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A closer look at Argentina’s FX reserves

The Argentine central bank’s large intervention in the FX market in recent days hasn’t been enough to stop the peso from weakening further against the dollar, and we think that the gross FX reserve figure overstates the BCRA’s ability to prop up the peso.
Edward Glossop Senior Emerging Markets Economist
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Latin America Economics Weekly

Chile’s constitution cost, Massa & Argentina’s mess

A recent report suggesting that provisions in Chile’s draft new constitution could increase annual government spending by 9-14% of GDP underscores that the country is shifting towards the state playing a much bigger role in the economy. Elsewhere, Argentina’s new economic superminister Sergio Massa has talked a good game on sticking to the IMF deal, but meeting the programme’s goals will be a big challenge.

5 August 2022

Latin America Economics Update

New “superminister” no saviour for Argentina’s woes

The appointment of Sergio Massa as head of Argentina’s newly-created economic “superministry” provides some hope that the government will try to stick to its latest IMF deal. But it will be a major challenge to meet the Fund’s targets. And even if Argentina manages to muddle through, the likelihood of another sovereign debt crisis before the end of this decade is high.

5 August 2022

Latin America Economics Update

Copom’s tightening cycle drawing to a close

The statement to yesterday’s Brazilian central bank meeting, at which the Selic rate was hiked by 50bp to 13.75%, made clear that Copom is more confident that inflation will fall back and also more concerned about the slowing economy. We remain of the view that there will be one more 25bp hike (to 14.00%) in September, but it’s clear that Brazil will be one of the first EMs to end its tightening cycle.

4 August 2022

More from Edward Glossop

Frontier Markets Monthly Wrap

SDR allocation no panacea for distressed frontiers

A fresh allocation of IMF Special Drawing Rights (SDRs), if implemented, would provide a welcome boost to the depleted foreign exchange reserves of some distressed frontier economies. But an allocation wouldn’t address underlying dire debt dynamics, notably in Ecuador, Sri Lanka, Ethiopia and Zambia.

3 March 2021

Emerging Markets Economics Update

Manufacturing PMIs still point to further EM recovery

February’s manufacturing PMIs released across the emerging world were the proverbial mixed bag but, taken together, generally point towards solid EM industrial production growth in the next month or two. There are signs under the hood of supply disruptions and rising price pressures in some places, which may be explained partly by semiconductor shortages.

1 March 2021

Emerging Markets Trade Monitor

Microchip shortages: first thoughts on the trade impact

A global shortage of semiconductors is disrupting auto production, and – among EMs – it could hit exports from Central Europe and Mexico in particular. But some of the lost revenue should be made up once shortages ease. Meanwhile, strong semiconductor demand is positive for the major producers in Asia, although their overall export revenues are still likely to soften later this year as global consumption patterns normalise.

26 February 2021
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