Bolivia's growth forecast is overly optimistic

2015 ◽  
Keyword(s):  
Public Spending ◽  
Trade Flows ◽  
South American ◽  
Short Term ◽  
Content Type ◽  
Capital Movements ◽  
Finance Minister ◽  
External Demand ◽  
Second Year ◽  
Small Economy

Subject Slowing growth in Bolivia. Significance On July 15, Fitch Ratings upgraded Bolivia's debt a notch to BB from BB-, with a stable outlook. This follows Finance Minister Luis Arce's announcement last month that, despite lower export earnings, the economy would grow by 5% this year, with Bolivia leading the South American ranking for the second year in succession. However, his prediction seems over-optimistic, even though the Bolivian economy depends less on foreign investment inflows and short-term capital movements than many of its neighbours. Impacts A small economy, Bolivia is highly dependent on trade flows for growth. Domestic and external demand are inter-dependent; lower revenues will curb public spending. The size of the informal and illegal sectors distorts the picture provided by official statistics.

Nigeria’s infrastructure backlog could worsen

2017 ◽  
Keyword(s):  
World Bank ◽  
Internal Migration ◽  
Short Term ◽  
Capital Projects ◽  
Content Type ◽  
Finance Minister ◽  
The World Bank ◽  
The World ◽  
Additional Funding ◽  
Alternative Sources

Subject Infrastructure shortfalls. Significance Finance Minister Kemi Adeosun stated on December 11 that Nigeria will release an additional 750 billion naira (2.1 billion dollars) to federal ministries and agencies for implementation of capital projects. Adeosun has previously said the country must explore alternative sources of financing in the short term to deliver critical road, rail and power infrastructural projects. However, there are concerns about whether additional funding will lead to the delivery of such projects; the World Bank recently said that 50 infrastructure public-private partnership (PPP) projects have not met their objectives because they were hastily designed. Impacts Slow-burning conflict between farmers and herdsmen will cause more internal migration to cities, further straining infrastructure. Major infrastructure gaps will be worst in states such as Lagos and Abia, which are struggling to cope with new migrants and residents. Persistent corruption and a 'kickback' culture will result in higher infrastructure delivery and maintenance costs.

Thailand’s democratic deficit will dampen GDP growth

2018 ◽  
Keyword(s):  
Public Spending ◽  
Gdp Growth ◽  
Democratic Deficit ◽  
National Strategy ◽  
Consumer Spending ◽  
Short Term ◽  
Domestic Activity ◽  
Content Type ◽  
The Government ◽  
The Impact

Subject Outlook for the Thai economy. Significance Thailand's GDP grew by 3.9% last year, the most since 2012, and is expected to remain at around 4.0% this year, with stronger public spending supporting surging tourism and solid consumer spending. Thailand’s National Strategy aims to raise GDP growth to 5-6%, but this ambition faces rising short-term risks and longer-term structural impediments. Impacts Despite rising pressure on the government to hold elections, protests will not grow, limiting the impact on spending and tourism. Automobiles, semiconductors and other electronics -- key Thai exports -- will be hit by deteriorating US-China relations. The Bank of Thailand is one South-east Asian central bank keen to ‘normalise’ rates, but higher rates could dampen domestic activity.

Malaysia will struggle to foster economic growth

2018 ◽  
Keyword(s):  
Economic Growth ◽  
Budget Deficit ◽  
Prime Minister ◽  
Credit Ratings ◽  
Political Support ◽  
Short Term ◽  
Foreign Investors ◽  
Content Type ◽  
Fiscal Management ◽  
Finance Minister

Subject Malaysia's 2019 budget. Significance Finance Minister Lim Guan Eng’s 314.5-billion-ringgit (75-billion-dollar) budget for 2019, tabled earlier this month, will likely be approved in parliament before year-end. The first budget under Prime Minister Mahathir Mohamad anticipates a budget deficit of 3.4% of GDP. Shortly after coming to power this May, Mahathir said he would give way to Pakatan Harapan (PH) coalition partner Anwar Ibrahim within two years. Impacts The PH’s fiscal management will bolster confidence among foreign investors and credit ratings agencies. The lack of budget handouts to rural Malay constituencies could weaken political support for the PH in the short term. Government borrowing will likely become more expensive through 2019. The digital economy tax introduced in the budget will come into effect in 2020. Corruption investigations into missing revenues could result in further legal charges against members of the former government.

South Africa's Ramaphosa will stress reform momentum

2019 ◽  
Keyword(s):  
Public Enterprises ◽  
Short Term ◽  
Content Type ◽  
The Public ◽  
Finance Minister

Significance This included the retention of key officials such as Finance Minister Tito Mboweni and Public Enterprises Minister Pravin Gordhan. While Ramaphosa has committed his administration to reform, a still-large executive and several lacklustre appointments highlight the fragile hold he has over the ruling ANC. Impacts Post-poll turmoil in the main opposition Democratic Alliance (DA) could provide Ramaphosa with a freer hand at parliament in the short term. The appointment of Patricia de Lille could precede the eventual merging of her GOOD party with the ANC. Pressure will grow for the public protector's ouster after several disputed reports and damaging court findings against her.

Lifting capital controls underpins Iceland’s growth

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Capital Controls ◽  
Economic Conditions ◽  
Short Term ◽  
Content Type ◽  
Short Run ◽  
Small Economy ◽  
Economic Balance ◽  
The Eu

Subject Iceland‘s macroeconomic outlook. Significance Iceland at the turn of the year took several steps towards lifting its capital controls on households and businesses. The authorities had worried that this would create an outflow of capital, destabilising the economy through a weakened krona and rising inflation. However, positive economic conditions have reversed the problem at least in the short run, with the main worries being an even stronger krona which could threaten export and tourism industries. Impacts High expected GDP growth and interest rates might be tempting for foreign investors looking for short-term gains. Fresh elections are possible if the Independence Party fails to form a government. The largest challenge for Iceland will be to find long-term economic balance as a small economy outside the EU.

