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First cut on the Mexican mid-term elections
MEXICO - In Brief 08 Jun 2015
The government seems to have won the midterm referendum. The Electoral Institute did a good job in organising the elections, amid problems in Guerrero and Oaxaca In the races for nine governor mansions, the three main parties seem to win something. The recent figure of an "independent candidate" ...

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What happened on June 3?
VENEZUELA - In Brief 07 Jun 2015
BCV's international reserves fell by $798 million on Wednesday, June 3. This sizeable decline left the markets at a loss. We were puzzled because, according to our daily calculations, the Bank’s cash holdings in FX would have dropped to a $10 million record low that day. On June 4, reserves rose ...

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​First Update: Voters reject Erdogan at the ballot
TURKEY - In Brief 07 Jun 2015
I expected a close election, but that wasn’t it. AKP won an easy victory, but according to preliminary unofficial results fell roughly 20 seats short of the majority to form a single part government. Pro-Kurdish rights party HDP easily catapulted over the 10% qualifying hurdle, while CHP and to a...

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A technical flaw in constructing the GDP deflator might be good news (sort of)
CHINA FINANCIAL - In Brief 05 Jun 2015 2 responses
I've long argued that a non-disruptive adjustment would require that China's annual GDP growth decelerate by a minimum of 100-150 bps during the rebalancing period (which probably began in 2012). Reported GDP growth was 9.3% in 2011. In 2015-Q1 it had dropped to 7.0% year on year -- a sclerotic 2...

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Politics: Last poll data before the election
MEXICO - Report 05 Jun 2015
Executive Summary The last GEA-ISA poll, released on June 2, shows the electoral preferences with the PRI on top (35%), followed by the PAN (28%), the PRD (12%), the Green Party (7%) and Morena (6%). Of the smaller parties, the PT, PANAL, and Movimiento Ciudadano might keep their registration as ...

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National Assembly convened on Saturday to amend the Constitution to allow re-election
DOMINICAN REPUBLIC - In Brief 04 Jun 2015
Last Tuesday, the House approved by a significant majority the bill that calls for a meeting of the National Assembly to discuss the proposal to amend the article of the Constitution which impedes a sitting President to run for re-election. The amendment proposed would allow a President to run fo...

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The MNB are making another effort to chase money out of their balance sheet
HUNGARY - In Brief 03 Jun 2015
No doubt, policy-makers at the central bank have been pushing the pedal hard in recent days. Just a few days following our previous post, which reacted to their base rate cut last week, they announced a reform of the MNB's monetary tools and mechanism yesterday, to take effect in three months fro...

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May Inflation: Food Down, Core Up...
TURKEY - Report 03 Jun 2015
Consumer price inflation came in at 0.56% in May, broadly in line with expectations, which meant an increase in the 12-month rate to 8.1% from 7.9% a month earlier. Domestic-PPI also rose to 6.5%, from 4.8%, largely reflecting a reversal of favorable cost-push factors (Table 1; Graphs 1-2). Food ...

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Economic Climb, Interrupted
MEXICO - Report 03 Jun 2015
Executive SummaryWith international oil prices on the upswing, and the possibility of a U.S. slowdown looking more remote, some early-year economic risks have evaporated. Yet other risks are emerging – the biggest of them employers' deteriorating economic expectations.Two other factors we will so...

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No Clear Way Out
VENEZUELA - Report 02 Jun 2015
Executive SummaryNicolás Maduro faces a severe political crisis that, if unaddressed, could further destabilize the country and drag down the economy. Pressures on his government include a wave of organized criminal violence, proliferating black markets for basic goods, terrible poll numbers, U.S...

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Week of June 1
BRAZIL POLITICS - Report 01 Jun 2015
Thursday's holiday will reduce activity in Congress. Expectations are rising regarding the report on the payroll tax exemption bill. In the economy, we highlight the Central Bank's decision on interest rates and the announcement of the 2015-2016 Harvest Plan.House debates payroll tax exemptionsRe...

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GDP in the First Quarter: the Recession is Deepening
BRAZIL ECONOMICS - Report 01 Jun 2015
GDP in the first quarter of 2015 contracted by 0.2%, which was less than the consensus projections. Still, there are no reasons for optimism. On the demand side, after many years of steady growth, there was a sharp drop in household consumption, and on the supply side, besides the fall in GDP in ...

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A Pre-Election Recap
TURKEY - Report 31 May 2015
Executive SummaryOn the eve of general elections, there is fear in AKP ranks, loathing for the party among the opposition parties and an expectation of great surprises among so-called experts like us. While final polls indicate a razor-thin victory for AKP in terms of the seats, the trepidation i...

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Post-rate-cut EURHUF and declining fixed investment in Q1 point to further monetary easing
HUNGARY - In Brief 29 May 2015
1. The MNB's third cut in a row of its base rate on May 26, by another 15 bps this time and by a total 45 bps in total over the last three months, to 1.65%, has not affected the EURHUF immediately, which is no big surprise, as the move was fully in line with the broad market consensus. 2. However...

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Uprisings Damning Growth
PERU - Report 29 May 2015
Executive SummaryThe anti-mining political movement has taken maximum advantage of President Ollanta Humala's mounting unpopularity, and staging a massive protest against the construction of the Tia Maria mining project. Though the government imposed a state of emergency, and has brought relative...