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COUNTRY INSIGHTS

Central Bank cuts rates as inflation falls into target range, and growth slows
DOMINICAN REPUBLIC · Report · 12 Jun 2023

May offered many surprises. Monthly inflation was negative (-0.2%), which allowed interannual inflation, at 4.43%, to fall into the target range of 4 ± 1% per year. But the cost has been high: economic activity growth was just 1.2% y/y in January-April. The Central Bank's response was immediat...

The dangerous interaction between the fiscal deficit and exchange controls before and after the change of government
ARGENTINA · Report · 12 Jun 2023 · 1 response

The significant monetary issuance of the past two years, the high stock of Central Bank debt (LELIQs), the tendency towards an increasing fiscal deficit despite the commitment to the IMF's EFF program and the exchange rate gap all form a slippery slope scenario in which a devaluation jump in the ...

Sharp shekel appreciation likely to prevent a further rate hike
ISRAEL · Report · 12 Jun 2023

1. This fiscal deficit will likely reach 1.8%-2% GDP this year, and 2024 will be more challenging. 2. Economic activity remains fairly robust, according to the latest business survey. 3. The recent sharp shekel appreciation will moderate inflation and reduces the chances of further tighteni...

Sharp shekel appreciation likely to prevent further rate hike
ISRAEL · In Brief · 11 Jun 2023

Fiscal data continues to support credibility in 2023, 2024 could be more problematic The fiscal deficit is gradually increasing as tax revenues decline, but the pace appears modest. The fiscal deficit reached 0.6% GDP in the last 12 months, up from 0.3% last month. Tax revenues are down 7.8% y/y ...

In pursuit of semi-pregnancy
TURKEY · Report · 11 Jun 2023 · 2 responses

In this econ-only weekly, we share a few thoughts on last week’s appointments to top econ posts, and briefly review the week’s data releases, including the latest reserve developments, as our politics author, unfortunately, tries to recover from pneumonia. In the meantime, we are following th...

Ukraine says counteroffensive is in progress
RUSSIA / FSU POLITICS · In Brief · 11 Jun 2023

On June 10 Zelensky publicly confirmed that it has commenced. Unsurprisingly, he declined to delve into detail. Russia says it is battling in the south and east of Ukraine. The US-based Institute for the Study of War said that Ukraine has an advantage according to Russia because it has night opti...

Putin says Ukraine's counter-offensive has failed so far
RUSSIA / FSU POLITICS · In Brief · 10 Jun 2023

On June 9 Putin made the statement and added that the Ukrainians have suffered serious losses. Until then he avoided commenting on it. He stated that the counter-offensive had definitely commenced 5 days ago. Ukraine has not said this. Putin's statement could be taken as a sign that the situation...

GULF WEEKLY: Oil market shrugs off OPEC+ and Iran rumors, Qatar has strong Q1 surplus, opposition wins another Kuwait election, PGA and LIV Gulf merge
GULF COUNTRIES · Report · 09 Jun 2023 · 1 response

A skimmable summary overlaid with our analysis and links. Headlines: * The oil market shrugged off the Saudi 1m b/d July cuts and the extension of OPEC+ into 2024. * Reports of resumed US-Iran talks and a possible interim deal briefly spooked the oil market. * Saudi non-oil GDP grew by 4.6% ...

Ukrainian counter-offensive seems to have begun
RUSSIA / FSU POLITICS · In Brief · 09 Jun 2023

On June 8 The Washington Post said that four Ukrainian military personnel had told them that the counter-offensive is already underway. It is certainly true that Ukrainian attacks are increasing in frequency and ferocity. The Washington Post said that the objectives are to retake land and to main...

The current account surplus appears narrower than reported previously
RUSSIA ECONOMICS · In Brief · 09 Jun 2023

The CBR published its updated estimates of selected items of the current account for 4M23 and the 5M23 data. It appears that reality now looks somewhat different relative to the previous perception. According to the CBR’s release a month ago, the current account surplus in April and 4M23 was $5.2...

States are criticizing the VAT measure of the Tax Reform proposal, the STF should vote on the case regarding taxing the operating income of financial institutions, and the CPMI is expected to vote on invitation requests
BRAZIL POLITICS · Report · 09 Jun 2023

Ten states took a stand against the new Value Added Tax (VAT). According to the guidelines approved by the Working Group of the House, a federal and a state VAT will be created. In the state VAT, which will be the Tax on Goods and Services (IBS), there would be shared management between states an...

BSP cuts reserve requirement ratio
PHILIPPINES · In Brief · 09 Jun 2023

The BSP today announced reductions in banks’ reserve requirement ratios (RRR) to be implemented starting June 30. As we had expected, the reduction will coincide with the expiration of a pandemic response measure that allowed loans to small firms to be counted as part of reserves. The BSP emphasi...

Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 09 Jun 2023

Some acceleration of inflation during the last week to 0.21% w-o-w caused some nervousness among investors. Given the previous moderately hawkish rhetoric of the CBR, many didn’t rule out that the regulator could have raised the key rate today. We didn’t see the necessity to do that, as overall C...

South Africa’s current account deficit narrows in Q1-2023
SOUTH AFRICA · Report · 08 Jun 2023

The latest current account data released by the South African Reserve Bank shows that, during the first quarter of 2023, while South Africa’s current account recorded its fourth consecutive deficit since Q2-2022, the deficit was smaller than that of the preceding quarter. The Q1-2023 deficit narr...

Yesss! CPI-inflation reported sharply down in May
HUNGARY · In Brief · 08 Jun 2023

The headline rates were -0.4% mom, 21.5% yoy, the latter down from 24% yoy in April, and the first time since November 2020 that consumer prices fell on a monthly basis. Core inflation was a significantly less impressive +0.5% mom, but the year-on-year rate still fell markedly, to 22.8% in May fr...

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