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$3 billion Eurobonds: good news, bad news
UKRAINE · In Brief · 18 Sep 2017

Finance Ministry and President Office opened the champagne today. The Finance Ministry did a great job raising $3 billion in the open market just a few years after default. President's Office now reconciles new political prospects given that they no longer hang solely on the IMF funding. No doubt...

Week of September 18
BRAZIL POLITICS · Report · 18 Sep 2017

President Temer takes part in the inauguration ceremony for Raquel Dodge at the PGR and then travels to the US for the UN General Assembly. The STF rules on the suspension of the accusation against Temer until signs of irregularities in the JBS plea bargain deal are clarified. In the Lower House,...

Inflation Keeps Rising Despite MNB Optimism
HUNGARY · Report · 18 Sep 2017

The second estimate of Q2 GDP brought no surprises. Compared to the first release, the y-o-y growth rate was marginally reduced, to 3.5%. This is the same as our new forecast for full-year 2017, as we expect a moderate deceleration in H2. The main factor driving growth was a spectacular rebound o...

Economics: No Growth Boost from 2018 Budget
MEXICO · Report · 18 Sep 2017

A week ago the administration of President Enrique Peña Nieto sent Congress its budget package for 2018, which was closely aligned with what the Ministry of Finance had been signaling in recent weeks: conservative assumptions on the macroeconomic framework; a modest increase in revenues, more bec...

Market Real Interest Rate and Neutral Real Interest Rate
BRAZIL ECONOMICS · Report · 18 Sep 2017

In its recent communication, the Central Bank left no margin for doubts: the ex-ante real interest rate is below the neutral real interest rate. Given the distance between actual and potential GDP – legacy of the severe recession that is just ending – monetary policy had to strongly stimulate the...

Politics: Zero-Sum Congressional Politics
MEXICO · Report · 18 Sep 2017

Congress just convened this month but politicians are more cognizant than ever of how their words and deeds must be tailored to enhance the electoral prospects of their respective parties, and their own chances of appearing on the ballot next year. Actual campaigning will not get underway for sev...

Political and Economic Update
TURKEY · Report · 17 Sep 2017

In the short-term, political risks that are relevant to markets and the economy remain modest to moderate, but we predict gradual escalation through 2018. Ankara, as well as all regional governments, is worried about the independence referendum by Iraqi Kurds, but there is no formula to stop it. ...

Draft Budget 2018 Presumes 2.4% GDP Deficit
UKRAINE · In Brief · 17 Sep 2017 · 1 response

On September 15, late in the evening the Cabinet approved draft budget 2018. Proposed spending plan presumes 15% increase in revenues (up to UAH 1.1 trillion, close to $38.2 billion), a 16.3% increase in minimum wages, and 2.4% of GDP deficit. Finance Ministry expects 3% GDP growth and 7% inflati...

David Lipton talks a lot – good sign, we believe
UKRAINE · In Brief · 16 Sep 2017

Last week the IMF's First Deputy Managing Director David Lipton visited Kyiv. He talks a lot publicly and even gives an extensive interview to local media (here is the text in English). The IMF officials never have been so talkative on my memory. He repeats key messages about pension reform, priv...

Prime Minister Fernando Zavala and the entire Cabinet forced to resign
PERU · In Brief · 15 Sep 2017

After Minister of Education Marilu Martens was summoned to Congress for an impeachment procedure (a process that can or not result in a censure vote), after a six week teachers’ strike, the Fuerza Popular party that commands an absolute majority announced its intention to sack her through a censu...

Janot’s second accusation against President Temer
BRAZIL POLITICS · Report · 15 Sep 2017

The Prosecutor General of the Republic, Rodrigo Janot, presented an accusation to the Federal Supreme Court (STF) against the so-called “PMDB of the House” for criminal organization. The following have been accused: President Michel Temer, Eduardo Cunha, Henrique Alves, Geddel Vieira Lima, Rodrig...

The Central bank keeps prime rate unchanged at 12.5%
UKRAINE · In Brief · 14 Sep 2017

Today the Central bank left prime rate at 12.5%. Mounting inflationary risks stand behind this decision. In August State Statistics reported deflation (CPI dropped 0.1% m/m); however, the price decline was very modest, much less than the Central bank anticipated. As a result, for 8m 2017 CPI incr...

The Current Account Deficit Rises Despite Further Widening of the Trade Balance
SOUTH AFRICA · Report · 14 Sep 2017

​The deficit on the South African current account balance widened from R91 billion in the first quarter of 2017 to R110 billion in the second quarter, raising the deficit as a percentage of GDP from 2% to 2.4%. Examining the two main components of the account, a similar trend to that of the first...

It’s Tight, But Is It Tight Enough?
TURKEY · Report · 14 Sep 2017

As expected, the CBRT’s Monetary Policy Committee (MPC) kept all short-term rates unchanged today (one-week repo rate at 8.0%, O/N lending and borrowing rates at 9.25% and 7.25%, respectively; and LLW rate at 12.25%; see chart). Recall that the Bank has been keeping average and marginal funding r...

A quick preview of the Monetary Council meeting on September 19
HUNGARY · In Brief · 13 Sep 2017

The Monetary Council is to hold its monthly rate-setting meeting, complicated a bit by the discussion of the MNB's Q3 inflation report next Tuesday (September 19). What makes this event interesting despite the somewhat boringly stubborn stability of the Council's long-held easing bias is a set of...

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