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COUNTRY INSIGHTS

The Reserve Bank Defies Market Expectations - No Interest Rate Cut
SOUTH AFRICA · Report · 21 Sep 2017

At its previous meeting in July 2017, the SA Reserve Bank’s Monetary Policy Committee cut the benchmark interest rate for the first time in five years. Today the MPC decided not to change the repo rate and kept it at 6.75%. South Africa’s inflation has been moderating since the beginning of t...

Tax reform: down to the wire?
PHILIPPINES · In Brief · 21 Sep 2017

The Senate ways and means committee submitted last night its version of the tax reform package, authored by 14 of 22 active senators. We gather that Senate bill 1592 is very different from both the DoF proposal and the lower house's version, in terms of both the included policy changes as well as...

Spending Plan 2018: Subsidies cut, Reforms Budgeted
UKRAINE · In Brief · 20 Sep 2017

Macro-parameters are in line with our projections. Finance Ministry projects 3.0% of GDP growth (exactly what we expect), 7% consumers’ inflation (we project 6.9%) and UAH 29.3/USD (UAH 29.8/USD). Nominal GDP is expected to reach UAH 3 247.7 billion (UAH 3 217.3 billion);Budget deficit fits to th...

Hurricane Maria unlikely to have direct impact; the country prepares
DOMINICAN REPUBLIC · In Brief · 20 Sep 2017

Just day after being seriously threat by Hurricane Irma, the Dominican Republic prepares for the possible impact of Hurricane Maria. As we write, Maria is hitting Puerto Rico, as its eye is passing through the middle of the island. Reports indicate that the damage is being massive. In the DR, a d...

CNT/MDA Poll: Lula leads in the 2018 race
BRAZIL POLITICS · Report · 19 Sep 2017 · 1 response

A poll released today by CNT/MDA on the 2018 presidential race shows that former President Lula (PT) leads all three scenarios tested by the poll. Despite suffering wear on his image from the Lava-Jato Operation, Lula has preserved the loyal support of 30% of the electorate. Federal Representativ...

TL’s baptism by fire begins early
TURKEY · In Brief · 18 Sep 2017 · 1 response

Fed’s FOMC decision created some unease in EM currencies, as the Dollar Index and U.S. long-yields rose somewhat, but the TL took a big hit, while the Istanbul Stock Exchange, now renamed BIST-100 Index substantially decoupled from peers in a negative way. Turkey’s exaggerated response to Fed con...

$3 billion Eurobonds: good news, bad news
UKRAINE · In Brief · 18 Sep 2017

Finance Ministry and President Office opened the champagne today. The Finance Ministry did a great job raising $3 billion in the open market just a few years after default. President's Office now reconciles new political prospects given that they no longer hang solely on the IMF funding. No doubt...

Week of September 18
BRAZIL POLITICS · Report · 18 Sep 2017

President Temer takes part in the inauguration ceremony for Raquel Dodge at the PGR and then travels to the US for the UN General Assembly. The STF rules on the suspension of the accusation against Temer until signs of irregularities in the JBS plea bargain deal are clarified. In the Lower House,...

Inflation Keeps Rising Despite MNB Optimism
HUNGARY · Report · 18 Sep 2017

The second estimate of Q2 GDP brought no surprises. Compared to the first release, the y-o-y growth rate was marginally reduced, to 3.5%. This is the same as our new forecast for full-year 2017, as we expect a moderate deceleration in H2. The main factor driving growth was a spectacular rebound o...

Economics: No Growth Boost from 2018 Budget
MEXICO · Report · 18 Sep 2017

A week ago the administration of President Enrique Peña Nieto sent Congress its budget package for 2018, which was closely aligned with what the Ministry of Finance had been signaling in recent weeks: conservative assumptions on the macroeconomic framework; a modest increase in revenues, more bec...

Market Real Interest Rate and Neutral Real Interest Rate
BRAZIL ECONOMICS · Report · 18 Sep 2017

In its recent communication, the Central Bank left no margin for doubts: the ex-ante real interest rate is below the neutral real interest rate. Given the distance between actual and potential GDP – legacy of the severe recession that is just ending – monetary policy had to strongly stimulate the...

Politics: Zero-Sum Congressional Politics
MEXICO · Report · 18 Sep 2017

Congress just convened this month but politicians are more cognizant than ever of how their words and deeds must be tailored to enhance the electoral prospects of their respective parties, and their own chances of appearing on the ballot next year. Actual campaigning will not get underway for sev...

Political and Economic Update
TURKEY · Report · 17 Sep 2017

In the short-term, political risks that are relevant to markets and the economy remain modest to moderate, but we predict gradual escalation through 2018. Ankara, as well as all regional governments, is worried about the independence referendum by Iraqi Kurds, but there is no formula to stop it. ...

Draft Budget 2018 Presumes 2.4% GDP Deficit
UKRAINE · In Brief · 17 Sep 2017 · 1 response

On September 15, late in the evening the Cabinet approved draft budget 2018. Proposed spending plan presumes 15% increase in revenues (up to UAH 1.1 trillion, close to $38.2 billion), a 16.3% increase in minimum wages, and 2.4% of GDP deficit. Finance Ministry expects 3% GDP growth and 7% inflati...

David Lipton talks a lot – good sign, we believe
UKRAINE · In Brief · 16 Sep 2017

Last week the IMF's First Deputy Managing Director David Lipton visited Kyiv. He talks a lot publicly and even gives an extensive interview to local media (here is the text in English). The IMF officials never have been so talkative on my memory. He repeats key messages about pension reform, priv...

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