Economic reform will falter with new Turkish cabinet

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Economic Reform ◽  
Prime Minister ◽  
Job Creation ◽  
Domestic Demand ◽  
Election Campaign ◽  
Short Term ◽  
Content Type ◽  
Political Risks ◽  
Financial Difficulties

Significance Presenting his government's programme on November 25, Prime Minister Ahmet Davutoglu promised to keep his election campaign pledges, complete major infrastructure projects, maintain fiscal stability and implement structural change. Impacts Domestic demand will strengthen in the short term. However, firms in labour intensive sectors may face financial difficulties, and new job creation may be slow. Currency and capital markets are likely to remain volatile and overreact to trends in monetary policy and the current account. Opportunities exist for those investors able to tap into the government's priorities and avoid political risks.

Politics set to slow Pakistan's divestment drive

2016 ◽  
Keyword(s):  
Public Sector ◽  
Economic Reform ◽  
Prime Minister ◽  
Structural Reforms ◽  
Short Term ◽  
Content Type ◽  
Reform Agenda ◽  
Political Patronage ◽  
The Government ◽  
Core Condition

Subject Pakistan's divestment drive. Significance Prime Minister Nawaz Sharif's government describes divestment of public sector enterprises (PSEs), involving 69 firms, as an essential part of its 2013-18 economic reform agenda. Progress thus far is limited, but the government faces rising pressure from the IMF, which made divestment a core condition of its 6.6-billion-dollar, three-year loan in September 2013. Impacts Another government led by Sharif would continue gradual divestments after 2018. Since PSEs are an important vector for distributing political patronage, structural reforms will face stiff resistance. Divestment of profitable PSEs defeats the purpose of the exercise, but the government will use them for a short-term cash boost.

Gloomy sentiment will spur stimulus in South Korea

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Foreign Policy ◽  
South Korea ◽  
Domestic Demand ◽  
The South ◽  
Content Type ◽  
South Korean ◽  
Sustained Growth ◽  
Korean Economy

Significance The recent fall in the price of oil was expected to provide a timely boost to the South Korean economy, but its performance in the first quarter of 2015, though rebounding from the previous quarter, has been below expectations. Beset by slowing exports and weak domestic demand, the mood in both the business and household sectors is downbeat. Impacts Absent a sustained growth rebound (or some kind of foreign policy breakthrough), Park's presidency will be seen as a failure. Deflation could threaten South Korea if there is no adjustment to monetary policy. An FTA with China will boost South Korean exports only in the longer term. The sharp depreciation of the euro will make Europe a challenging market for South Korea for now.

Narrow win limits new Jamaican government's options

2016 ◽  
Keyword(s):  
Public Opinion ◽  
Prime Minister ◽  
Job Creation ◽  
Labour Party ◽  
Window Of Opportunity ◽  
National Party ◽  
Content Type ◽  
Positive Message ◽  
The Government ◽  
Opinion Polls

Subject Outlook for the new government. Significance Despite opinion polls before the February 25 election indicating a victory for the incumbent People's National Party (PNP), the opposition Jamaica Labour Party (JLP) won a narrow one-seat victory and JLP leader Andrew Holness was sworn in as prime minister for a second time on March 3. The PNP ran a lacklustre campaign that failed to galvanise its core supporters. In contrast, the JLP offered a positive message of tax cuts and job creation. Impacts Absent rapid economic improvements, public opinion may turn against the new government. Juggling IMF targets and popular demands may prove beyond the JLP's capabilities. The government has only a narrow window of opportunity before the PNP recovers from its surprise defeat.

Monetary easing may quicken in Brazil this year

2017 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Economic Recession ◽  
Government Debt ◽  
Domestic Demand ◽  
Private Debt ◽  
Content Type ◽  
Positive Effects ◽  
The Government

Significance At its first meeting of 2017, on January 10-11, the COPOM reduced the benchmark Selic interest rate to 13%. The 75-basis-point (bp) rate cut decision, the largest in nearly five years, accelerated the monetary easing cycle that started in October 2016. Economic recession has been relieving inflationary pressures and opening room for more intense cuts in interest rates. Impacts Further reductions of interest rates may contribute to controlling government debt. Private debt renegotiations at lower interest rates may facilitate a recovery in domestic demand and output. Any positive effects of monetary policy on activity may help contain popular dissatisfaction with the government.

Bet on Canada's spending poses risks for Trudeau

2016 ◽  
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Prime Minister ◽  
Commodity Prices ◽  
Tax Rates ◽  
Tax Havens ◽  
Content Type ◽  
Conservative Government ◽  
Business Tax ◽  
Fiscal Austerity

Significance It includes large federal stimulus spending to spur economic growth and to alleviate the worst impacts of the collapse in global commodity prices, particularly oil. The budget represents a break on the part of Prime Minister Justin Trudeau with the prevailing orthodoxy around fiscal austerity and reliance on central bank monetary policy to support growth. Impacts Small business tax rates remain unchanged from levels set by the previous Conservative government. Troubled Quebec aerospace firm Bombardier may receive a federal bailout. Post-election leadership questions surrounding the Conservatives and NDP provide Trudeau with a weakened opposition for the time being. Ambitious federal projections of revenues recovered from tax havens and arrears are unlikely to be realised.

