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COUNTRY INSIGHTS

Equal terms for foreign firms
CHINA · Report · 25 Mar 2019

Prime Minister Keqiang Li announced during his annual address to the People’s Congress of Beijing on March 5th that China’s growth target for 2019 would be in the 6% to 6.5% range. Another key takeaway is a significant 3 pps cut in value-added tax rate for manufacturers, to 13%. Industrial out...

U.S. sanctions against Bandes
VENEZUELA · In Brief · 25 Mar 2019

On Friday, 22 March 2019, the U.S. imposed sanctions against the Bank of Economic and Social Development of Venezuela (Bandes) and four institutions it controls: Banco de Venezuela and Banco Bicentenario in Venezuela, Bandes Uruguay in Uruguay and Banco Prodem in Bolivia. All five have been desig...

Politics: Recall referendum, re-election and 4T
MEXICO · Report · 25 Mar 2019

In response to protests from opposition politicians that he is laying the groundwork to remain in office after his term expires in 2024, last Monday President López Obrador signed a commitment that he would not stand for re-election. The main issue in dispute involves a pair of proposals involvin...

The Monetary Policy route
BRAZIL ECONOMICS · Report · 25 Mar 2019

It has long been known that monetary policy decisions must consider the conditions coming from fiscal policy. What is the likelihood attributed by the market to approval of a robust pension reform – the most important condition necessary to guarantee fiscal consolidation? Looking at asset prices ...

Tomorrow's Monetary Council: most analysts expect a little tightening of some kind
HUNGARY · In Brief · 25 Mar 2019

The Monetary Council is to hold its March rate-setting meeting tomorrow, this time combined with the discussion of the Q1 inflation report, i.e. an especially good time to carry out a policy change if any. Most analysts seem to agree that some kind of tightening is likely on this occasion, but th...

Data in early 2019 point to some acceleration
ISRAEL · Report · 25 Mar 2019

Initial data for Q1 2019 point to some acceleration in activity, as underlined by the BoI Composite Index. Despite signs of improvement in growth we do not envision a rate hike this year, unless inflation surprises on the upside. Housing inventory is expected to increase in the coming quarters, s...

Groundhog Day
TURKEY · Report · 24 Mar 2019

Last week’s polls indicate the opposition is gaining momentum across the nation, though there is still not sufficient evidence to call for a CHP-IYIP victory in Istanbul. Polls also determine that up to 10% of potential voters may be still undecided, with vast majority coming from AKP-MHP axis. R...

Bond and equity market open in first quarter
RUSSIA / FSU POLITICS · In Brief · 24 Mar 2019

Four Russian Eurbonds worth USD 2.67 billion were issued this quarter. This is larger than the total over the three previous quarters. A few companied issued SPO for the first time since August 2019. In 2018 Russian capital markets suffered from both political and economic risks. The US Federal R...

Russian banks circumventing DASKAA - for now
RUSSIA / FSU POLITICS · In Brief · 23 Mar 2019

Russian banks and the Finance Ministry are drawing up a plan to get around DASKAA. This will be through correspondent accounts. A non-sanctioned bank would receive USD and pass them through a correspondent account to the sanctioned account. This tactic is not new.In August 2018 the US Congress pa...

Privatizing credit in China – Part 2
CHINA ADVISORY · Report · 22 Mar 2019

​We have been arguing that China is increasingly privatizing credit to avoid increasing official state debt. This will have several outcomes in terms of future credit flows from the banks and shadow banks. Recent data on land sales, a key source of revenue for local governments, and on non-perfor...

The regime escalates conflict after the Bachelet report
VENEZUELA · Report · 21 Mar 2019

Venezuela’s massive blackout is a sign of the serious deterioration of public services and the deepening humanitarian crisis. Maduro intensifies repression. Regime change becomes more urgent but the time horizon seems to lengthen. Allied countries, including the U.S., abandoned the "credible t...

Lava Jato – Temer’s arrest
BRAZIL POLITICS · Report · 21 Mar 2019

​Former President Michel Temer was arrested today, Thursday, March 21, by the Rio de Janeiro arm of the Car Wash Operation. The warrant was requested by Federal Judge Marcelo Bretas, of the 7th Federal Court of Rio. The former president was arrested in São Paulo and is being transferred to Rio.

Fidesz' membership in the EPP is suspended, the party undergoes a rule of law investigation
HUNGARY · In Brief · 21 Mar 2019

The political convention of the European People's Party decided yesterday to suspend Fidesz' membership in the organisation until a freshly appointed three-member committee investigates Fidesz' domestic activities, to find out if those are in conformity with the EPP's basic values, especially in ...

Coming soon: monetary easing 2
PHILIPPINES · In Brief · 20 Mar 2019

The signal from BSP Governor Benjamin Diokno was clear, i.e., there is room for monetary easing. But will the Monetary Board cut policy rates when it meets tomorrow? Very unlikely, in our view. What we think will happen is a resumption of its policy to reduce the reserve requirement ratio (RRR) o...

January BOP fundamentals do not support the forint's existing strength
HUNGARY · In Brief · 19 Mar 2019

The forint has continued to strengthen against the euro recently, up by 2.5% between end-2018 and today's MNB fixing. Obviously, this started with the MNB's verbal intervention on January 16, and has been maintained since then by the expectation of an eventual policy tightening by the central ban...

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