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Country Insights

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Economics: Public Finance in the Wake of Cuts
MEXICO - Report 11 Feb 2015
Executive Summary During the last week of January the authorities released public finance data as of December 2014. Tax revenues remained strong and there was no major expansion of public spending, so the public deficit came in below what the Ministry of Finance had anticipated in the general eco...

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More of the same
VENEZUELA - In Brief 10 Feb 2015
In a rather disorganized press conference, Finance minister Rodolfo Marco Torres and Central Bank president Nelson Merentes announced the new forex system. They added little to what President Maduro said on January 21. As expected, the 6.30 bolivars per dollar rate applies to food and medicines. ...

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Politics: Posing for the Elections
MEXICO - Report 10 Feb 2015
Executive Summary The Mexican Congress officially convened February 1 for a three-month regular session scheduled to conclude April 30, just over one month before federal elections in which every member of the Chamber of Deputies is to be replaced. With corruption and potential conflicts of inter...

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Weaker Oil Prices Will Slam Growth
RUSSIA ENERGY / FINANCE - Forecast 10 Feb 2015
Executive Summary Though we published our last Quarterly outlook in early December, lower oil prices and a weaker ruble, coupled with higher inflation, impose significant changes in our forecasts for the Russian economy. In this report, we offer updated scenarios for Russia in 2015, based solely ...

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Managing Economic Crisis
RUSSIA / FSU POLITICS - Report 10 Feb 2015
The Russian government is dealing with two opposing priorities: managing economic difficulties, while denying their existence. The government launched a plan to support budget-funded parts of society, while staving off full-throated economic crisis. With high interest rates creating challenges fo...

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Week of February 10
BRAZIL POLITICS - Report 10 Feb 2015
Despite the approaching Carnaval holidays, this will be an intense week in Congress. In the House, the Compulsory Budget may be voted upon. House leaders will also nominate members for the Petrobras CPI. In the Senate, the opposition is still trying to gather support for a Joint CPI. The presiden...

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Lower Growth for the Long Haul
CHINA - Forecast 09 Feb 2015
Executive Summary China’s main indicators show that the economy has reached a “new normal” stage, of relatively low yet stable performance. Real GDP rose 7.4% in 2014, down 0.3 pp from 2013. That puts growth below 8% for three years in a row. Quarterly growth rates were fairly flat last year, ...

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How Severe Will the Recession Be?
BRAZIL ECONOMICS - Report 09 Feb 2015
Despite the option for a gradual fiscal adjustment to save economic activity from an intense contraction, it’s becoming increasingly clear that Brazil is not only facing a recession in the coming months, but rather negative GDP growth for the entire year. This conclusion holds even without includ...

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Weekly Tracker: February 8-14
TURKEY - Report 08 Feb 2015
Executive Summary President Erdogan says he is receiving death threats from alleged members of the Gulen Organization and we believe him. An assassination attempt will have disastrous consequences for Turkish politics and economic confidence since it will bring Turkey to war footing. According to...

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January CPI (+3.9% m-o-m; +15% y-o-y) surprised to the downside
RUSSIA ENERGY / FINANCE - In Brief 05 Feb 2015
Rosstat published today January CPI data. Inflation surprised to the downside (+3.9% m-o-m) and was significantly higher than in December (+2.6% m-o-m). It’s maximum monthly growth in last 15 years (since Februrary 1999). On annual basis January inflation reached +15.0% y-o-y. We've expected to r...

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Petrobras Scandal
BRAZIL POLITICS - Report 05 Feb 2015
Creation of Petrobras CPI authorized The president of the House of Representatives, Eduardo Cunha (PMDB-RJ), has authorized the functioning of the Petrobras CPI (Investigative Parliamentary Committee). The request was read on the House floor. Now, party leaders have 48 hours to nominate members o...

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CBT Independence: How much longer?
TURKEY - In Brief 05 Feb 2015
I’m writing this brief to address FAQs after the recent barrage of criticism by Erdogan about CBT’s erroneous ways which reached the point of questioning the wisdom of its independence. To summarize the salient points of the debate, allow me to share this question by a reader, whose name I shall ...

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Headwinds Kicking Up
MEXICO - Report 04 Feb 2015
Executive Summary Mexico’s non-oil exports remained strong in 2014, according to the latest data, with private investment and consumption recovering faster, and public investment continuing to fall. In H2 the economy regained its “natural” growth rate, a trajectory it could sustain through 2015. ...

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Petrobras Scandal
BRAZIL POLITICS - Report 04 Feb 2015
Graça Foster leaves Petrobras and a new CPI is underway On Tuesday evening, February 3, President Dilma Rousseff met with then-President of Petrobras Graça Foster. Despite the secrecy surrounding the meeting, the topic of which was never divulged, everyone in Brasília knew what was coming, and th...

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Inflation and MPC: Back to Square One
TURKEY - Report 03 Feb 2015
January CPI inflation came in at 1.1%, which is higher than both consensus (0.7%) and our slightly higher forecast (0.8%). Most importantly, today’s print proved the overly optimistic expectations by Governor Basci unwarranted and, as announced by the Bank in the aftermath of the release, it rule...