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Country Insights

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This Time, It Ain’t Just Food...
TURKEY - Report 03 Sep 2015
Consumer prices rose by a higher than expected 0.4% in August (expectation: 0.1%), which meant an increase in the 12-month rate to 7.1% from 6.8% in July. Twelve-month producer price inflation also rose to 6.2% from 5.6% a month earlier (Table 1; Graph 1). Most noteworthy is the fairly visible ju...

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Hyperinflation knocks at the door
VENEZUELA - Report 02 Sep 2015
We forecast the NCPI September MOM inflation rate at 17.7 percent. The YOY rate rises to 243.8 percent in September from 206.0 percent in August. Our September forecast exceeds our August estimate, which we revised down to 15.8 percent (from 18.3 percent in our previous report.) Inflation is affe...

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Risks Prompt Lower Growth Forecast
MEXICO - Report 02 Sep 2015
The slowdown of crude output, and loss of momentum in the construction sector, led to weak industrial activity data for June (when it was up just 1.4% y/y), amid general financial uncertainty. Industrial results plunged in Q2, to almost half their Q1 growth rate. The peso has lost more than 25...

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The Beginning of the End?
TURKEY - Report 01 Sep 2015
With the formation of the Davutoglu “Election Government” Turkey officially set foot on the trail of reelections, which will be held on November 1st. AKP made a historic decision to declare war on ISIS, which may shorten the time to defeat this vicious virus, but the fall-out may be more bloody t...

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Opposition still ahead in the polls
VENEZUELA - Report 31 Aug 2015
Parliamentary election campaigns have begun as the economic crisis rages on. Surveys show the opposition solidly ahead among likely voters with 45 percent of the vote, versus 20 percent for the government. However, we cannot yet confidently forecast the composition of the National Assembly. Natio...

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Week of August 31
BRAZIL POLITICS - Report 31 Aug 2015
The government will send Congress the proposed 2016 Budget. The House may vote on the CSLL increase for banks. In the Senate, the bill on repatriation of resources held by Brazilians abroad may be voted upon. The Central Bank sets the benchmark interest rate. The MDIC releases the trade balance f...

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Political Readings
ARGENTINA - Report 31 Aug 2015
The results of last month’s Mandatory, Simultaneous and Open Primaries (PASO in Spanish) largely ratified the previous electoral polls. That is, they suggested the possible victory of the governing party, Frente para la Victoria (FpV), in October’s presidential elections, but not one strong enoug...

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Reversing the Trend
INDONESIA - Report 31 Aug 2015
Indonesian authorities have been confronted with two major challenges: the slowdown in the economy and the turmoil in the global financial markets. The turmoil in the global market has put downward pressure both on the currency exchange rate as well as the stock exchange. The slowdown of the e...

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GDP in the Second Quarter: A Long and Deep Recession
BRAZIL ECONOMICS - Report 31 Aug 2015
The GDP contraction of 1.9% in the second quarter (Graph 1) confirmed the expectation that the recession would deepen. Because of the negative carry-over to the rest of the year and all the evidence that further contraction will happen in the third quarter, GDP will likely decline by 3% in 2015 a...

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Low Levels of Economic Growth Threaten Employment Creation
SOUTH AFRICA - Report 31 Aug 2015
During his budget speech at the beginning of the year, the Minister of Finance estimated growth for 2015 at 2%. For the economy to grow at an average rate of 2% in 2015 it would have to grow at relatively high rates in the second half of the year because growth in the first half was disappointing...

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Guatemala: Corruption Scandals Dampen Outlook
CENTRAL AMERICA - Report 31 Aug 2015
Executive Summary Political developments linked to Guatemala’s corruption scandals have dampened the national economic outlook. But the turmoil has not so far damaged financial stability, which been powerfully resilient.The dollar is stable in the 7.60-7.70 quetzal range; the Bank of Guatemala’s ...

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The PBoC is selling US Treasuries!!!
CHINA FINANCIAL - Report 28 Aug 2015
Special points to highlight in this issue: The PBoC has been reported to have sold substantial amounts of US government bonds. It will probably continue to sell a lot more.This doesn’t mean, however, that there will be substantial liquidation. The reasons driving PBoC selling also mean that China...

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Circling a Deal
COLOMBIA - Report 28 Aug 2015
A FARC deal may be close, and the focus has turned to intense public discussion over how a deal might be finalized and executed. Yet the difficulties still seem substantial: these basically boil down to political disagreement over whether a special “mini-congress” might be created to ratify any d...

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Political Crisis and Loss of Degrees of Freedom in Conducting Economic Policy
BRAZIL ECONOMICS - Report 27 Aug 2015
Against the backdrop of stagflation and a politically weak government, the Central Bank is facing two challenges. The first is the need to keep interest rates high for longer, even in face of the deepening recession, which raises the political pressures for easing. The second is the task of absor...

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South African Economy: The China Effect
SOUTH AFRICA - Report 27 Aug 2015
As a member of the “fragile five”, South Africa was hit hard by the global financial vortex that engulfed the markets this week. Its currency was hardest hit, and the Johannesburg stock exchange lost over 7% of its market cap. The global turmoil coincided with a raft of other negative indicators:...