
On September 6 Ms. Christine Lagarde, Managing Director of the IMF, visited Kyiv. During this visit she expressed her optimism about observed results. “I am extremely encouraged by the progress that has been achieved in the past few months” said Ms. Lagarde. “In a difficult environment, macroecon...

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Weekly Tracker: September 6-12
TURKEY - Report 06 Sep 2015
On the day of the publication of our monthly report last Tuesday, the police raided the headquarters of pro-Gulen KOZA-IPEK Holding on charges of money-laundering. We remain concerned that a new crackdown may be in progress, which may spill over to KOZA-IPEK’s media arm, and other dissident press...

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Guatemala: President Pérez resigns
CENTRAL AMERICA - Report 03 Sep 2015
After all doors closed, President Otto Pérez Molina today submitted his resignation to Congress.On Tuesday, September 1, Congress stripped Pérez's immunity by an almost unanimous decision (125 votes in favor), including several congressmen from his own party. On Wednesday, September 2, the Consti...