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COUNTRY INSIGHTS

Brexit: Tremor but no earthquake
CHILE · Report · 14 Jul 2016

It is not evident what the economic cost of Brexit will be for Chile. At the macro level, Chile is not significantly exposed to the UK. What is relevant for Chile is the indirect effect through the impact on its trade partners and the price of copper. What was widely unexpected was the strong app...

Citibank's decision
VENEZUELA · In Brief · 13 Jul 2016 · 1 response

On July 11, Citibank notified the Central Bank of Venezuela and Banco de Venezuela that it will discontinue its correspondent banking relationship and service to their accounts in 30 days. The news was brought into the open by President Maduro. It took everyone by surprise and opens room for unce...

Impact of the China debt relief
VENEZUELA · Report · 13 Jul 2016 · 4 responses

According to the media, the government of China extended the repayment schedules for Venezuela’s loans by two years. The information has not been officially confirmed.

Macroeconomic headwinds associated with the banking crisis
INDIA · Report · 13 Jul 2016

The official position of the government is that the banking crisis is being contained. From 2013 onwards, bank credit growth has been stable at roughly 4% in real terms. While this is low by historical standards, it does not suggest a crisis. While overall bank credit has been growing at 4% in...

Merchandise exports contract sharply in Q216
ISRAEL · In Brief · 13 Jul 2016

Industrial exports (trend data, excluding mining and quarrying in dollar terms) contracted 18.9% SAAR in Q2 following a 21% decline in Q1. The sectors that declined sharply in Q2 include computer components (-62%, impacted by Intel downsizing production) and chemicals (-42%). Without these two se...

Ministry of Finance updates forecasts
CHILE · In Brief · 12 Jul 2016

The Minister of Finance, Rodrigo Valdes, cut from 2% to 1.75% the growth forecast for this year, in line with market expectations. The budget this year was built with an expected GDP growth of 2.75%. The ministry also cut its forecast for the growth rate of domestic demand from 1.9% to 1.4%, and ...

Week of July 11
BRAZIL POLITICS · Report · 11 Jul 2016 · 1 response

This is the last week of legislative activity in Congress. Starting on July 15, there will be a “white recess”, with work resuming in August. The most important event this week is the election of the president of the House.

The Primary Fiscal Target for 2017: A Step Ahead
BRAZIL ECONOMICS · Report · 11 Jul 2016

The announcement of the primary deficit target of R$ 139 billion for next year brought more criticism than praise. After all, even if it is accomplished, the primary deficit will still be very high (2% of GDP), frustrating the expectations of all those who would like to see stronger action by the...

Much Uncertainty about Brexit, Turnaround to Come from Mid-2016
HUNGARY · Forecast · 11 Jul 2016

The Brexit vote of late June has left behind a great deal of uncertainty and the prospect of highly incalculable consequences. The only thing that seems rather certain is that the legal status quo within the EU is unlikely to change before 2018. Even after that date, the UK will remain most proba...

The South African Economy in Dire Need of a Confidence Boost
SOUTH AFRICA · Forecast · 11 Jul 2016

• Economic Growth: On the whole, the South African economy appears to have been stuck in a down phase since 2012 (i.e. when not counting the recession period following the financial crisis). The economy contracted during the first quarter of 2016, and we expect overall growth for 2016 to not exce...

Eid developments in Turkish politics
TURKEY · In Brief · 11 Jul 2016 · 1 response

Nothing ground-breaking transpired in Turkish politics during the 9-day Eid of Ramadan holiday, but the scene is going to heat up very quickly. I thought it would be wise to summarize the recent developments and how they might affect the risk and opportunity prolife of investments. Turkey pushing...

Robust fiscal posture in 1H16
ISRAEL · In Brief · 08 Jul 2016

Israel has maintained strong fiscal credibility so far this year. The fiscal deficit in the first six months reached 3.4bn ILS, compared to 3.8n this time last year. The 12-month rolling deficit reached 2.1% of GDP, similar to last month, but down from April's 2.2%. We note that the fiscal target...

Eduardo Cunha resigns
BRAZIL POLITICS · In Brief · 07 Jul 2016

Earlier this afternoon, Eduardo Cunha (PMDB-RJ) resigned from the presidency of the House of Representatives. Below is an analysis of the consequences of his decision. Disbarment The likelihood is that the case against him, which calls for his disbarment as a congressman, will continue to progres...

The cabinet reshuffle
INDIA · In Brief · 07 Jul 2016

Summary The BJP administration has had negligible changes of the cabinet in its first two years. A cabinet reshuffle, announced on Tuesday, reflects the difficulties faced by the administration in its two years. The reshuffle speaks well for the clarity and clout of the prime minister. Changes at...

Monthly Index of Ecopnomic Activity (IMACEC), May 2016
CHILE · In Brief · 06 Jul 2016

In May, the 12-month variation of the IMACEC was 1.8%. This year, May had 3 trading days more than last year, with an incidence of +0.5%. Our reading of the IMACEC is negative. While the 12-month variation increased from the previous month (0.7% in April), the (rolling) quarterly variation of the...

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