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South Africa’s first quarter GDP contracts for the fourth time in a row ‒ a deep contraction, too
SOUTH AFRICA · Report · 04 Jun 2019 · 1 response

Despite our expectations of a GDP contraction during the first quarter of 2019, it was still disappointing when results released by Statistics South Africa today confirmed that indeed GDP had a much deeper contraction than expected at -3.2% following 1.4% in the fourth quarter of 2018. This was t...

CBR concerned by company debt
RUSSIA / FSU POLITICS · In Brief · 04 Jun 2019

The Central Bank of Russia has voiced its anxiety in its review of financial risks over increasing debt in several major companies. This poses a danger to Russian banking. Companies are spending an average of 10% servicing debt. In 2015 it was 10.4% and when sanctions and low oil prices hit the m...

Firm data in Jan-Mar 2019
INDIA · Report · 04 Jun 2019

After a long wait, we have four quarters of relatively good performance by the large listed companies, for the period ended Jan-Mar 2019. The four quarters had nominal net sales growth and nominal operating profit growth of about 10% or more. Net profit has bounced back from the abysmal performan...

Political tango or political tangle?
ARGENTINA · Report · 04 Jun 2019 · 2 responses

In this report, we review the current political discussions ahead of the presidential elections. We consider this essential to better understand the economic implications of the current political moves and countermoves. As we move closer to June 12 (the deadline for the recognition of politica...

Standoff over presidential race must end in July
DOMINICAN REPUBLIC · Forecast · 04 Jun 2019

Growth remained strong in Q1, with the IMAE estimating GDP growth at 5.7%, compared with Q1 2018. Inflation accelerated in March and April, by 0.65% and 0.53%, respectively. But at the close of Q1, accumulated 2019 inflation since January reached 0.86% q/q, and was up 1.47% y/y. These figures are...

The importance of the approval of PM 871
BRAZIL POLITICS · Report · 04 Jun 2019

As we expected, on Monday night, June 3, the Senate approved Provisional Measure 871/19, which intends to fight fraud in INSS benefits and modifies the rules for the concession of rural retirement. Savings from the measure are estimated at R$ 9.8 billion over 12 months. Approval brings with it so...

Monetary tightening is happening at last, slowly, slowly
HUNGARY · In Brief · 04 Jun 2019 · 1 response

The MNB held the stock of its FX swaps unchanged at HUF1725bn yesterday. This was the third weekly tender in a row that the swap stock did not change, following the previous one-and-a-half months of steep reduction.The fact that the reduction of the FX swap stock has been stopped does not mean in...

Pension Reform: First round vote possible before recess
BRAZIL POLITICS · Report · 03 Jun 2019

The Senate votes on PM 871/19, which attempts to reduce fraud in the INSS, generating R$ 10 billion in savings. In the Lower House, the measure that changes the procedures for provisional measures may be voted upon. The Federal Supreme Court decides on the need for legislative authorization for p...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 03 Jun 2019 · 1 response

Some signs of good sense have started to appear on the political stage. Although it is too soon for celebrations, we hope the recent improvement is not just a series of random events, but instead reflects some learning by the actors involved. The retraction (0.2%) of GDP in the first quarter, wit...

CEOs of embattled Eskom and SAA step down – is it a case of dropping the ball? Or, a Ministerial over reach?
SOUTH AFRICA · Report · 03 Jun 2019

Following South Africa’s May 8 general elections, Moody’s Ratings Agency published a post-election credit report on the country. It expects government’s debt burden to rise to 65% of GDP by 2023, increasing to more than 70% when taking into account guarantees to the debt-ridden Eskom. This deteri...

Politics: Anti-graft talk yields first charges
MEXICO · Report · 03 Jun 2019

Word of an arrest warrant for a former Pemex official last week sparked speculation that Andrés Manuel López Obrador’s career-long denunciations of graft might yet lead to prosecutions of other major figures in the last government, but political history and Mexican prosecutors’ disappointing reco...

China’s “shadow” shadow banking
CHINA ADVISORY · Report · 03 Jun 2019

We have just completed a two-day visit to Fuzhou, in Fujian Province, to examine local banks, investors, pawnshops and other non-bank institutions in the capital chain. We drew three conclusions: 1) The significant increase in non-bank lending has continued to grow since the original explosion...

EL SALVADOR: New Cabinet Members
CENTRAL AMERICA · Report · 03 Jun 2019

In our May report we informed about the four first members of the Nayib Bukele’s cabinet, all of them woman. This brief is to update that information as the new staff took office on June 1, 2019. Most of the new ministers were announced on the same first day of the new administration. The initial...

Economics: Economy extends slowing trend
MEXICO · Report · 03 Jun 2019 · 1 response

The May 30 announcement by the president of the United States that it will impose a 5% tariff on all imports from Mexico effective June 5, with the possibility to raise it by an additional 5% each month until it hits 25% October 1, could have additional negative effects on the economy. It is very...

Is the economy recovering?
BRAZIL ECONOMICS · Report · 03 Jun 2019

​From a technical standpoint, Brazil is not in a recession, and possibly will not enter this phase of the economic cycle in the next quarter, when there should be slight (and mediocre) growth. However, although a double dip is not in sight, the recovery of economic activity is disappointing to sa...

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