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COUNTRY INSIGHTS

The labor market and the recovery pace
BRAZIL ECONOMICS · Report · 05 Aug 2019

​The Central Bank resumed the monetary easing cycle, cutting the SELIC rate by 50 basis points, to 6.0%, at the last COPOM meeting. The Bank’s projection model indicates that the SELIC will be reduced at least once more by 50 points, and we expect further cuts bringing the SELIC rate to 5% at the...

Economics: Barely dodging a recession, for now
MEXICO · Report · 05 Aug 2019

Last Wednesday’s preliminary report on second quarter GDP defied expectations that the Mexican economy may have embarked on a recession, but only by the barest of margins, as activity gained a single basis point over levels of the previous quarter and only 0.4% compared to a year earlier. But in ...

Politics: No answer to soaring violence
MEXICO · Report · 05 Aug 2019

Inegi has released its annual report on homicides in Mexico corresponding to 2018, and the data confirms that the year was the most violent since the institute first began publishing such data in 1990. With the exception of a slight downtrend from mid-2011 to late 2014, increasing homicidal viole...

What does it mean for the RMB to “crack 7”?
CHINA FINANCIAL · Report · 05 Aug 2019

​• The RMB closed above 7 to the dollar today for the first time since before the financial crisis in 2008, and that was part of the currency’s steady appreciation path since July 2005. This is mainly about political signaling, and reflects the fact that Beijing has very few tools with which to r...

Yuan falls below 7
CHINA ADVISORY · Report · 05 Aug 2019

China’s decision to let the yuan drop below the symbolic 7 level was a striking departure from the PBOC’s stance over the past decade. Although never formally stated, the 7.0 level has been the defacto limit on the value of the currency. We can see several possible causes for this breaking of the...

July inflation: up for technical reasons
TURKEY · In Brief · 05 Aug 2019

Consumer prices rose by 1.4%, m/m, in July lower than the consensus (1.6%) and our even somewhat higher forecast, but the 12-month rate nevertheless increased to 16.6%, from 15.7% in June because of administrative price hikes and tax adjustments, which, incidentally, marked the first increase sin...

BoI Governor backtracks on his hawkish bias
ISRAEL · Report · 05 Aug 2019

Unemployment remains low and the labor market tight. * Unemployment in Q2 2019 reached 3.9% from 4.0% in Q1 2019. * Unemployment in the 25-64 age group reached 3.3% in Q2 2019. * Job growth slowed in Q2 2019, and labor participation declined. * The labor market remains t...

Settlement systems on stock exchanges in India
INDIA · In Brief · 05 Aug 2019

In the bad old days, the Indian financial markets infrastructure worked poorly. The Bombay Stock Exchange (BSE) used to have many settlement failures. The last major failure which took place on the equity market was on the Calcutta Stock Exchange in 2001. (There was also a settlement failure in a...

President of Turkmenistan rumored to have died
RUSSIA / FSU POLITICS · In Brief · 03 Aug 2019

For two weeks there have been rumors that the President of Turkmenistan has died. Gurbanguly Berdymukhammedov has ruled to the country with a rod of iron. July 24 was the president's birthday. The President Uzbekistan claimed to have spoken to his Turkmen opposite number on the phone that day. Be...

US planning further sanctions on Russia
RUSSIA / FSU POLITICS · In Brief · 02 Aug 2019

President Trump is formally planning to impose yet more sanctions on Russia. On August 1 Trump signed the relevant executive order - months after Congress sought the imposition of sanctions. The reason for this latest round of sanctions is the poisoning of the Skripals in the United Kingdom in Ma...

Hong Kong protests and China’s economic policy
CHINA ADVISORY · Report · 02 Aug 2019

The continuing protests in Hong Kong have put Beijing in an awkward position. Xi Jinping does not wish to appear weak by losing control of Hong Kong. Nor does he want to intervene directly and make the situation more volatile. Xi is refraining from intervening in order to avoid: Solidifyin...

Bridge in the Ukrainian conflict zone to be repaired
RUSSIA / FSU POLITICS · In Brief · 01 Aug 2019

On July 31 the Trilateral Contact Group (TCG) met in Minsk. The TCG consists of Ukraine, Russia and the OSCE. They were negotiating about the conflict in Donbass. The OSCE announced that all parties have agreed to the demining of the area around Stanytsia Luhanska Bridge. This bridge is the only ...

Andriy Bohdan might resign, media reports
UKRAINE · In Brief · 01 Aug 2019

Andriy Bohdan, Head of President Office has claimed an intention to resign from his post according to local media. A copy of a document with the claim circulates in social nets. It’s not clear how reliable this information is. But recent developments show that relations between president Zelenski...

Fed cuts are a small but welcome relief for the GCC
GULF COUNTRIES · In Brief · 01 Aug 2019

GCC central banks have mainly followed the Fed lower, in keeping with usual behaviourThe rate cuts come as a small but welcome relief for fiscal policy and to support credit growth, after a number of years of rate hikes amidst slowing economic growthHighly leveraged economies and sectors will be ...

The Riddle of the Reasonable Real Rate of Return
TURKEY · In Brief · 01 Aug 2019

The CBRT released the year's third Inflation Report yesterday. I am, in theory, on holiday, so I missed the presentation by Governor Murat Uysal and the Q&A that followed it. Now that I have read the speech, which is available verbatim on the CBRT site, and watched the Q&A, I wanted to share a fe...

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