Country Insights

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The Point Guard
PHILIPPINES - Report 27 Dec 2013
In this, our year-end report, we print in full our conversation with Philippine Budget Secretary Florencio "Butch" B. Abad, by all accounts one of the President's most trusted men. The “point guard” on budget matters, he talks about the pork barrel controversy and its possible impact on public ex...

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Mortal Combat turns into Constitutional Crisis
TURKEY - In Brief 27 Dec 2013
First let me wish our readers a Merry Christmas. Alas, Christmas was not merry for Turkey, with PM Erdogan being forced into a drastic cabinet revision, while departures from the party continued (5 so far). As I had feared, allegations of graft reached PM’s son Mr. Bilal Erdogan. This is the good...

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Will Oil Price Be The Scrooge Of The Ecuadorian Economy?
ECUADOR - Report 26 Dec 2013
Executive SummaryThe strong fall in oil prices since October 2013 and less than optimistic estimations for the future forced government officials to come up with lower GDP growth rates for 2014 and 2015. Minister of Finance Fausto Herrera placed these rates at 4% for 2014 falling back to 3.5% in ...

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Future Payback from Energy Reform
MEXICO - Report 24 Dec 2013
Executive Summary Last week the national statistics office released its report on aggregate demand for the third quarter of 2013. Demand grew 1.5% compared to the same July-September period of a year earlier (GEA had estimated a 1.6% increase). During the second quarter of 2013, demand grew 2.2%....

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No Referendum on Reform
MEXICO - Report 24 Dec 2013
Executive Summary Early last week, the necessary 17-state majority ratified the constitutional reform regarding the energy sector and last Friday, at the National Palace, President Enrique Peña Nieto signed it into law. The enactment itself is likely to produce two main types of political consequ...

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(Politics Are) Hot, Hot, Hot
CENTRAL AMERICA - Report 24 Dec 2013
Executive Summary The Costa Rican presidential race is heating up, with dark horse leftist candidate José María Villalta advancing. A Unimer poll for the daily La Nación, published in early December, gave Villalta 23.7% of the votes by voters who had made up their minds, while government candidat...

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Governor on 2014 Monetary Policy: Short Term Gain, Long Term Pain?
TURKEY - In Brief 24 Dec 2013
Governor Basci introduced the CBT's 2014 Monetary and Exchange Rate Policy report today. As far as the big picture is concerned, there are no major surprises. The Bank plans to deal with the F/X market pressures in two phases, as fas as we can see it. Phase One: Do not move rates any higher than ...

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S&P raises Mexico’s credit rating: more wishful thinking on debt quality improvement than hard facts
MEXICO - In Brief 23 Dec 2013
Standard and Poor’s (S&P), raised Mexico’s sovereign rating from BBB to BBB+ shortly after Energy Reform was approved. Mexico’s country rating has been investment grade for a while. With this action S&P reverses the one notch reduction following the 2009 recession (-6.2% annual GDP change) and br...

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Quis Custodiet Ipsos Custodes?
TURKEY - Report 22 Dec 2013
The arrests of two sons of Cabinet ministers for charges of influence peddling makes it almost certain that AKP-Gulen battle has passed the point of no return. Like Ergenekon-Sledgehammer trials it shall anger and bemuse the nation for years to come. This is the opening act; the pro-Gulen judicia...

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Stagflation Postponed to 2014
VENEZUELA - Report 20 Dec 2013
Executive Summary Venezuela will begin 2014 with growth slowing sharply and inflation remaining sky high. In other words, the country will suffer stagflation. We estimate that GDP will grow by only 1.6 percent this year and shrink by 2.5 percent in 2014. We see inflation rates persisting in the 5...

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Growth of 3% in 2014 is Optimistic
RUSSIA ENERGY / FINANCE - Forecast 20 Dec 2013
Executive Summary The Russian economy will grow no more than 1.5% in 2013, compared to 3.4% in 2012 and 4.3% in 2011. In 2013, a number of large investment projects were curbed, companies cut back on investment, and domestic demand slowed, all of which contributed to the unimpressive results for ...

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Advantage Gulen, Service Erdogan
TURKEY - In Brief 20 Dec 2013
The action on the screen is moving so fast, it is impossible to suppress the adrenalin rush and to contemplate the end of this movie. Dare I say that the Bribery and Corruption Operation (the Operation) may be the second most talked-about affair in GEM after Fed’s taper? In this brief note, I out...

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Moderation Times
PERU - Forecast 19 Dec 2013
Executive Summary Amid a less favorable international environment, and louder political noise, the Peruvian economy slowed mildly this year. The two main culprits were a decline in exports, and dwindling private investment growth. We expect GDP to grow 5% in 2013, or 1.5 pp below the robust avera...

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Operation Big Fish: The morning after
TURKEY - In Brief 18 Dec 2013
I’m still not ready to write a full-blown market brief on the “Big Fish” corruption probe launched yesterday, because there is so little official information. For instance, we don't even know whether the detainees (85 in total) are material witnesses are actually accused of crimes. We also need t...

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Buying one more year of ‘stability’
UKRAINE - In Brief 17 Dec 2013
Ukraine was sold. Officially. For $15 billion loan and $130 per tcm gas price discount. Yanukovitch has been bargaining heavily with EU and Russia and finally he’s got his price. But he does not look happy with this deal. From this day he became a full-fledged marionette of Putin with all consequ...