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Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
1st March 2024
Korea election: reform prospects in the balance President Yoon Suk-yeol has seen a rebound in his popularity in recent weeks, with an opinion poll published today showing an approval rating of 39% – up from a low earlier this year of just 29%. The …
HCES underscores need to update CPI index The initial findings of the Household Consumption Expenditure Survey (HCES) for 2022-23 (the full report will be released in June) show a shift in consumption patterns since the previous survey from over a decade …
Even with Ras el Hekma deal, Egypt needs the IMF Headlines in the past week have been dominated by Egypt’s deal to sell the Ras el Hekma project to the Abu Dhabi sovereign wealth fund, ADQ, to provide crucial foreign currency inflows. But, even with this …
29th February 2024
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Funding boost could be large, if banks do their part China’s housing market is still struggling . High frequency data suggest that sales in major cities have ticked up since the start of the year. And price declines eased slightly in January. (See Chart …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
Tunisia: threat of messy crisis and default builds Tunisia managed to meet a Eurobond repayment this week but only by draining its already-low FX reserves. In the meantime, steps were also taken towards deficit monetisation, taking Tunisia further down …
22nd February 2024
Ratings downgrade highlights realities in Israel The decision by Moody’s to deliver Israel’s first credit rating downgrade in its history late last week is a warning sign to policymakers that the strength of the public finances should not be taken for …
16th February 2024
Can Milei tame inflation? The jump in inflation in Argentina to 254% y/y in January underscores the scale of the challenge the Milei administration faces stabilising the economy. The rise (from 211% y/y in December) reflected the full impact of the 50%+ …
South Africa's Finance Minister Enoch Godongwana faces an uphill task in next week's Budget to convince investors that the government will be able to place the public finances on a sustainable footing. Mr. Godongwana will start his speech in parliament …
Farmer protests won’t lead to big fiscal giveaways Widescale farmer protests have returned and have dominated the headlines this week. Farmers are currently marching from neighbouring states towards New Delhi in demand of higher prices for key crops; …
Saudi’s loose fiscal stance to continue (for now) Data released yesterday confirmed that Saudi Arabia ran a budget deficit over 2023 as a whole and, as the government maintains high spending levels despite lower oil prices, the Kingdom will run larger …
15th February 2024
SONA: Ramaphosa sets out policy plans South Africa’s President Ramaphosa delivered his State of the Nation (SONA) on Thursday. His speech celebrated the 30 th anniversary of the transition to democracy and laid out the ANC’s policy agenda ahead of the …
9th February 2024
Is euro adoption the path forward for Czechia? The Czech government’s debate on adopting the euro reignited at the start of this year and took another step forward this week, although we think that the potential benefits of joining the single currency …
Brazil: the hawkish case builds This week’s release of the minutes to the latest Copom meeting, January CPI figures and December budget data support our view that Brazil’s central bank will lower interest rates by less than most expect this year. The …
RBI not ready to pivot yet There were no surprises from the RBI’s policy announcement this week, with the repo rate being kept on hold at 6.50% once more. We had even suggested that MPC member Jayanth Varma would dissent, and in the event he was the only …
Bahrain taps bond market as repayments near This week, Bahrain became the latest emerging market to issue dollar bonds which will help it meet large upcoming debt repayments. But fiscal policy will need to be tightened in the coming years to put the …
8th February 2024
Dragon years have been middling for economy The world’s largest annual migration of people is well underway, with millions of Chinese returning to their hometowns to spend the Lunar New Year holiday with their families. On Saturday, the Year of the Rabbit …
Naira plunges again, is the policy shift back? This week the naira dropped for a second time in eight months, contradicting months of claims by officials that the currency will witness a revival. The hope is that this new found policy pragmatism extends …
2nd February 2024
Milei’s shock therapy plan suffers another blow As expected, the IMF Board signed off on the seventh review of Argentina’s $44bn programme this week. This gives the country access to the next loan tranche of $4.7bn to support “authorities’ upfront policy …
EM Drop-In : We'll be discussing EM policy easing, debt risks and the outlook for bond yields in our monthly EM drop-in on Thursday 8th February . Register here . Ukraine aid deals ends a week of uncertainty Hungary dropped its veto against the EU’s …
TFP touted as key metric for Xi’s new growth model President Xi has spoken a lot in recent years about the need to foster “high-quality development” (HQD). There have been a raft of policy documents and state media editorials attempting to flesh out what …
Finance Ministry focuses on consolidation Despite the looming general election, we had expected the Interim Budget for FY24/25 to be a muted affair. In the event, the Finance Ministry showed even more restraint than had generally been anticipated. The …
Why has the Saudi gov’t changed Aramco’s policy? Aramco announced this week that it received a directive from the Saudi state to suspend plans to raise oil production capacity, but we don’t think this is a sign that actual output will remain low for …
1st February 2024
