Country Insights

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Back To Square One
TURKEY - In Brief 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, data proved the overly optimistic expectations by the CBRT wrong and, as has just been stated by the Bank on its website, eliminated the (by-now notorious) ...

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Central bank abandons indicative exchange rate regime
UKRAINE - In Brief 03 Feb 2015
The Central bank plans to cancel current exchange rate regime when ‘legal’ exchange rate is 'indicated' every day during auctions. The regime was introduced on November 5th 2014, after parliament elections when the authorities realized that they do not have money for large-scale FX interventions....

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Economic Scenarios: The Good, the Bad and the Ugly
ARGENTINA - Report 02 Feb 2015
Executive Summary For the first time in decades, the electoral year and the political transition toward “a more rational administration” is helping to stabilize the economy. There is a broad consensus that any of the candidates who are leading the polls will make the necessary changes to improve ...

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Week of February 2
BRAZIL POLITICS - Report 02 Feb 2015
A politically intense week, with the end of the recess for the Legislative and Judiciary.The government will have to regroup the allied base after the election for presidents of the House and Senate.Dialogue with unions on the fiscal adjustment measures continues.President Dilma Rousseff and form...

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COSTA RICA: Hello Managed Floating; Good Bye Currency Bands
CENTRAL AMERICA - Report 02 Feb 2015
The Central Bank announced last Saturday the elimination of the currency band and the start of a new exchange rate regime characterized by a managed float. The new system, which has been the de facto regime over the past 12 months, implies the Central Bank´s active participation in the market to ...

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The Size of the Fiscal Disaster in 2014
BRAZIL ECONOMICS - Report 02 Feb 2015
Few observers had any doubts that the fiscal policy put into practice by former finance minister Mantega would leave a disastrous legacy. The publication of the numbers for 2014 last week allows assessing the problem’s magnitude. From January through December 2014, the central government had a pr...

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Weekly Tracker: February 1-7
TURKEY - Report 01 Feb 2015
Executive Summary President Erdogan launched a campaign for a new Constitution and Executive Presidency after the general elections.This means the stakes are very high going to the June 7th ballot. We dedicate a major portion of the politics section to the implications of Mr. Erdogan’s dreams of ...

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Dominican Rep buys back the debt with Venezuela under Petrocaribe with a 52% discount
DOMINICAN REPUBLIC - In Brief 30 Jan 2015
After months of rumors, last night the Minister of Finance of the Dominican Republic announced that the government has bought back 98.5% of the total debt with PDVSA, the Venezuelan state owned oil company. The debt was contracted under Petrocaribe, a program which provides generous financing for...

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CBR surprisingly cut key rate to 15%
RUSSIA ENERGY / FINANCE - In Brief 30 Jan 2015
CBR surprised the markets today cutting key rate by 200 b.p., to 15%. Monetary authorities announced ‘stabilization in inflation and devaluation expectations’ as a reason for the cut. We believe that the decision is inconsistent with declared policy of inflation targeting regime. It’s an obvious ...

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Will China Save the Day?
VENEZUELA - Report 30 Jan 2015
Executive Summary President Maduro signaled policy continuity in his annual address to the legislature last January 21. We see no signs that severe shortages and spiraling inflation will be tamed and remain as uncertain as we were last month regarding the probability of default. We project net ou...

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Repo Rate Unchanged on Improved Inflation Prospects
SOUTH AFRICA - Report 30 Jan 2015
The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) left the repo rate unchanged at 5.75%. In acknowledging the continued weakness of the South African economy, Governor Lesetja Kganyago mentioned that the earlier emphasized interest rate normalization process will be pau...

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The IMF mission to stay one more week in Kyiv
UKRAINE - In Brief 29 Jan 2015
The IMF mission, which arrived in Kyiv on January 12 and was expected to finalize its work on January 29, will stay one more week in Kyiv, media reported. In our opinion it is a positive signal. After crazy budget 2015 the authorities approved in late December 2014 it is good the parties still ha...

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4Q14 GDP at 6.9%
PHILIPPINES - In Brief 29 Jan 2015
Government announced today a 6.9% GDP growth in 4Q14 that brought the full year average to 6.1%, exactly matching our forecast made early in the year. The big contributor to 4Q14 growth was net exports as sales of electronics products quickened and imports were held down by port congestion and st...

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The “New Normal”
CHINA - Report 29 Jan 2015
Executive Summary Growth has been slowing, with the 7.4% rise in real GDP in 2014 representing a 0.3 pp dip from 2013. That means growth has run below 8% for three years in a row. Quarterly growth rates were quite flat last year, too. Some depressive factors are worth noting. First, industr...

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The growing corrosive power of the Petrolão scandal
BRAZIL POLITICS - Report 29 Jan 2015
Two new pieces of information add potentially explosive elements to the crisis surrounding the Petrobras corruption allegations. According to the Radar Online column, the President of UTC, Ricardo Pessoa, is collaborating with the Lava Jato operation on a plea bargain deal in exchange for informa...