Growth is Robust, But a Pension System Deficit Looms
PANAMA · Report · 31 May 2017

The Monthly Index of Economic Activity grew 7.5% y/y in March, and 6% in Q1. March IMAE growth was its highest since December 2014. There were three main drivers of Q1 growth: transportation, due to an increase in Canal and ports activity; commerce, due to the recovery of Colon Free Zone reexport...

Politics Overshadows Ho-Hum Economic Performance
CHILE · Report · 31 May 2017

The Central Bank has for the second month in a row cut its monetary policy rate by 25 bps, to 2.5%. Surprisingly, the board’s communiqué was 100% neutral. Clearly the current cycle of MPR reductions has ended, and a long pause lies ahead. GDP in Q1 recorded its lowest y/y growth rate since ...

Investment Grade from S&P
INDONESIA · Report · 30 May 2017

The long awaited ratings upgrade from S&P for Indonesia was finally announced on May 19, 2017. The Indonesian stock market was cheered by the announcement and pushed the index to a greater than 3% spike during the intraday session, gaining 2.59% that day to reach 5,791.9. This announcement was ma...

Fixed investment up 34% yoy (!) in Q1
HUNGARY · In Brief · 30 May 2017

This morning's fixed investment data gave good explanation on what exactly drove up Q1 GDP growth to 4.1% yoy unadjusted / 3.7% yoy, sda. It was (now) evidently fixed investment growth, which in itself explained 3-3.5% yoy growth in Q1 (unadjusted) GDP, leaving really little for anything else on ...

Week of May 29
BRAZIL POLITICS · Report · 29 May 2017

The political crisis continues to develop in Brasilia.But the Lower House and the Senate have a full voting agenda.Federal representatives may vote the bill on fiscal incentives.In the Senate, the governing coalition tries to advance Labor Reform and vote on Provisional Measures.In the economy, w...

COSTA RICA: Currency Issues Hit the Headlines
CENTRAL AMERICA · Report · 29 May 2017 · 3 responses

Currency issues have burst into the Costa Rican headlines. After more than two years of a relatively stable managed exchange rate, the Central Bank in recent weeks implicitly changed its intervention rule, allowing for greater volatility. In just the first 23 days of May, the wholesale exchange r...

The Political Crisis and the Economic Scenario
BRAZIL ECONOMICS · Report · 29 May 2017

The merely mild reaction of asset prices to a political crisis as severe as the present one is a puzzle. Of course, market agents are understandably hesitant to bet against a competent economic team that has instruments to intervene in the markets. But in the middle of last week, without any acti...

Little support for Maduro’s power grab
VENEZUELA · Report · 29 May 2017 · 1 response

The government has set the date for National Constituent Assembly (ANC) elections for July. “Elections” is a generous term: under Maduro’s transparent plan to consolidate power, his government would essentially hand pick the constitutional delegates through obscure “social sector” quotas and ad h...

Political Crisis and Asset Prices
BRAZIL ECONOMICS · Report · 29 May 2017

From looking only at the reflections of past crises on asset prices, it was tempting to predict that the current political crisis – which has seriously eroded the governability of President Temer – would trigger much stronger oscillations in asset prices than have occurred. We believe the relativ...

​First arrests in the Odebretch case
DOMINICAN REPUBLIC · In Brief · 29 May 2017

As we finalize our quarterly report, the Office of the General Prosecutor ordered the first arrests in the Odebretch case. So far, 12 persons are currently in custody (or about to be) and will be charged: Angel Rondón: entrepreneur who supposedly acted as the middleman in the bribery scheme. Andr...

Zuma Survives via Defiance- And Only Just
SOUTH AFRICA · In Brief · 28 May 2017 · 1 response

This weekend, the National Executive Committee of the ANC has been hard at work, discussing the fate of its president. It is the second time in the past six months that Zuma has had to face his own party's doubts about his leadership suitability. It is reported that 54 of a total of 104 NEC membe...

Abolition of `Foreign Investment Promotion Board' (FIPB) : this may not help matters
INDIA · In Brief · 28 May 2017

In the erstwhile regime, FDI into India was intermediated through the `Foreign Investment Promotion Board' (FIPB). For a certain class of transactions, e.g. FDI in certain industries, approval of FIPB was required. For most FDI, FIPB is not in the picture as the FDI process requires no involvemen...

Political and Economic Update
TURKEY · Report · 28 May 2017

President Erdogan’s meetings with key EU leaders at the sides of the NATO Summit helped defuse tensions and confirmed the mutual desire to reengage. Yet, concrete progress is difficult. EU handed the President a list of reforms to be undertaken in the next 12 months, at which time the relationshi...

The pro-cyclical Chinese economy
CHINA FINANCIAL · Report · 26 May 2017

Special points to highlight in this issue: • Moody’s has downgraded China one notch from Aa3 to A1. Except for a brief flurry within the first half hour after the announcement, when markets reacted quite negatively to the news, the market response has been minimal. • The main consequence of the...

Mr. Orbán sees no reason to give in to the EU on the CEU affair
HUNGARY · In Brief · 26 May 2017

Well, events on Hungary do not seem to proceed in the EU's preferred way, to say the least. And even though it is still hard to say at which point, if ever, a real conflict with immediate consequences will develop between Hungary's Fidesz government and its Western European partners, the Hungaria...