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Pension Reform Proposal: the final steps
BRAZIL POLITICS · Report · 07 Oct 2019

A slow week in Brasília – because of the canonization of Sister Dulce on October 13, parliamentarians, governors and other authorities will travel to Rome. Congress meets on October 8 to analyze the LDO and vetoes. The five-business-day waiting period for second round discussions on Pension Refor...

Economics: Signs of a weaker economy in 2H 2019
MEXICO · Report · 07 Oct 2019

For some time we have been discussing in these pages the extent to which external economic and financial headwinds as well as domestic political factors threaten to pull the Mexican economy into recession. Aggregate demand components through the first half of the year validated our view that the ...

State debt to balloon as some SOEs continue to be rescued by the government
SOUTH AFRICA · Report · 07 Oct 2019

The communications ministry announced on October 4 that the South African Broadcasting Corporation (SABC) would receive a bailout of R2.1 billion from the National Treasury (NT). This follows more than two years of the SABC’s struggle to secure funds from the NT, and the funding should therefore ...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 07 Oct 2019

The level of political uncertainty has increased with the set of actions guided by representatives of the three branches of government, tailor made to protect the interests of influential groups. On the economic front, contrary winds from the global slowdown plus internal factors continue to rest...

Politics: The fight over Morena’s future
MEXICO · Report · 07 Oct 2019

The governing National Regeneration Movement (Morena) party will elect a new national leadership when 3,000 delegates meet in late November. Four people are competing to become the party’s next president. The winner will wield enormous influence over candidate selection and campaign finance in fu...

The Controversy over the Spending Cap
BRAZIL ECONOMICS · Report · 07 Oct 2019

The nervousness over the sluggish cyclical recovery has prompted the suggestion that the spending cap established by Constitutional Amendment 95 should be relaxed to restore the government’s ability to use countercyclical fiscal measures. In support of this proposal, its advocates argue that with...

Markets will watch closely the revised BoI policy rate forecast
ISRAEL · Report · 07 Oct 2019

We expect a rate hold decision today, with the dovish forward guidance maintained. More important will be the revised BoI policy rate forecast, likely to reflect rate stability through Q320 (with one hike in Q420). Wage pressure (up 3.8% y/y) continues on a tight labor market. The adjusted fis...

Thinking about monetary policy
PHILIPPINES · In Brief · 07 Oct 2019

In our quarterly report last August, we asked whether the key policy rate, the overnight RRP rate, will soon return to 3%, its level before the Monetary Board started tightening in May last year. In that tightening cycle, the overnight RRP rate rose by a total of 175bp, ending at 4.75%, before mo...

Castillo projected to defeat Fernandez in the PLD primaries
DOMINICAN REPUBLIC · In Brief · 06 Oct 2019

With a very narrow margin, Gonzalo Castillo, the dolphin of Danilo Medina, is projected as the winner of PLD primaries, defeating former president Leonel Fernández for the presidential candidacy. With 97.5% of the voting booth computed, Castillo reached 48.4% of the total votes, just 14 thousand ...

The fallout after Vizcarra’s decision to dissolve Congress
PERU · In Brief · 06 Oct 2019

After the September 30 dissolution of Congress, a few facts remain clear:This action is considered illegal by most prominent constitutional scholars and constitutional experts (see attached declaration published by 11 constitutional experts in Spanish ). However, there are many lawyers that argue...

Preventive protest sets redlines for Zelenskiy
UKRAINE · In Brief · 06 Oct 2019

Today more than 10 thnd people gathered at Maydan Nezalezhnosty, the central square of the country, to protest against ‘Steinmeier formula’ that President Zelenskiy officially accepted. It’s appeared to be the largest public protest since the Revolution of Dignity in 2013. Andrey Bohdan, Chief of...

Costa Rica´s fiscal rule. A correction
CENTRAL AMERICA · Report · 06 Oct 2019

In our September 30th Monthly Report we indicated that, in defining the Fiscal Rule, the Ministry of Finance considered the final budget allocation, which includes allocations done after the approval of the original budget. That statement was not correct. The compliance with the fiscal rule was ...

Odds of a military campaign increase
TURKEY · Report · 06 Oct 2019 · 3 responses

This week’s note is very brief. On politics, we focus on Turkey’s potential Syria campaign, as President Erdogan has served final notice on Saturday that the Turkish military has been given marching orders to enter North East Syria. He wants a safe zone badly for a variety of reasons. The risk...

Gulf weekly: Saudi rating downgraded; hints of possible Saudi-Iran talks
GULF COUNTRIES · Report · 06 Oct 2019

​Fitch’s downgrade of Saudi Arabia to A, in the aftermath of the Abqaiq attack but still leaves its rating well above market-implied levels. The fact that Qatar’s GDP contracted for the first in 26 years is less dramatic than it sounds. There was also GDP data for Saudi (fine) and PMI data for Sa...

Hungary in the centre of the Brexit endgame?
HUNGARY · In Brief · 06 Oct 2019

In a rather unusual story, two British newspapers (Telegraph and Express) reported Hungarian foreign minister Péter Szíjjártó and Hungary's ambassador to the UK to have been spotted as leaving the building of the UK Cabinet Office on Friday morning, around the time when PM Boris Johnson reportedl...

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