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COUNTRY INSIGHTS

​HEADS UP: Military incursion appears imminent
TURKEY · In Brief · 09 Oct 2019

The chairman of Presidential Communications Commission Prof Fahrettin Altun tweeted a few hours ago that the Turkish military in conjunction with allied Syrian rebels will cross the Syrian border to the East of Euphrates to initiate the control of the safe zone ”soon”. Syrian Kurdish sources comp...

Severe and Dangerous Protests after the Presidential Decision to Eliminate Subsidies
ECUADOR · In Brief · 08 Oct 2019 · 1 response

The last economic measures taken by President Moreno have been the root of violent protests in Ecuador. Albeit we expected social unrest, the level of violence we are witnessing on the streets and highways has no precedence, at least in the last decades. Social groups including the transportation...

September CPI data positively surprising, but there is a twist in the story
HUNGARY · In Brief · 08 Oct 2019

The headline rate of CPI-inflation fell to 2.8% yoy in September from 3.1% yoy in the previous month. This has been the first below-target number since January. It is also a positive surprise, as the average of analyst expectations was 3% yoy, according to Portfolio.hu. And most importantly, the ...

Credit stress in large private firms
INDIA · Report · 08 Oct 2019

Credit stress in large private firms is one of the most important features of the Indian macroeconomy. In the class of listed companies with a balance sheet size of above Rs.0.5 trillion, we compute the "Distance to Default" (DtD) using the Merton/KMV model. A useful rule of thumb under Indian co...

Temporary inflation slowdown coming up
VENEZUELA · Report · 08 Oct 2019

Inflation accelerated to 63 percent in September from 58 in August. That’s a slightly slower pace than our forecast of 66 percent. Prices were pushed up by an 89 percent jump in the black-market dollar‒bolivar rate in August, including a 45-percent spike in the last week of said month. Overall...

No more rate cuts this year
PHILIPPINES · In Brief · 08 Oct 2019

Monetary authorities appear to have closed the door on further policy rate cuts this year. News feeds report that BSP Governor Benjamin Diokno, responding to questions from journalists, said that while authorities may consider additional reduction in banks’ reserve requirement ratio (RRR) this ye...

​Trump tweet throws a spanner in safe zone plans
TURKEY · In Brief · 08 Oct 2019 · 1 response

Trump staged one of his classic U-turns on Monday, with White House first green-lighting a Turkish military campaign in North East Syria, and then Trump tweeting his second “I will obliterate Turkey” warning in early evening.He mentioned “crossing my lines” which makes the U-turn even more intrig...

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...

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