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Country Insights

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Regressive Pitfalls of Tax Reform
MEXICO - Report 18 Sep 2013
Executive Summary The government of President Enrique Peña Nieto unveiled its budget proposals for 2014 along with closely related pieces of legislation that imply major changes to tax and fiscal policy while greatly expanding social security coverage. The stated purpose of such a reform would be...

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Clearing Another Hurdle
MEXICO - Report 18 Sep 2013
Executive Summary In the run-up to the official Mexican Independence Day Celebrations, which traditionally center on Mexico City’s main square, the government reached an agreement with the main organization of teachers to dismantle the protest encampment they have maintained for many weeks in the...

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Above Target Headline Inflation
SOUTH AFRICA - In Brief 18 Sep 2013
In August 2013, the headline inflation rate recorded 6.4 per cent year-on-year i.e. a 0.1 percentage point increase compared to the previous month’s print. This outcome is consistent with the South African Reserve Bank (SARB)’s expectation of a temporary breach of its 6 per cent inflation targeti...

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The MPC Does the Expected, but Chooses Not to Tinker with F/X Ratios
TURKEY - In Brief 17 Sep 2013
As expected, the MPC kept all rates unchanged today, while its assessment of the economy (e.g., mild recovery in domestic demand, a contained CAD thanks to current policy framework) was also broadly unchanged.  The Bank chose not to alter the F/X ratios (that would help to transfer some of its gr...

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An uneventful MPC, as expected
TURKEY - Report 17 Sep 2013
As expected, the MPC kept all rates unchanged today (see graph), while its assessment of the economy (e.g., mild recovery in domestic demand, a contained CAD thanks to current policy framework) was also broadly unchanged. The Bank chose not to alter the F/X ratios (that would help to transfer som...

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Preliminary Analysis: Turkish Air force Shoots Down Syrian Chopper
TURKEY - In Brief 16 Sep 2013
According to deputy PM Bulent Arinc, later confirmed by the HQ of Chiefs of Military Staff, a Syrian military chopper was shot down ”inside the Turkish airspace” by two Turkish  Air Force F16s. The incident is new, with no announcement from Damascus as I write these lines; hence this is only a pr...

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Political Insights
BRAZIL POLITICS - Report 16 Sep 2013
An intense week of political negotiation ahead: The National Congress analyzes President Dilma’s vetoes, with the government’s effort focused on sustaining the veto on the end of the 10% fine on the FGTS in case of unfair dismissal. The STF decides on the possibility of a new trial for 12 of the ...

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Thanks, Mr. President
PERU - Report 16 Sep 2013
Executive Summary President Ollanta Humala’s announcement that “the crisis has arrived” depressed confidence in Peru—according to a recent poll, 61% of Peruvians think the country is already in economic crisis. So the government’s main near-term task is to avoid hitting the brakes too hard. Unfor...

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Noise in the Economic Activity Indicators
BRAZIL ECONOMICS - Report 16 Sep 2013
The extreme volatility of the data lately has been hampering the task of gauging the economic activity trend. In previous reports we have already indicated this has been happening with the figures on industrial production, where the monthly variations in recent months have been alternating betwee...

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All Eyes on the Fed and the SARB
SOUTH AFRICA - Report 16 Sep 2013
This week the Federal Open Market Committee of the US Federal Reserve Bank meets to discuss the conduct of monetary policy. Expectations are that an announcement will be made concerning the timing and extent of the reduction of the stimulus program, also known as “quantitative easing”.Against thi...

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Weekly Tracker: September 15-21
TURKEY - Report 15 Sep 2013
Executive Summary An American military intervention in Syria is off the table, which leaves Ankara out in the cold. The milestone event in the Kurdish Peace Process is the announcement of the Reform Package during the coming week. Will PM Erdogan bite the electoral bullet and give Kurds what they...

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Heads Up
VENEZUELA - In Brief 14 Sep 2013 2 responses
Rumors about conversations between the IMF and the Venezuelan government are emerging. We don’t know if there's any basis for these rumors. However, thinking out of the box, we see both parties having incentives to engage in conversations.  For the IMF, this would be an opportunity to reestablish...

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Overkill
DOMINICAN REPUBLIC - Report 14 Sep 2013
Executive Summary The Central Bank’s abrupt reversal of its expansionary monetary policy, amid concerns over sharp currency depreciation and prospective inflation, unnecessarily compromised economic recovery. Those worries dominated economic policy decisionmaking, and pointed once again to risks ...

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Emergence of Rupee Denominated Bonds as a Globally Investable Asset Class
INDIA - Report 13 Sep 2013
Executive SummaryInvestment into rupee denominated debt in India has faced a cumbersome auction mechanism, in which a foreign investor must first buy the right to buy government bonds. This auction mechanism was eliminated on September 13 for government bonds. It had been eliminated for corporate...

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Labor and Credit Markets Do Not Favor Consumption
BRAZIL ECONOMICS - Report 13 Sep 2013
Last week the data for August on the labor and credit markets were announced. The indications on both counts are that the growth of consumption will continue being lethargic. In August the unemployment rate fell to 5.3% in the seasonally adjusted series, but this does not mean the job market is g...