Country Insights

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Fed cuts are a small but welcome relief for the GCC
GULF COUNTRIES - In Brief 01 Aug 2019
GCC central banks have mainly followed the Fed lower, in keeping with usual behaviourThe rate cuts come as a small but welcome relief for fiscal policy and to support credit growth, after a number of years of rate hikes amidst slowing economic growthHighly leveraged economies and sectors will be ...

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The Riddle of the Reasonable Real Rate of Return
TURKEY - In Brief 01 Aug 2019
The CBRT released the year's third Inflation Report yesterday. I am, in theory, on holiday, so I missed the presentation by Governor Murat Uysal and the Q&A that followed it. Now that I have read the speech, which is available verbatim on the CBRT site, and watched the Q&A, I wanted to share a fe...

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The 2020 Budget: Key questions linger
COLOMBIA - Report 31 Jul 2019
On July 30, Minister Carrasquilla went through the usual ritual of submitting next year’s budget to Congress and discussing the main features of the bill with the press. The latter is meant to clarify important aspects of an initiative that, while central to fiscal policy, is full of fine print t...

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South Africa’s fiscal woes magnify as Eskom losses balloon
SOUTH AFRICA - Report 31 Jul 2019
South Africa’s widening budget deficit on the back of lower GDP growth, coupled with increased spending (including government’s financial support for Eskom) as well as the downward adjustment of GDP growth for 2019 led Fitch Ratings Agency to revise the country’s outlook to negative from stable (...

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Russian legislation makes nationalization of Yandex likely
RUSSIA / FSU POLITICS - In Brief 31 Jul 2019
On July 26 legislation was introduced in the Russian Parliament aiming to restrict foreign ownership of internet resources to under 20%. Yandex is one of the big three Russian internet companies. Its parent company is Yandex NV which is based in Holland. Yandex is traded on the Nasdaq. Renaissanc...

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Costa Rica: New taxes and financing lead the adjustment plan
CENTRAL AMERICA - Forecast 31 Jul 2019
After several failed attempts, Costa Rica is finally tackling a fiscal adjustment to reduce its large fiscal deficit, and to stabilize government debt. The road hasn’t been smooth, given the years of accumulated disequilibrium and the associated rigidities imposed by domestic legislation. But the...

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Having our cake and eating it too?
COLOMBIA - Report 31 Jul 2019
This year may mark the end of stagnation in financial deepening. Outstanding commercial loans in May finally started growing faster than nominal GDP growth. Still, it’ll be a few years before commercial credit-to-GDP ratios rebound to 2015 levels. Will this be enough to take the economy to health...

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​Indonesia: Vision 2019-2024
INDONESIA - Report 31 Jul 2019
President Joko Widodo, acting as president-elect for 2019-2024, recently outlined his vision for the second term of his presidency. His speech was a strong one, showing his great confidence in running his second term, starting in October 2019. There are five priorities that President Joko Widodo ...

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Two macro charts on the forint dilemma
HUNGARY - In Brief 30 Jul 2019
The forint was fixed at EURHUF 327.84 today, its weakest ever level to the best of our recollection. As usual, we suspect that the current forint weakness is at least not entirely against the will of the MNB. At least this is what we read from the dovish comments made by the Monetary Council afte...

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​A Neutral Zone restart is coming and means more to Kuwait than Saudi
GULF COUNTRIES - Report 30 Jul 2019
Kuwait and Saudi Arabia are edging towards restarting shared oil fields suspended for over four years due to bilateral disputes, which overlap with wider tensions with Iran and Qatar. Until OPEC quotas are lifted, a restart would be offset by cuts at other fields, but the spare capacity and expec...

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BAHRAIN: Protests after Shia executions unlikely to spark change
GULF COUNTRIES - In Brief 30 Jul 2019
In the last few days Bahrain has seen the most extensive protests in two years following the executions of three men on saturday, including two young Shia. The anger is likely to lead to further clashes between protestors and police but there are currently no indications of an escalation towards ...

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Pension reform: risk of changes in the second round and other weekly topics
BRAZIL POLITICS - Report 29 Jul 2019
The government and truckers will take part in a new round of negotiations on the cargo pricing table. Meetings are scheduled for Monday, Tuesday and Wednesday in Brasília. The Central Bank may finally reduce the benchmark interest rate, currently at 6.5% per year. On Thursday, Congress and Superi...

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Russian Ministry of Finance trying to encourage home insurance
RUSSIA / FSU POLITICS - In Brief 29 Jul 2019
On July 25 the Ministry of Finance finished a report adumbrating ways to convince householders to insure their properties. The ministry is working with the Ministry of Economics and the Ministry of Construction on this. This move comes right after an inundation in Irkutsk ruined many home. This c...

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Economics: Pemex retreats to a closed model
MEXICO - Report 29 Jul 2019
Pemex recently made good on a longstanding promise to deliver its new five-year business plan, which covers most of the six-year term of office of President Andrés Manuel López Obrador. The administration had been offering previews of some of the plan’s features in recent months as it tested the ...

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SAUDI: Stimulus will only buy a temporary reprieve
GULF COUNTRIES - Forecast 29 Jul 2019
Saudi Arabia is pressing ahead with a fiscal stimulus to drive growth after several tough years for both consumers and businesses. This stimulus will not be sustainable, and non-oil growth will slow to around 1.8% by 2021 from 2.6% in 2019. As a result, the fiscal deficit will swell to 9% of GDP ...