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COUNTRY INSIGHTS

Economics: The mirage of 1Q public finance
MEXICO · Report · 18 May 2020

Public finance data for the first quarter confirmed much of what we already knew about government priorities, but raised further points of concern about how well the public coffers will hold up as we move deeper into the recession. The numbers look extremely upbeat at first glance, with public ba...

The danger of financial and fiscal populism in Congress
BRAZIL POLITICS · Report · 18 May 2020

President Jair Bolsonaro discusses the veto of the bill that allows for civil servant salary increases with governors. Federal representatives analyze the bill on judicial recovery and bankruptcies during the pandemic and the provisional measure on the reduction of salaries and working hours for ...

Measuring the Pulse of Economic Activity
BRAZIL ECONOMICS · Report · 18 May 2020

The depth of the recession depends on the behavior of the Covid-19 contagion curve, which has not yet flattened. Models like the SIR serve to describe the behavior of contagion but cannot make projections. This requires comparisons with other countries and reveals an extremely vexing situation. W...

Politics: Reopening plan - more doubts than points of clarity
MEXICO · Report · 18 May 2020

The plan for reopening social and economic activities the federal government announced last Wednesday was so vague, confusing and contradictory that it left most observers baffled, and most state governors looking to plans of their own. A few general aspects are clear. The strategy consists o...

Russian blue chip companies post bad results
RUSSIA / FSU POLITICS · In Brief · 18 May 2020

Results for Q1 are out now. They are almost uniformly bad. Energy companies and banks have been hit hard. Airlines are suffering the worst. The worst is yet to come in Q2. It is unlikely that these entities will rebound once coronavirus is beaten. VTB estimates it will take 18 months to recover a...

Russian macro: Budget execution and balance of payments suggest the Russian economy is adjusting
RUSSIA ECONOMICS · Report · 18 May 2020 · 1 response

The Finance Ministry reported that the federal budget revenue flow was strong last month as non-oil-and-gas revenues soared by over 76% y-o-y and reached R1.836 trln. As a result, the budget posted a small surplus in April even though expenditures exceeded R2.26 trln, which is very high, given th...

The reopening of the economy begins; in March, activity declined 9.4%
DOMINICAN REPUBLIC · In Brief · 18 May 2020

Last night, President Medina announced the beginning of the reopening of the economy and signed a decree reducing the curfew hours, which will now start at 7pm (instead of 5pm) and end at 5am (instead of at 6 am). The announcement of the start of reopening came two days after the Central Bank rep...

Weak consumer demand will keep inflation low
ISRAEL · Report · 18 May 2020

April's CPI (-0.3% m/m) was higher than expectations as rental prices surprised on the upside. Consumer confidence fell sharply in April on spiking unemployment, supportive of weak inflationary pressure. The economy appears to be opening up more rapidly than previously expected, as the number of ...

Government at a crossroads between fighting the virus and reviving the economy
PERU · Forecast · 18 May 2020

The president, Martín Vizcarra, had a strong showing at the beginning of the Covid-19 crisis. Mr. Vizcarra promptly closed ports and airports in early March and put the whole population under lockdown on March 16th, in line with the so-called “hammer” strategy. Moreover, taking advantage of Peru’...

Recession deepens and inflation is momentarily contained, but monetary expansion raises the risk of inflationary explosion
ARGENTINA · Forecast · 18 May 2020

Quarantine and social distancing measures were implemented in Argentina mid-March, as soon as the initial COVID-19 infection cases were detected in people who arrived from abroad. So far, the early reaction has contained the number of coronavirus deaths to around eight per million inhabitants, we...

Weak consumer demand will keep inflation low
ISRAEL · In Brief · 18 May 2020

April's CPI (-0.3% m/m) was higher than expectations (-0.5%). This upward surprise came from housing rental prices, which continued to increase by 2.3% y/y, similar to last month, while we had expected some price moderation. Core inflation moderated to 0.2% y/y from 0.35% in March. We expect core...

Betting on a "V", with no Plan B
TURKEY · Forecast · 17 May 2020 · 1 response

“Prediction is difficult especially about the future”, thus the saying goes, which couldn’t be more accurate in these times of “radical uncertainty”. The COVID-19 epidemic has been ravaging the economies the world over, and Turkey is no exception. Where we go from here is difficult to fathom, for...

Belarus to receive US oil
RUSSIA / FSU POLITICS · In Brief · 17 May 2020 · 1 response

On May 17 Belarus announced that a shipment of oil has left Texas bound for Belarus. It will transit via Klaipeda, Lithuania. The Belarusian petrochemical company Belneftkhim is handling the shipment. It will not be received until June. United Energy Trading and Getka are the American companies i...

Russia withdraws unreliable ventilator model
RUSSIA / FSU POLITICS · In Brief · 17 May 2020

Moscow has decided to ban Aventa M ventilators made since April 1 by Ural Instrument Engineering Plant (UPZ) in Yekaterinaburg. Rostec the state holding owns the plant and is under sanctions from the US over other issues. The Aventa Ms which were manufactured before April 1 2020 are still allowed...

Nord Stream 2 subject to EU gas market rules
RUSSIA / FSU POLITICS · In Brief · 16 May 2020

On May 15 the German energy regulator stated that Nord Stream 2 will have to comply with EU rules on the gas market. Nord Stream 2 investors had hoped for an exception to be made. The pipeline will bring gas from Russia to Germany.An EU directive requires gas production and distribution to be ind...

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