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COUNTRY INSIGHTS

Federal budget deficit in December widened as expected, while the current account unexpectedly turned red
RUSSIA ECONOMICS · In Brief · 21 Jan 2025

The Ministry of Finance reported that in 2024, as a whole, the federal budget was in deficit of about RUB3.5 trln, which should be below 1.8% of GDP, i.e., a mere percentage of GDP. Revenues and expenditures looked close to what the government targeted, albeit actual revenues appeared below the a...

The problem of the exchange rate
INDIA · Report · 21 Jan 2025

In late 2022, the INR moved to a highly managed exchange rate regime, with low volatility and (most likely) an attempt at a strong rupee. Such actions are inconsistent with the new inflation-targeting regime. They are likely to have reflected the consensus between the previous RBI governor and th...

2026 elections rising to the fore; economy accelerated at end-2024; BCRP to end its easing cycle
PERU · Report · 21 Jan 2025

We discuss three topics in this report. First, we argue that politics is changing gears, with the focus turning to the 2026 election campaign. Second, we discuss economic performance. We suggest that, although the economy accelerated through November, economic cooling began in December, and we ex...

Politics: Trump’s threats cast a shadow over the Mexican outlook
MEXICO · Report · 21 Jan 2025

Supporters of Claudia Sheinbaum jammed Mexico City’s Zocalo square on January 12th for a rally to mark her 100 days in office. The new President’s speech centered on several key points: continuity with AMLO’s project and policies and a rejection of a return to the neoliberal past; major achieveme...

Economics: Signs of progress in Sheinbaum’s Plan Mexico but excessive optimism and other faults of past years continue to predominate
MEXICO · Report · 21 Jan 2025

Plan Mexico: a National Strategy for Industrialization and Shared Prosperity, which the administration of President Claudia Sheinbaum unveiled on January 13, clearly marks a step in the right direction in terms of planning. Complete with a mission and goals for 2030, actions for January-April 202...

Israel's unemployment hits historic low in December 2024 amid tight labor market; easing expected in 2025
ISRAEL · In Brief · 21 Jan 2025

In December 2024, Israel's official unemployment rate dropped to 2.6% from 2.7% in November (seasonally adjusted). The broader measure of unemployment, which includes individuals temporarily out of work due to the war, fell to 4.0%, from 4.4% in the previous month. Consequently, the annual unempl...

China reported 5 percent GDP growth in 2024
CHINA FINANCIAL · Report · 21 Jan 2025

Special points to highlight in this report: - The year 2024 ended pretty much as we had all more or less expected: GDP grew by 5 percent on the dot (almost literally on the dot), driven by surging exports and expanding production, and dragged down by very weak domestic demand. This means that...

A difficult start and other weekly topics
BRAZIL POLITICS · Report · 21 Jan 2025

The Ministry of Finance announces the standard tax rate percentage for the Value-Added Tax (VAT). Expectations are that it will be around 28%. President Lula may convene the ministerial team. Internationally, attention is focused on Donald Trump's inauguration in the United States and the World E...

The Petro administration declared two simultaneous emergencies
COLOMBIA · In Brief · 20 Jan 2025 · 1 response

A critical region located on the border with Venezuela, where Ecopetrol produces oil, and coca plantations and cocaine laboratories abound, is currently the theater of war between the guerrilla of ELN, on one side, and FARC dissidents on the other. These events have been particularly harsh recent...

Not so fast
BRAZIL ECONOMICS · Report · 20 Jan 2025

Monthly activity indicators point to a certain slowdown in the economy in the fourth quarter of 2024. Given the restrictive monetary policy and a possibly reduced fiscal impulse, we expect the cooling of economic activity to persist in 2025, with GDP projected to grow by 2.2%. However, we are mon...

Food security emergency could risk inflation
PHILIPPINES · In Brief · 20 Jan 2025

The beginning of 2025 does not seem to augur well for the Marcos government. It is under heavy siege for the so-called “sub-optimal” 2025 budget, for some, “unconscionable” budget. It is accused of corruption at all levels of government. Even retired generals and uniformed officials of the police...

The fog of war: understanding broader battlefield realities
UKRAINE · In Brief · 19 Jan 2025

On the eve of Donald Trump’s inauguration, let me provide an overview of the current stance on the battlefield in Ukraine to offer a better picture of where we stand and the position from which the announced negotiations might commence. I am not a military expert—I’ve said that many times. What I...

All eyes on CBRT and Ocalan
TURKEY · Report · 19 Jan 2025 · 2 responses

After the ousting of yet another CHP mayor, that of Istanbul borough Besiktas, CHP leader Ozgur Ozel declared war on Erdogan, promising unspeakable destruction. In reality, there is not much CHP can do to restrain Erdogan, perhaps short of quitting Grand Assembly sessions altogether. On the other...

Ukraine strikes Turkstream, pushing gas prices up 7%
RUSSIA / FSU POLITICS · In Brief · 17 Jan 2025

Ukraine strikes gas pumping station in Russia that supplies gas to Europe via Turkey.Energy prices jump up to 7% amidst fears of a disruption of supply.Ukraine had previously cut off Europe from Russia by preventing gas transit through its territory earlier this month.Russia accuses the USA of be...

2024 was better than expected, but 2025 will be full of challenges
DOMINICAN REPUBLIC · Report · 17 Jan 2025

The economy in 2024 performed better than initially expected. A preliminary estimate put growth at a rate very close to potential growth of 5%, due to significant investment expansion (7.5% y/y in January-September 2024) and exports (5.1% y/y in January-September 2024). Inflation was 3.35%, close...

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