Country Insights

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EL SALVADOR: President Earns Low Marks for His First Year
CENTRAL AMERICA - Report 29 Jun 2015
Executive Summary We give El Salvador’s new presidential administration a low grade for its first year in office. Growth is still sluggish, and other troubles persist, such as uncontrolled public debt. The adverse business climate is reflected in low private investment, driven by the government’s...

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Hungary is looking ahead to incalculable Greek events with healthy fundamentals
HUNGARY - In Brief 28 Jun 2015
Most recent events with regard to Greece have proven to be genuinely incalculable, and so it may continue in the forthcoming days and weeks. As the potential capital market consequences on Europe and perhaps even more on the eastern side of the continent may be significant, it is good to remember...

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Weekly Tracker: June 28-July 4
TURKEY - Report 28 Jun 2015
Executive Summary Heads up!If a large variety of Turkish news sources are to be believed President Erdogan and PM Davutoglu already ordered the military to march into Syria to defend Turkey’s borders. We don’t quite find the news sensible, but remain very alarmed about the prospect of Turkish boo...

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Will Political Turmoil Affect Economic Performance?
PANAMA - Forecast 26 Jun 2015
Executive Summary The economy is running at a steady pace: we project a 5.9% GDP growth in 2015 and 6.1% in 2016. The political climate is the most worrisome in the two-and-a-half decades after the demise of the military dictatorship due to corruption scandals during the Martinelli administration...

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Signs of Stagflation?
INDONESIA - Report 26 Jun 2015
Executive Summary Similar to April, May 2015 was considered another critical month for the trade balance for Indonesia. In the previous years, the period starting from the third month prior to Ramadan was considered critical because of the spike in imports. However this year the months of Apri...

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Strong Contraction of Credit
BRAZIL ECONOMICS - Report 26 Jun 2015
Executive Summary Since the level of nonperforming loans started to creep upward in late 2011-early 2012, private banks have been extremely cautious in extending new credit, both to consumers and companies. The most recent data indicate sharper contraction of non-earmarked credit and less impe...

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A Bumpy Inflation Landscape
SOUTH AFRICA - Report 26 Jun 2015
Headline inflation has accelerated from 4% year on year (y/y) in March 2015 to 4.6% y/y in May 2015. Producer price inflation for final manufactured goods increased significantly, to 3.6% y/y in May 2015 from 3.0% y/y recorded in April. Essentially, the trend in domestic inflation has reversed co...

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CBR Goals Contradictory and Unrealistic
RUSSIA ENERGY / FINANCE - Report 26 Jun 2015
Executive Summary The ruble has entered a new stage of volatility and depreciation, with its weakening in early June triggered by a drop in oil prices, and the escalation of fighting in Eastern Ukraine. But the actions of the monetary authorities likewise played an important role. The Central Ban...

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Economics: Commodities, Forex and Inflation
MEXICO - Report 24 Jun 2015
Executive Summary Over the past year raw material prices have experienced their sharpest contractions on an international level since the economic crisis of 2008-2009. The International Monetary Fund’s general index of raw material prices recorded a 31.9% decrease between June 2014 and May of thi...

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Politics: Municipal Election Results
MEXICO - Report 24 Jun 2015
Executive Summary In addition to electing a new Chamber of Deputies and nine state governors, on June 7 Mexican voters elected new authorities in slightly more than 1,000 municipalities. This election confirmed that a party’s victory in a gubernatorial contest is by no means a guarantee of carryi...

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Another 15 bps cut by the MNB, further small reduction promised
HUNGARY - In Brief 23 Jun 2015
The MNB reduced its base rate by 15 bps to 1.5% today, just as widely expected. Including this measure, the MNB has cut the base rate by a full 60 bps in equal steps over the past four months. The forint received this news quite negligently, hovering around EURHUF 310, which essentially represent...

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The Current Account Deficit Remains in Place
SOUTH AFRICA - Report 23 Jun 2015
After having eased to 5.1% of the gross domestic product in Q4 2014, the deficit on the current account narrowed further, to 4.8% in Q1 2015 (see Graph 1). Graph 1 Current account balance, South Africa, 2010 Q1- 2015 Q1 Notes: (1) The data is seasonally adjusted and annualized.(2) Current account...

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What Can We Learn From the Currency Defense of 2013
INDIA - Report 23 Jun 2015
Executive Summary In 2013, at the time of Ben Bernanke’s “Taper Talk”, India mounted a currency defense to combat currency depreciation. It is useful to look back at this episode, in order to obtain insights into the workings of a currency defense. The authorities appeared to throw everything the...

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MPC: All Hopes On Food Prices
TURKEY - Report 23 Jun 2015
The Monetary Policy Committee left all key short-term rates unchanged as expected – one-week repo rate at 7.5% and the O/N lending and borrowing rates at 10.75% and 7.25%, respectively (see chart). The content of the statement on growth and the current account dynamics (the first econ paragraph o...

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Warning: Polarization Ahead
DOMINICAN REPUBLIC - Report 23 Jun 2015
Executive Summary The political landscape has changed dramatically over the past three weeks, emerging from confusion to arrive at clarity: we now see that the country is headed toward political and electoral polarization. On one side are President Danilo Medina and his Partido de la Liberación D...