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COUNTRY INSIGHTS

Economic performance in May: mixed results
KAZAKHSTAN · In Brief · 15 Jun 2023

The Bureau of National Statistics reported that the short-term indicator (a monthly proxy for an aggregate measure of the country’s economic activity) grew by 4.5% in 5M23 y-o-y, which looks decent. However, in 4M23 and 1Q23, y-o-y growth rates were higher – 5.5% and 5.1%. Amid significant base e...

May inflation: in line with our forecast
VENEZUELA · Report · 14 Jun 2023

As expected, inflation in May intensified as a result of wage increases, especially the 2,122 percent rise in the food bonus (cesta ticket). Public outlays rose by 22 percent for the steepest monthly jump seen so far this year. It pushed up the exchange rate. The central bank sold $210 million, f...

The CAE approved the payroll tax exemption extension yesterday, the State Finance Secretaries will discuss Tax Reform tomorrow, and the fiscal framework should be put to a vote in the Senate on June 21
BRAZIL POLITICS · Report · 14 Jun 2023

As expected, the Economic Affairs Committee (CAE) approved a bill yesterday that extends the payroll tax exemption for 17 sectors of the economy for four years. The benefit ends in December. This was a defeat for the government. State Finance Secretaries scheduled a virtual meeting for Thursday t...

Ukrainian offensive makes ground but Russia claims to capture US-made vehicles
RUSSIA / FSU POLITICS · In Brief · 14 Jun 2023

On June 13 Ukraine said it was moving forward in Zaporizhzhia. There is evidence that Ukraine has made headway but it is modest. There is no sign of a breakthrough against very well-entrenched Russians. On June 13 Russia showed footage of its troops on Bradley Armored Fighting Vehicles and German...

Budgetary performance seemingly improved in May
KAZAKHSTAN · In Brief · 13 Jun 2023

Kazakhstan’s Deputy PM and Finance Minister, Mr. Erulan Zhamaubaev, reported at a government meeting today that the country’s state budget (i.e., the republican and local budgets combined) was in decent shape as in 5M23 it accumulated “over KZT8.0 trln of revenues” which appeared about 3% over th...

The STF decided that PIS/Cofins taxes will be levied on all business activities, the fiscal framework is expected to be approved in the Senate without changes, and the CAE may vote on the bill that extends the payroll tax exemption
BRAZIL POLITICS · Report · 13 Jun 2023

Yesterday, the government had an important victory in the Supreme Federal Court (STF). The STF decided that the PIS/Cofins taxes should be levied on all business activity because social security is financed by billing and companies' revenue. The Minister of the Institutional Relations Secretariat...

Political and economic scenarios for 2023-2026
PERU · Forecast · 13 Jun 2023

This report focuses on our 2023‒2026 forecasts. In the first section, we discuss possible political scenarios. Our base case is that President Dina Boluarte remains in office until July 2026. However, we suggest that Boluarte faces two significant threats: accusations of human rights violations a...

Deleveraging in China and the Japan trap
CHINA ADVISORY · Report · 13 Jun 2023

China’s economy continued to slow in April and May, with only auto sales showing strength due to low base effects in 2022. The government remains steadfast on property deleveraging although there are new rumors of further stimulus, but no firm announcement. The key issue for China’s economy is ho...

Worst Fears Confirmed
ECUADOR · In Brief · 13 Jun 2023

Official candidates will be announced by the Electoral Council next August 6th, and the electoral race will start on August 8th, including a presidential debate that will take place on August 13th. Of the eight announced presidential and vice-presidential candidates, only Daniel Noboa and Veronic...

Economics: Continuing strength in hiring and wages may encounter obstacles later this year
MEXICO · Report · 13 Jun 2023

Various labor indicators as of the first quarter, as well as other measures through April, indicate that job growth remains high, a result consistent with the extent of the economic growth registered in the first quarter of 2023. Total employment expanded 4.3% in the first quarter of 2023 based o...

Armenian Central Bank Starts Rate-Cutting Cycle
CAUCASUS / CENTRAL ASIA · In Brief · 13 Jun 2023

The Central Bank of Armenia (CBA) cut the refinancing rate by 25bpts to 10.50 percent on Jun 13th. This is the first cut since Sep 2020 and now sets monetary policy on an easing path that we anticipate will bring the refinancing rate to 8.50-9.00 percent by year-end. The Central Bank of Armenia r...

Ukraine retakes villages
RUSSIA / FSU POLITICS · In Brief · 13 Jun 2023

On June 12 Kyiv said it has made progress in its counter-offensive but admits that Russian resistance is firm. Ukraine has shown footage of the Ukrainian flag being hoisted in villages it has retaken. These are in the Zaporizhzhia Region. Ukraine has also advanced in Donetsk. France has said that...

Politics: What the June 4 election results mean for each party and the 2024 elections
MEXICO · Report · 12 Jun 2023

Despite having held on to Coahuila, perhaps the biggest loser on June 4 was the PRI, which will no longer govern the State of Mexico for the first time in 96 years. There is no getting around public perceptions of the party as having become practically irrelevant nationally, having seen its erstw...

Behavior of the Yield Curve Reflects Implicit Inflation Rates
BRAZIL ECONOMICS · Report · 12 Jun 2023

In recent days, the nominal rates at the long end of the yield curve (DI curve) have fallen. That movement predominantly reflects the decline of the implicit inflation rates, with a smaller reduction of real interest rates. Before the approval of the fiscal framework, the real interest rates on t...

Questions about Tax Reform and other weekly topics
BRAZIL POLITICS · Report · 12 Jun 2023

Negotiations continue on the fiscal framework in the Senate. In the Economic Affairs Committee (CAE), Senators may vote on a bill to extend payroll tax exemptions. The CPMI on the January 8 attacks votes on requests for testimony. The confirmation hearing of Cristiano Zanin, appointed to the Supr...

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