Vazquez faces gloomy second year in Uruguay

2016 ◽  
Keyword(s):  
Free Trade ◽  
Domestic Market ◽  
Short Term ◽  
Content Type ◽  
Ideological Position ◽  
Economic Climate ◽  
Economic Trends ◽  
International Demand ◽  
Second Year ◽  
The Government

Subject Uruguay's political and economic woes. Significance President Tabare Vazquez started his second year in office with conflicts within his own Frente Amplio (FA) coalition, clashes with the opposition and an adverse economic climate. In a context of regional recession, low international demand and a small, sluggish domestic market, he is seeking free trade accords to boost investments and expand export capacity. However, this is at odds with the ideological position of most of the FA. Impacts The government faces a difficult year with no credible chance of reversing negative political and economic trends in the short term. Growth is set to stay well below 2% this year and next. The opposition has yet to benefit from disappointment with the FA.

South African downgrades will raise regional risks

2017 ◽  
Keyword(s):  
South African ◽  
Government Spending ◽  
Credit Rating ◽  
Customs Union ◽  
Government Revenue ◽  
Short Term ◽  
Content Type ◽  
Finance Minister ◽  
African Development Bank ◽  
Sovereign Credit Rating

Subject Regional impact of South Africa's downgrades. Significance In April 2017, Standard & Poor's and later Fitch downgraded South Africa's sovereign credit rating to junk status. This has raised regional risks for members of the Southern African Customs Union (SACU), who rely on the union for government revenues. South Africa's ratings downgrades will reduce revenues for other members, who received 46.0 billion rand (3.56 billion dollars) of the 84.0-billion-rand revenue pool in 2015-16, and force cutbacks in government spending across the region. Impacts Botswana's government revenue will only be moderately constrained by the downgrades. Namibia will be resilient to reduced SACU revenue in the short term, supported by a loan from the African Development Bank. South Africa will struggle to reassure investors that a new finance minister does not signal a change in fiscal policy.

Zimbabwe’s vice president could be sidelined by party

2017 ◽  
Keyword(s):  
Decision Making ◽  
Foreign Investment ◽  
Vice President ◽  
Economic Uncertainty ◽  
Short Term ◽  
Content Type ◽  
Financial Decision Making ◽  
Finance Minister ◽  
Financial Decision ◽  
Robert Mugabe

Subject ZANU-PF infighting. Significance A cabinet reshuffle by President Robert Mugabe on October 9 removed key allies of Vice President Emmerson Mnangagwa and demoted him to vice president without portfolio. Among persistent wrangling between the rival ‘G40’ and ‘Lacoste’ factions ahead of the 2018 elections, the ZANU-PF politburo has agreed to hold a ‘Special Congress’ in December at which there will be elections for senior posts. If the extraordinary congress is held, Mnangagwa could be the biggest leadership casualty. Impacts Confirmation of an early poll would cause heightened economic uncertainty and deter foreign investment in the short term. More centralised and politically motivated financial decision-making is likely under the new finance minister. Minister of Defence Sydney Sekeramayi could emerge as a potential presidential successor for the ailing 93-year-old Mugabe.

Economic policy will be unpredictable after Turks vote

2019 ◽  
Keyword(s):  
Interest Rates ◽  
Ad Hoc ◽  
Public Spending ◽  
Consumer Confidence ◽  
Local Elections ◽  
New Wave ◽  
Content Type ◽  
High Interest ◽  
External Demand ◽  
The Government

Significance The TCMB has responded quickly to a new wave of lira volatility ahead of local elections, forcing banks to borrow at the overnight rate of 25.5% instead of the 24.0% policy rate. Such decisiveness defies President Recep Tayyip Erdogan’s antipathy to high interest rates and is particularly welcome as the government tries to bolster support by reviving economic activity through accelerated public spending and ad hoc interventions. Impacts A lira collapse would trigger renewed crisis and may be avoided, but nominal depreciation is likely and lira volatility almost certain. Inflation may decline, but only to 12-15% from September onwards. Low investor and consumer confidence, weak external demand and high interest rates, debt and unemployment may keep recovery to 0-2% growth. Economic discontent will persist into 2020, inducing Erdogan to continue clamping down despite the tradition for post-election conciliation.

Radically new UK economic strategy could be undermined

2020 ◽  
Keyword(s):  
United Kingdom ◽  
Public Spending ◽  
Regional Inequality ◽  
Short Term ◽  
Economic Strategy ◽  
Content Type ◽  
Regional Inequalities ◽  
The United Kingdom ◽  
Economic Divergence ◽  
The Eu

Subject New UK economic direction. Significance The rhetoric of the new government implies a radical break with previous policy both domestically (tackling regional inequality) and internationally (the freedom to diverge from EU rules). In both cases the ambitions are real and there will be major changes, but significant economic and political tensions remain and have yet to be resolved: public spending demands may not be met due to fiscal and political constraints while London's aim for economic divergence will face opposition from business. Impacts The respective red lines of the United Kingdom and EU mean that a thin trade deal, or possibly none at all, is the most likely outcome. Large increases in infrastructure spending are unlikely to alleviate regional inequalities in the short term. Economic divergence from the EU will limit the scope for a close and comprehensive EU-UK security and defence relationship post-Brexit.

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