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COUNTRY INSIGHTS

Economics: Continuing strength in hiring and wages may encounter obstacles later this year
MEXICO · Report · 13 Jun 2023

Various labor indicators as of the first quarter, as well as other measures through April, indicate that job growth remains high, a result consistent with the extent of the economic growth registered in the first quarter of 2023. Total employment expanded 4.3% in the first quarter of 2023 based o...

Armenian Central Bank Starts Rate-Cutting Cycle
CAUCASUS / CENTRAL ASIA · In Brief · 13 Jun 2023

The Central Bank of Armenia (CBA) cut the refinancing rate by 25bpts to 10.50 percent on Jun 13th. This is the first cut since Sep 2020 and now sets monetary policy on an easing path that we anticipate will bring the refinancing rate to 8.50-9.00 percent by year-end. The Central Bank of Armenia r...

Ukraine retakes villages
RUSSIA / FSU POLITICS · In Brief · 13 Jun 2023

On June 12 Kyiv said it has made progress in its counter-offensive but admits that Russian resistance is firm. Ukraine has shown footage of the Ukrainian flag being hoisted in villages it has retaken. These are in the Zaporizhzhia Region. Ukraine has also advanced in Donetsk. France has said that...

Politics: What the June 4 election results mean for each party and the 2024 elections
MEXICO · Report · 12 Jun 2023

Despite having held on to Coahuila, perhaps the biggest loser on June 4 was the PRI, which will no longer govern the State of Mexico for the first time in 96 years. There is no getting around public perceptions of the party as having become practically irrelevant nationally, having seen its erstw...

Behavior of the Yield Curve Reflects Implicit Inflation Rates
BRAZIL ECONOMICS · Report · 12 Jun 2023

In recent days, the nominal rates at the long end of the yield curve (DI curve) have fallen. That movement predominantly reflects the decline of the implicit inflation rates, with a smaller reduction of real interest rates. Before the approval of the fiscal framework, the real interest rates on t...

Questions about Tax Reform and other weekly topics
BRAZIL POLITICS · Report · 12 Jun 2023

Negotiations continue on the fiscal framework in the Senate. In the Economic Affairs Committee (CAE), Senators may vote on a bill to extend payroll tax exemptions. The CPMI on the January 8 attacks votes on requests for testimony. The confirmation hearing of Cristiano Zanin, appointed to the Supr...

Economy Minister Nagy is proposing to consider raising the medium-term inflation target
HUNGARY · In Brief · 12 Jun 2023

Economy Minister Nagy, formerly MNB vice governor, published an article in today's daily newspaper Magyar Nemzet, raising the idea to set a higher medium-term inflation target than the MNB's current 3%, with a 2-4% tolerance band. Explaining his idea, he referred to upcoming structural changes on...

Iceland closes its Moscow embassy and Romania expels Russia diplomats
RUSSIA / FSU POLITICS · In Brief · 12 Jun 2023

On June 10 Russia said it will react to Iceland's suspending the operation of its embassy in Russia. The Foreign Ministry said Iceland's act was anti-Russian. Iceland has announced that it will limit the activities of the Russian Embassy in Iceland. The two states still have diplomatic relations....

The STF should adjudicate the case on the PIS/Cofins taxes, the STF should also adjudicate the case on the national nursing salary floor, and negotiations on the fiscal framework continue
BRAZIL POLITICS · Report · 12 Jun 2023

Today, the Supreme Federal Court (STF) should complete the judgment on the levy of PIS and Cofins taxes on financial income. Justice Dias Toffoli disagreed with the rapporteur, Ricardo Lewandowski. On Friday, the STF will also adjudicate in the virtual plenary the case that deals with the nursing...

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...

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