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An Interest Rate Hike amidst Low Economic Growth and High Macroeconomic Volatility
SOUTH AFRICA · Report · 18 Mar 2016

The South African Reserve Bank’s (SARB) decision to increase the repurchase (repo) rate by 25 basis points at its March 2016 meeting, after having raised it by 50 basis points at its previous (and first) meeting of 2016, did not come as a surprise. Although the South African economy is still unde...

Lula’s appointment fails to solve Dilma’s problems
BRAZIL POLITICS · Report · 18 Mar 2016

On Thursday afternoon, Judge Sérgio Moro, responsible for the Lava-Jato Operation, removed the secrecy of telephone wiretaps targeting former President Lula. The conversations recorded by the Federal Police, which include dialogue with President Dilma Rousseff, have intensified the political cris...

Moody's Visiting SA in the Middle of Political Dramas: Downgrade
SOUTH AFRICA · In Brief · 18 Mar 2016

South Africa's sovereign credit rating is under review. The risk is a junk-status downgrade! Earlier this week, the Moody's team arrived in SA in the midst of a huge political drama engulfing the President and some of his corrupt dealings with the Gupta family business-a diversified business grou...

Economics: Pemex Rescue Plans Fall Short
MEXICO · Report · 17 Mar 2016

On February 8, President Enrique Peña appointed José Antonio González as the new General Director of Petróleos Mexicanos. Nine days later, the Ministry of Finance announced the company’s budget was being slashed by 100 billion pesos. The new CEO presented the company’s preliminary consolidated ...

Politics: New Viceroys Key to 2018 Campaign
MEXICO · Report · 17 Mar 2016

The importance of the gubernatorial elections to take place this June, a full two years before the next presidential contest, resides in the enormous power state governors have acquired over the past 15 years, and the considerable prerogatives they derive from the political, territorial and budge...

Lula: The last move against the impeachment
BRAZIL POLITICS · Report · 16 Mar 2016

The appointment of former President Lula to the Civil House Ministry (the equivalent of Chief of Staff) is a risky move that gives us an idea of the government’s current desperation. In appointing Lula, President Dilma Rousseff is, in practice, abdicating her government. Lula will try to resta...

More Complication for Fidesz
HUNGARY · Report · 16 Mar 2016

Detailed GDP data for Q4 confirms the preliminary 2.9% growth for the whole of 2015. Excluding agriculture, growth even accelerated slightly from 2014. On the supply side, growth was driven by manufacturing, mainly the car industry, and some service sectors. On the demand side, it was propelled b...

Turkish politics: It’s a totally new ball game
TURKEY · In Brief · 16 Mar 2016

I’m preparing to write one of the most difficult Weeklies of this year and thought it important to share some of my initial views with my readers, because the three developments I’ll mention may have an important influence on Turkey’s risk premium. Since they act in opposite directions, I leave i...

The Chances of Impeachment Have Increased
BRAZIL ECONOMICS · Report · 14 Mar 2016

Executive Summary In recent days the real has appreciated, the CDS quotations have fallen, stock prices have risen and longer term interest rates have declined. These were not movements prompted by signs the Rousseff administration was “coming to its senses”, changing its economic policy bearing...

Week of March 14
BRAZIL POLITICS · Report · 14 Mar 2016

The government starts the week feeling the pressure of the success of the demonstrations calling for the impeachment of Dilma Rousseff, which brought around 4 million people to the streets, as well as the PMDB party convention. After the STF decision on the rules for the impeachment proceedings, ...

NFPS deficit for 2015 right on target (2.4% of GDP). Central Bank says different
DOMINICAN REPUBLIC · In Brief · 14 Mar 2016

The Ministry of Finance has finally released the figures of fiscal year 2015. The data set the NFPS deficit at DOP 72.7 bn. This is equivalent to 2.38% of GDP, right at the level that was set as a target for 2015 by the budget law. Our estimates pointed to a slightly higher deficit due to weak re...

Household Consumption Continues to Fall
BRAZIL ECONOMICS · Report · 14 Mar 2016

In November last year there was some optimism about possible recovery of real retail sales, but it soon became evident that the growth that month came from the Black Friday promotions, repeating the same behavior that had occurred in November 2014. However, the optimism was not easily abandoned, ...

Tumultuous Campaign
PERU · Report · 14 Mar 2016

After the turbulent weeks surrounding the campaign for the April 10th presidential election, the electoral tribunal at last decided to disqualify candidates Cesar Acuña and Julio Guzman, citing irregularities in both candidacies. It’s not yet clear which candidates will benefit most from their...

Turkey entering a vicious cycle of crack-downs and terror
TURKEY · In Brief · 14 Mar 2016

Hours after we e-mailed our Weekly Tracker, where we warned of PKK’s intentions to wreak havoc in Western cities, a BMW car laden with explosives detonated in the busy Kizilay Square of Ankara, killing 34 and injuring 125 innocent civilians. 17 of the injured are in critical condition, meaning th...

Weekly Tracker: March 13-19
TURKEY · Report · 13 Mar 2016

Davutoglu’s provocative refugee proposal to EU is not acceptable in its initial form, meaning that some kind of bargaining will have to take place. Given that there is no Plan B for EU, and no other direction to turn for Ankara, we bet on some type of a compromise. Russia might propose a federa...