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Pension Reform: A good version approved by the Special Committee and the challenges ahead
BRAZIL ECONOMICS · Report · 17 Jun 2019

​Last week the rapporteur of the Pension Reform Proposal presented his opinion to the Special Committee. The version urged in his opinion was somewhat watered down in relation to the government’s original proposal, but it would still lead to significant savings over the next 10 years, of over R$ ...

Despite high inflation in May, rates to remain on hold
ISRAEL · Report · 17 Jun 2019

Highlights: Inflation in May reached 0.7% m/m (1.5% y/y). - The market was expecting 0.4%-0.6% (Leader: 0.6%). - The CPI was impacted by a strong seasonal jump in fresh produce and clothing prices. - Core inflation ticked higher, to 1.0% y/y from 0.8% last month. Trade dat...

Disinflate at any cost!
VENEZUELA · Report · 17 Jun 2019

We revised down our inflation estimate for May to 36 percent (from 49 percent), very close to April (35 percent). In our view, weak consumption largely offset the effect of faster depreciation of the bolivar (51 percent in May vs. 21 percent in April). Cumulative inflation for January-May 2019 is...

Update on the financial stress
INDIA · Report · 17 Jun 2019 · 1 response

We compute distance to default for large private firms using data as of June 10, 2019. With financial firms, there is a focus on eight firms which add up to a balance sheet size of about Rs.10 trillion. Three firms (Axis Bank, ICICI Bank and Federal Bank) have seen no deterioration in the dist...

An unstable equilibrium
TURKEY · Report · 16 Jun 2019 · 1 response

Our political thesis, which also has a strong bearing on the economy, can be summed up in one sentence: “It’s such a mess that things will probably get better”. In terms of Turkey’s purchase of S-400s, the die appears cast, yet, underneath the surface, there is heavy shuttle diplomacy and hectic ...

Russia in Venezuela: players aligning for a long-term crisis
RUSSIA / FSU POLITICS · Report · 15 Jun 2019

As the crisis in Venezuela continues, Russia continues to engage in different strategies to support the chavists while trying to reduce its exposure to further sanctions. China has adopted a ‘keep a low profile’ (KLP) strategy, and thus, Cuba and Iran start to align to support Caracas. However, g...

Not a minute to lose
ECUADOR · Report · 14 Jun 2019

The IMF mission assessing Ecuador’s compliance with the goals for Q1 set up under the agreement visited the country in the past few weeks. The official report has not been published yet, but apparently there is no reason to believe that the Republic will not receive the attached disbursements bec...

CBR slashes key rate
RUSSIA / FSU POLITICS · In Brief · 14 Jun 2019

On June 14 the Central Bank of Russia reduced the key rate to 7.5%. This was prompted by inflation forecasts and growth slowing more sharply than anticipated. Inflation was predicted to be 5.2% maximum. Now the maximum prediction is 4.7%. VAT is being increased which has helped to reduce inflatio...

€1 billion placement: strong positive signal
UKRAINE · In Brief · 14 Jun 2019

Yesterday Ukraine placed €1 billion Eurobonds in EUR under 6.75% yield. Excellent news amid messy political developments. Let alone delayed IMF program. In fact, it’s a real success to attract private external funding already under new leadership. Skeptics say the placement was expensive. But in ...

​Erdogan wows to take delivery of S-400s
TURKEY · In Brief · 12 Jun 2019

According to state-owned Anatolian Agency, President Erdogan rebutted threats by US Acting Secretary of Defense Patrick Shanahan during his address to party caucus on Wednesday: “Turkey has already bought the Russian S-400 missile defense systems, President Recep Tayyip Erdogan said on Wednesday,...

Concerns about GDP measurement
INDIA · Report · 12 Jun 2019

​The previous "Chief Economic Advisor" to the Ministry of Finance, Arvind Subramaniam (who now lives in the US), has released a paper suggesting that GDP growth was overstated from 2011 to 2017. We have long known that the methodology change, which came into effect for the series starting from 20...

Update on the financial stress – the deeper problem in real estate
INDIA · Report · 12 Jun 2019

Dewan Housing ("DHFL"), which has a balance sheet of about Rs.1.3 trillion, has defaulted. By September 2018, this firm was on the shortlist of stressed financial firms, and now we have the default. This will be a difficult default to address, as India does not have a resolution process for finan...

MPC: Better safe than sorry
TURKEY · In Brief · 12 Jun 2019

The Monetary Policy Committee left the short-term rates unchanged today in line with the expectations, including ours (see chart). In the past day or two, there had been some speculation that the CBRT could be tempted to ease rates today, given the relative stability in the lira and strengthening...

MÁP+ appears as a new factor in monetary policy
HUNGARY · In Brief · 12 Jun 2019 · 1 response

MÁP+, the government's new 5-year retail bond started with a spectacular success. The Treasury sold a massive HUF529bn of it between between June 3-7, the first week following its debut. This raised the outstanding amount of retail bonds to HUF8060bn, according to finance minister Varga. Or perha...

​A truly political tangle: PJ-Pichetto as Macri’s vice-presidential candidate
ARGENTINA · In Brief · 11 Jun 2019 · 1 response

In our last monthly report (“Political tango or political tangle?”) we echoed the view that in case Massa abandoned Alternativa Federal to join forces with the Kirchnerists (as is expected to be announced any moment), that Macri might consider the possibility of widening the Cambiemos´ coalition ...

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