India's Hindu right constrains Modi's economic agenda

2015 ◽  
Keyword(s):  
Economic Reform ◽  
West Bengal ◽  
Prime Minister ◽  
Land Acquisition ◽  
State Governments ◽  
Content Type ◽  
The Law

Subject Modi's political compulsions. Significance Prime Minister Narendra Modi's government recently indicated that it will no longer pursue radical amendments to land acquisition laws, and will accept the substance of the law passed by the previous Congress administration. This comes after the government's own amendment bill became stuck in parliament due to its lack of an upper house majority and its controversial use of amending executive ordinances. Its response reflects pressure not only from the opposition but also Hindu nationalist cadres. Impacts Economic reform will prove obdurate so long as the BJP lacks an upper house majority. In response, the centre will encourage state governments to pursue liberalisation, in key areas such as land. This will have mixed results: industrialised states (eg, Maharashtra) will be more receptive than poorer states such as West Bengal.

Excess euro-area liquidity raises bank lending risks

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Commercial Banks ◽  
Bank Lending ◽  
Domestic Demand ◽  
Basel Iii ◽  
Content Type ◽  
Reserve Requirements ◽  
Regulatory Standards ◽  
Excess Liquidity

Significance The ECB stopped purchasing bonds this month after running its asset purchase programme (APP) since March 2015. The APP flooded commercial banks with liquidity in excess of their minimum reserve requirements, which they could use to grant new loans. The ECB achieved its goal of increasing credit to the private sector, raising domestic demand and warding off price deflation, but commercial banks have kept large amounts of excess liquidity. Impacts Euro-area banks' average profitability has improved during the APP scheme, but less accommodating monetary policy may reverse this trend. The high prudential ratios the Basel III regulatory standards require should make euro-area banks more resilient to monetary tightening. The ECB's mopping up may pose difficulties to banks relying on excess liquidity to meet the Basel III coverage liquidity ratio.

Canada faces federal-provincial gridlock on policy

2018 ◽  
Keyword(s):  
Federal Government ◽  
Prime Minister ◽  
New Right ◽  
Election Campaign ◽  
Right Wing ◽  
Carbon Taxes ◽  
Content Type ◽  
Cross Border ◽  
Border Trade ◽  
Opposition Parties

Subject Canadian provincial and federal politicial dynamics. Significance As Ontario Premier Doug Ford’s term gets underway, Quebec is beginning its election campaign, running to October 1; the centre-right Coalition Avenir Quebec (CAQ) will likely perform well. Prime Minister Justin Trudeau faces a fractious final year, as relations worsen between the Liberal federal government and various new right-wing provincial governments. Leading issues are migration, carbon taxes, cross-border trade and right-wing provincial governments’ socially conservative and fiscally austere agendas. Impacts Failed NAFTA renegotiations would hurt Trudeau’s administration before 2019 and necessitate further post-2019 negotiations. Right-wing provincial premiers will still cooperate with Trudeau to mitigate the effect of US trade tariffs on Canada. Currently, Trudeau and the Liberals are likely to win in 2019, but opposition parties will gain votes.

India’s remedy for bad debt may not bring relief

2017 ◽  
Keyword(s):  
Prime Minister ◽  
Banking System ◽  
Job Creation ◽  
Bank Credit ◽  
Content Type ◽  
Reserve Bank ◽  
Bankruptcy Code ◽  
The Government ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Implementation of India's new Insolvency and Bankruptcy Code. Significance Shrinking bank credit is hindering India’s ability to finance spending. The Reserve Bank of India (RBI) is relying on the recently instituted Insolvency and Bankruptcy Code (IBC) as the principal instrument to address the problem of stressed assets in the banking system. Impacts The government may accelerate plans to merge stronger and weaker PSBs. Indian corporates may increase their issue of bonds denominated in domestic currency. Prime Minister Narendra Modi will emphasise job creation rather than investment until the next election.

Guinea unrest is not yet a threat to stability

2017 ◽  
Keyword(s):  
Service Delivery ◽  
Social Services ◽  
Public Service ◽  
Job Creation ◽  
Economic Conditions ◽  
Short Term ◽  
Municipal Elections ◽  
Content Type ◽  
Mining Communities ◽  
The Military

Significance Recent demonstrations focused on the government’s failure to hold long-delayed municipal elections and voiced frustration with dysfunctional service delivery and deteriorating socio-economic conditions. As a result, President Alpha Conde has unveiled a new electoral code which could allow elections to be held in 2018. Impacts Conde’s grip on the military should ensure short-term stability. Modest growth is unlikely to lead to broader job creation and improvements in public service delivery. Protests in mining communities will persist over jobs and social services.

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