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COUNTRY INSIGHTS

End-2016 3-month deposit target achieved, new end-Q1 target does not look very ambitious
HUNGARY · In Brief · 21 Dec 2016

The Monetary Council's rate setting meeting of yesterday did not bring about to any significant surprises, which is a relatively rare occasion in itself. Interest rates were not touched, just as expected. The only interesting decision was the setting of the end-Q1 target for the total accessible ...

Economics: Bigger Problems than Trump
MEXICO · Report · 21 Dec 2016

The rating agency Fitch changed Mexico’s risk outlook last week from stable to negative, citing lower projected growth in the Mexican economy following Donald Trump’s victory at the polls. The Trump factor is, in fact, one of the channels of risk to public finances but it is important to note th...

The de-monetization shock sinks in
INDIA · Report · 21 Dec 2016

Five shocks are playing out: monetary, exports, investment, banking and aggregate demand. The contraction in cash began on November 8 and will worsen until December 31. The shock will gradually be alleviated from January 1 onwards. We estimate that normalcy on cash in circulation will return b...

Politcs: Back to the Barracks?
MEXICO · Report · 21 Dec 2016

In recent weeks National Defense Minister General Salvador Cienfuegos once again publicly vented the military high command’s frustration in recent years over the government’s failure to pass an internal security law that would provide legal protections to military personnel that have been pressed...

Swimming Upstream
PERU · Report · 21 Dec 2016

Education Minister Jaime Saavedra, considered by many the most valuable member of President Pedro Pablo Kuczynski’s (PPK) cabinet, was first impeached, then sacked, by the opposition-dominated Congress. While the supposed reason was corruption over computer purchases by lower-level officials, and...

TPP Pullout Wouldn’t Hurt, But FTA Revision Would Be a Catastrophe
CHILE · Report · 21 Dec 2016

Economic activity continues to be quite depressed. The mining sector is dragging and, beyond seasonal fluctuations, the economy for the first 10 months of the year was flat. While October retail sales figures surprised slightly on the upside, performance remained anemic. But manufacturing produc...

​Fire and rain
PHILIPPINES · In Brief · 21 Dec 2016

As the body count from President Rodrigo Duterte’s drug war keeps rising – 6000 is the latest number – and the President lately admitting in a BBC interview to have killed 3 people in his Davao days – we are reminded of a long-ago observation that the Philippines has a knack for snatching defeat ...

Why?
VENEZUELA · Report · 20 Dec 2016

The abrupt demonetization of Bs 100 banknote attempted by Maduro has been a disastrous experience. It revealed misconceptions on macroeconomic matters and lack of coordination between government agencies. The government seriously underestimated the challenge of replacing a banknote that accounts ...

MPC Keeps Rates on Hold
TURKEY · Report · 20 Dec 2016 · 1 response

Contrary to the consensus forecast of an already fairly modest 25 bps hike of the O/N lending rate, the Monetary Policy Committee (MPC) chose instead to stay on hold at today’s meeting, keeping the O/N lending and borrowing rates at 8.5% and 7.25%, respectively, and the one-week repo rate at 8% (...

​Assasination of ambassador is a picture worth thousand words
TURKEY · In Brief · 19 Dec 2016

A rapid response team police officer, Mr. Mevlut Altintas, shot Russian ambassador in Turkey on Monday night during an art exhibit, shouting Quranic verses, and claiming to avenge the atrocities committed in Aleppo. He was subsequently shot dead by the police arriving at the scene. This morning, ...

Policies for 2017 Are Taking Concrete Shape
HUNGARY · Report · 19 Dec 2016

Having achieved a deal with employers and trade unions on deep cuts in the social contribution tax (SCT) and the corporate tax, to compensate enterprises for sharp increases in the statutory minimum wage, the government has set the main theme for economic policies in 2017-2018. The agreement incl...

Week of December 19
BRAZIL POLITICS · Report · 19 Dec 2016

According to the Ministry of Planning, the government should publish almost all the administrative acts in the economic stimulus package announced last week. Changes may also be made to labor regulations. On Monday and Tuesday, the Lower House will try to vote on the renegotiation of state debt w...

Consequences of Privatbank Nationalization: Provisional Thoughts
UKRAINE · In Brief · 19 Dec 2016

The main risk of Privatbank nationalization was in potential adverse reaction of the bank owners. The Central bank officials have been thoroughly working with so called “red button scenario” which presumed potential damage to the datasets of clients. It was the main concern of state officials in ...

Cabinet Decides on Privatbank Nationalization
UKRAINE · In Brief · 18 Dec 2016

Today the Cabinet approved nationalization of the largest private bank (20 million clients) Privatbank, according to the Cabinet web-site. The bank was previously owned by oligarch Igor Kolomoyskiy. Press-briefing on this issue is scheduled for Monday morning. Some rumors tell that ex-Finance Min...

Political and Economic Update
TURKEY · Report · 18 Dec 2016

The second major attack in as many weeks suggests that terror might become a leading political risk for Turkey in 2017. We discuss the implications, which go beyond economics to ethnic polarization and a deeper military involvement in Syria. The text of the presidential reform bill contains po...

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