Country Insights

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MPC: What to Expect Tomorrow
TURKEY - Report 17 Aug 2015
The CBRT’s Monetary Policy Committee will meet tomorrow. The meeting is an especially interesting one because: 1) it is the first meeting since Governor Basci signaled the Bank’s intention to simplify the monetary policy framework late last month; and 2) it is taking place at a time lira is at an...

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ECUADOR - In Brief 15 Aug 2015
Cotopaxi, the highest active volcano in the world and located close to largely populated areas including Quito, had three important explosions last Friday and the government has raised the alert from yellow to orange. The government has also issued a decree declaring an "state of exception" which...

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What happens after new elections?
TURKEY - In Brief 14 Aug 2015
Once again I take the stage to answer questions from a reader, who shall --as has now become custom--remain unanimous. I do love to field questions from you, but urge all of you who have my private e-mail to use this platform which reduces my workload greatly and facilitates information sharing. ...

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Reelections loom on the horizon
TURKEY - In Brief 13 Aug 2015
Today’s summit between AKP leader Davutoglu and CHP’s Kilicdaroglu failed to produce a break-through, with both leaders declaring that Turkey is probably heading for reelections. We now assign 90% probability to a reelection before the turn of the year, possibly on 22th of November. Yet, as Kilic...

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FX Watch
PHILIPPINES - In Brief 13 Aug 2015
China's attempt to pursue a more market-based exchange rate has seen other Asian currencies depreciating alongside it. The impact on the peso has been relatively smaller compared with other neighboring currencies, reflecting robust external accounts. But at a time when exports across the region a...

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The PBoC’s currency reform
CHINA FINANCIAL - Report 12 Aug 2015
On Tuesday the PBoC devalued the RMB by 1.86%, its biggest devaluation since 1994. It also announced a deregulation of the currency regime that will allow the PBoC significantly to reduce intervention. I expect that the PBoC will have to choose between intervening to nearly the same exte...

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Economics: Middle Class Sustains Consumption
MEXICO - Report 12 Aug 2015
Many media outlets have dedicated considerable attention in recent weeks to indicators of Mexico’s middle class in Mexico as part of the broader discussion of recent data confirming a considerable rise in poverty. Based on the information published by the National Council for the Evaluation of...

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Politics: Key Preliminaries Ahead of 2018 Race
MEXICO - Report 12 Aug 2015
The 2018 campaign is now underway. The country’s three main parties are electing new leaderships with an eye toward the next presidential elections. By mid late last week it became obvious that Manlio Fabio Beltrones would face no opposition in his bid to become the next chairman of the govern...

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Question Marks Are Growing
HUNGARY - Report 12 Aug 2015
Moving closer to the end of 2015, an increasingly intriguing question is how the authorities will handle the combination of decelerating output growth, weak domestic investment, rising inflation, the imminent decrease of development grants from the EU and the continued inactivity seen at domestic...

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Shrinkage Bottoming Out
RUSSIA ENERGY / FINANCE - Forecast 12 Aug 2015
Russia’s economic slump deepened in Q2. According to a preliminary Rosstat estimate, GDP fell 4.6% y/y, vs. a 2.2% fall in Q1. The recession is shifting toward investment and industry, while household demand is showing signs of stabilizing. Weak external demand is hurting export industries. Co...

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Expecting a Growth Rebound
CHINA - Forecast 12 Aug 2015
Though growth is still low, we expect it to pick up in H2, driven by several positive factors. GDP grew 7% y/y in Q2, flat on Q1. The GDP deflator grew 2.54% y/y in Q2, up 1.12 pps from Q1. Although prices are picking up, and are slightly higher, both domestically and compared with other devel...

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​Coalition alert: Turkey heading for early elections
TURKEY - In Brief 12 Aug 2015 3 responses
Turkey’s secularist bastion Cumhuriyet daily newspaper claimed that CHP leader Kemal Kilicdaroglu told delegates from left-wing labor unions that Erdogan has sabotaged the coalition talks and the break-down may be announced as soon as Thursday. I’m linking the Turkish news item here. While the Tu...

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Accusations Fly in as Elections Near
PERU - Report 11 Aug 2015
President Ollanta Humala’s confrontational attitude toward the opposition has compounded his party’s problems, after it lost its congressional majority. The uncovering of wrongdoing related to campaign financing and favoritism in the awarding of contracts to individuals and firms linked to the pr...

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​Reconstructing the Davutoglu-Kilicdaroglu summit
TURKEY - In Brief 10 Aug 2015
After 8 days in the remote Aegean island of Imroz (Gokceada), which I highly recommend to those wishing to become monks or goat herders, I'm back in action and begin work by sharing with my Asian and early-bird European readers my first theories about the background of the 4.5 hour long Davutoglu...

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A first victory of Scioli, but not yet enough to ensure Presidency
ARGENTINA - In Brief 10 Aug 2015
With close to 95% of total votes counted, the results of yesterday’s primary elections are clear and not too different from what the polls hinted in the previous weeks. Scioli emerged as the “winner” but not necessarily strong enough to ensure a first round victory in the October elections, depen...