Takeaways from the SARB meeting The South African MPC’s fears expressed at this week’s meeting about an inflation resurgence look overdone. Even so, with fiscal risks high ahead of the election, officials will continue to tread cautiously. At the …
26th January 2024
Hungary skating on thin ice with new rate proposal The proposal by the Hungarian government this week to change the reference rate used to price bank loans risks undermining the central bank’s (MNB’s) independence and presents a further upside threat to …
PBOC is pushing on a string The 50bp cut to banks’ required reserve ratio (RRR) announced this week is the largest since 2021 and will free up around RMB1trn of liquidity when it comes into force on 5 th February. The move has improved investor sentiment …
Limited need for large fiscal giveaways As it is an election year, the Finance Ministry will deliver an “interim” Budget on Thursday 1 st February, in place of the annual Union Budget. Interim budgets give an update of the current fiscal year and outline …
Is Egypt setting the stage for ‘Super Thursday’? IMF officials have been in Egypt over the past week to discuss a new financing package and, while no details have filtered through, momentum is building fast and there’s a chance that all will be revealed …
25th January 2024
Russian oil imports drop as G7 cracks the whip We learnt this week that the goods trade deficit narrowed from US$20.6bn in November to US$19.8bn in December, the smallest monthly trade deficit since July. (See Chart 1.) Both imports and exports rose last …
19th January 2024
GDP breakdown points to rebound in tech & retail Officially, GDP growth slowed last quarter in q/q terms. But as we noted in our response to the data, this does not seem consistent with wider evidence of a slight improvement in momentum recently. On …
Egypt needs enhanced IMF deal urgently Egypt’s foreign currency woes remained in the spotlight this week, highlighting the importance of getting an enhanced IMF deal over the line in order to avoid a disorderly balance of payments crisis. This week …
18th January 2024
South Africa climate efforts at risk from power plan South Africa’s draft energy plan presented bad news to those concerned about loadshedding and the commitment to reducing greenhouse gas emissions. South Africa’s Integrated Resource Plan (IRP) set out …
12th January 2024
Inflation data surprise to the downside The softer-than-expected December inflation data released across Central and Eastern Europe (CEE) this week suggest that further interest rate cuts will be delivered across the region over the coming months and, in …
Growth pick-up to extend into Q1, fade by year-end The Q4 GDP data due on Wednesday are likely to show that China’s economy ended 2023 on a more positive note. Our GDP tracker points to y/y growth of 5.5%, up from 4.9% in Q3. That partly reflects a weaker …
Air pollution a modest headwind Air pollution in India has been a growing problem for several decades – on some measures air pollution has almost doubled from the levels at the start of the century. (See Chart 1.) Chart 1: India Annual Average PM 2.5 …
Egypt’s policy shift and IMF deal edging closer Meetings this week between Egypt, the IMF, and the US took place following the release of a draft economic plan, which points to the expansion of the current IMF deal and a renewed shift towards economic …
11th January 2024
Nigeria spending up, but no more deficit financing This week, Nigeria signed its 2024 budget into law. Spending is projected to be higher than originally anticipated, although officials are signalling that it will be financed by higher revenues rather …
5th January 2024
BoI starts easing cycle, but uncertainty remains high Israel’s central bank started its monetary easing cycle this week with a 25bp interest rate cut – a move that came a bit sooner than we’d expected. But inflation risks are greater than most anticipate, …
Argentina and the IMF to tango again? An IMF delegation is set to meet with Argentine officials in Buenos Aires today to discuss the country’s $44bn program that – in the Fund’s words – had “ gone off track ” in August under the previous Peronist …
PSL injection to provide modest lending boost While bond yields in developed economies have regained some ground this week, the opposite has been the case in China, with the 10Y CGB yield dropping to a near four-year low of 2.52% today. This suggests …
Remittance inflows to remain robust The World Bank reported in its latest Migration and Development Brief that India remained the world’s largest recipient of remittances in 2023. Remittances jumped to US$125bn (3.4% of GDP) last year, from US$111bn in …
Egypt tightening the purse strings as IMF deal nears In Egypt, 2024 started off with a raft of price hikes as officials seek to tighten fiscal policy and warm relations with the IMF ahead of an anticipated enhancement of the current deal. The increases …
4th January 2024
Zambia secures latest IMF tranche as debt talks drag Zambia received the latest $187m tranche of its IMF deal this week as it continues to make progress with its fiscal performance despite a tough external backdrop. This may help to push long-running debt …
22nd December 2023
Fiscal rules no game changer for CEE public finances EU finance ministers agreed on a new set of fiscal rules this week, but this doesn’t change our view that concerns about public debt dynamics will grow in parts of Central and Eastern Europe (CEE) over …
PBOC moving cautiously to ease further The Loan Prime Rates (LPR) were left unchanged for a fourth consecutive month on Wednesday. But today’s coordinated reductions in commercial bank deposit rates suggest that the PBOC is still on an easing path. Lower …
Will the RBI follow the lead of other central banks? India’s economy has held up exceptionally well in 2023 due to strong government spending and investment. Meanwhile, timely data show a renewed surge in food prices. This is a worry for the RBI as the …
