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Week of February 10
BRAZIL POLITICS - Report 10 Feb 2015

Despite the approaching Carnaval holidays, this will be an intense week in Congress. In the House, the Compulsory Budget may be voted upon. House leaders will also nominate members for the Petrobras CPI. In the Senate, the opposition is still trying to gather support for a Joint CPI. The presi...


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Lower Growth for the Long Haul
CHINA - Forecast 09 Feb 2015
Executive Summary China’s main indicators show that the economy has reached a “new normal” stage, of relatively low yet stable performance. Real GDP rose 7.4% in 2014, down 0.3 pp from 2013. That puts growth below 8% for three years in a row. Quarterly growth rates were fairly flat last year, ...

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How Severe Will the Recession Be?
BRAZIL ECONOMICS - Report 09 Feb 2015
Despite the option for a gradual fiscal adjustment to save economic activity from an intense contraction, it’s becoming increasingly clear that Brazil is not only facing a recession in the coming months, but rather negative GDP growth for the entire year. This conclusion holds even without includ...

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Weekly Tracker: February 8-14
TURKEY - Report 08 Feb 2015

Executive Summary

President Erdogan says he is receiving death threats from alleged members of the Gulen Organization and we believe him. An assassination attempt will have disastrous consequences for Turkish politics and economic confidence since it will bring Turkey to war footing....


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January CPI (+3.9% m-o-m; +15% y-o-y) surprised to the downside
RUSSIA ENERGY / FINANCE - In Brief 05 Feb 2015

Rosstat published today January CPI data. Inflation surprised to the downside (+3.9% m-o-m) and was significantly higher than in...


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Petrobras Scandal
BRAZIL POLITICS - Report 05 Feb 2015

Creation of Petrobras CPI authorized

The president of the House of Representatives, Eduardo Cunha (PMDB-RJ), has authorized the functioning of the Petrobras CPI (Investigative Parliamentary Committee). The request was read on the House floor. Now, party leaders have 48 hours to nomin...


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CBT Independence: How much longer?
TURKEY - In Brief 05 Feb 2015

I’m writing this brief to address FAQs after the recent barrage of criticism by Erdogan about CBT’s erroneous ways which reached the point of questioning the wisdom of its independence. To summarize the salient points of the debate, allow me to shar...


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Headwinds Kicking Up
MEXICO - Report 04 Feb 2015

Executive Summary

Mexico’s non-oil exports remained strong in 2014, according to the latest data, with private investment and consumption recovering faster, and public investment continuing to fall. In H2 the economy regained its “natural” growth rate, a trajectory it could sustain t...


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Petrobras Scandal
BRAZIL POLITICS - Report 04 Feb 2015

Graça Foster leaves Petrobras and a new CPI is underway

On Tuesday evening, February 3, President Dilma Rousseff met with then-President of Petrobras Graça Foster. Despite the secrecy surrounding the meeting, the topic of which was never divulged, everyone in Brasília knew what was c...


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Inflation and MPC: Back to Square One
TURKEY - Report 03 Feb 2015

January CPI inflation came in at 1.1%, which is higher than both consensus (0.7%) and our slightly higher forecast (0.8%). Most importantly, today’s print proved the overly optimistic expectations by Governor Basci unwarranted and, as announced by the Bank in the aftermath of the release, it r...


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Back To Square One
TURKEY - In Brief 03 Feb 2015

January CPI inflation came in at 1.1%, which is higher than both consensus (0.7%) and our slightly higher forecast (0.8%). Most importantly, data proved the overly optimistic expectations by the CBRT wrong and, as has just been stated by the Bank on its website, eliminated the (by-now not...


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Central bank abandons indicative exchange rate regime
UKRAINE - In Brief 03 Feb 2015

The Central bank plans to cancel current exchange rate regime when ‘legal’ exchange rate is 'indicated' every day during auctions. The regime was introduced on November 5th 2014, after parliament elections when the authorities realized that they do not have money for large-scale FX interve...


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Economic Scenarios: The Good, the Bad and the Ugly
ARGENTINA - Report 02 Feb 2015

Executive Summary

For the first time in decades, the electoral year and the political transition toward “a more rational administration” is helping to stabilize the economy. There is a broad consensus that any of the candidates who are leading the polls will make the necessary change...


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Week of February 2
BRAZIL POLITICS - Report 02 Feb 2015

A politically intense week, with the end of the recess for the Legislative and Judiciary.The government will have to regroup the allied base after the election for presidents of the House and Senate.Dialogue with unions on the fiscal adjustment measures continues.President Dilma Rousseff and f...


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COSTA RICA: Hello Managed Floating; Good Bye Currency Bands
CENTRAL AMERICA - Report 02 Feb 2015

The Central Bank announced last Saturday the elimination of the currency band and the start of a new exchange rate regime characterized by a managed float. The new system, which has been the de facto regime over the past 12 months, implies the Central Bank´s active participation in the ...