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28 Oct. 2015 Budget Deal Means Fiscal Policy Will Ease Slightly Next Year (Publication Centre)

The two-year budget deal agreed between the administration and the Republican leadership in Congress will avert a federal debt default and appears to constitute a modest near-term easing of fiscal policy. The debt ceiling will not be raised, but the law imposing the limit will be suspended through March 2017, leaving the Treasury free to borrow as much as necessary to cover the deficit. As a result, the presidential election next year will not be fought against a backdrop of fiscal crisis.

18 Mar. Don't Believe Reports that the Fiscal Squeeze Has Been Eased (Publication Centre)

Media reports allege that the Chancellor's Budget pared back the fiscal squeeze planned for the next couple of years. The Director of the Office for Budget Responsibility, Robert Chote, even compared the Chancellor to Saint Augustine, who supposedly said "make me pure, but not yet."

29 Oct. 2015 Will the Chancellor Ease Next Year's Fiscal Squeeze? (Publication Centre)

The defeat in the House of Lords of the Government's plans to cut spending on tax credits by £4.4B next year is not a barrier to their implementation. But it has prompted speculation that the Chancellor will reduce the size of the fiscal consolidation planned for next year. The plans may be tweaked in the Autumn Statement on 25 November, but we think the economy will still endure a major fiscal tightening next year.

21 Oct. 2015 Recovery Won't Shrug Off The Fiscal Squeeze (Publication Centre)

The conventional wisdom that the U.K. economy will comfortably weather the coming fiscal squeeze is misplaced. The planned adjustment is large, designed to minimise its political, not economic, impact, and based on overly optimistic assumptions. What's more, the economy is in many respects less well-placed to cope with the tightening than when the previous government applied the fiscal brakes. And when the recovery slows, the Chancellor is less likely to change tack and ease the squeeze this time.

13 October. 2016 The Chancellor Won't Set Fiscal Policy to Boost Growth Next Year (Publication Centre)

Many commentators have assumed that the new Chancellor's pledge to "reset" fiscal policy and to stop targeting a budget surplus in this parliament means that fiscal policy will support growth in economic activity next year.

26 Nov. 2015 The Chancellor Leaves the Fiscal Shackles Firmly in Place (Publication Centre)

The Chancellor used the Autumn Statement to shift the composition of the fiscal consolidation slightly away from spending cuts and towards tax hikes. But in overall macroeconomic terms, he changed little. The fiscal stance is still set to be extremely tight in 2016 and 2017, ensuring that the economic recovery will lose more momentum.

23 November 2017 The Chancellor Softens the Fiscal Squeeze and Hopes for the Best (Publication Centre)

The Chancellor was bolder than widely expected yesterday and scaled back the fiscal consolidation planned for the next two years significantly, even though his borrowing forecast was boosted by the OBR's gloomier prognosis for the economy.

20 November 2017 The Chancellor Will Stick to Plans for an Intensifying Fiscal Squeeze (Publication Centre)

Chancellor Hammond likely will broadly stick to the current plans for the fiscal consolidation to intensify next year when he delivers his second Budget on Thursday.

22 November 2017 What's the Case for Increased Fiscal Stimulus in the Eurozone? (Publication Centre)

The euro area's record-high external surplus has prompted commentators to suggest that the zone has room to loosen fiscal policy to support growth, or at least relax the deficit reduction rules.

23 July 2018 A Welcome Pause to the Fiscal Squeeze is In Sight (Publication Centre)

The public finances continue to heal rapidly, suggesting that the Chancellor should have scope to soften his fiscal plans substantially in the Autumn Budget.

20 April 2018 Argentina's Fiscal Accounts on the Mend, but Inflation is a Key Concern (Publication Centre)

Argentina's government continues to show signs of reining in fiscal policy, with the primary budget balance improving steadily over the last year.

10 November. 2016 How Far Will Trump Loosen Fiscal Policy? And How Will the Fed React? (Publication Centre)

Note: This updates our initial post-election thoughts, adding more detail to the fiscal policy discussion. Apologies for the density of the text, but there's a lot to say. Our core conclusions have not changed since the election result emerged. The biggest single economic policy change, by far, will be on the fiscal front.

8 December. 2016 Will the Fed Move up the Dotplot in Anticipation of Fiscal Easing? (Publication Centre)

We're hearing a good deal of speculation about the dotplot after next week's FOMC meeting, with investors wondering whether the median dot will rise in anticipation of the increased inflation threat posed by substantial fiscal loosening under the new administration. We suspect not, though for the record we think that higher rate forecasts could easily be justified simply by the tightening of the labor market even before any stimulus is implemented.

08 Mar. 2016 Is the Economy Better Placed to Withstand the Fiscal Squeeze? (Publication Centre)

The consensus view that the recovery won't lose more momentum this year seems to assume that the U.K. economy is better placed to deal with the intensification of the fiscal squeeze than earlier this decade. We do not share this optimism.

25 July 2018 China's Scope for Fiscal Expansion is Surprisingly Limited (Publication Centre)

The PBoC and Ministry of Finance have been locked in a relatively public debate recently over which body should shoulder the burden of stimulating the economy as growth slows and trade tensions take their toll.

23 Mar. 2016 Rousseff's Government is on the Ropes - Fiscal Progress Will Slow (Publication Centre)

Political turmoil in Brazil continues to undermine President Dilma Rousseff's leverage over the economy. On Friday, the Lower House of Congress voted to start impeachment proceeding against Ms. Rousseff. She has until early April to present her defense against charges that she doctored government accounts and used graft proceeds to fund the 2014 electoral campaign.

25 September 2018 The Government has 99 Problems, but the Fiscal Deficit Ain't One (Publication Centre)

August's public finances figures, released last week, were an unwelcome but manageable setback for the Chancellor.

28 November. 2016 The Housing Slowdown Next Year Will be Offset by Fiscal Easing (Publication Centre)

We have been asked how we can justify raising our growth forecasts but at the same time arguing that the housing market is set to weaken quite dramatically, thanks to the clear downshift in mortgage applications in recent months. Applications peaked back in June, so this is not just a story about the post-election rise in mortgage rates.

6 March 2018 Why China will Miss its GDP Growth, Fiscal Deficit and RMB targets (Publication Centre)

China's National People's Congress yesterday laid out its main goals for this year, on the first day of its annual meeting.

4 September 2017 Recovery will Continue in H2, but Fiscal Reforms are Key (Publication Centre)

Brazil's economy likely will bounce back during the second half of this year and into 2018, after the second quarter was marred by political risk.

21 March 2018 Fiscal stimulus in the EZ won't cure global imbalances (Publication Centre)

Global current account imbalances are back on the agenda. In the U.S., economic policies threaten to blow out the twin deficit, while external surpluses in the euro area and Asia are rising.

20 November 2017 Will Argentina Succeed in Tackling High Inflation and Fiscal Deficits? (Publication Centre)

Argentina's economy is firing on all cylinders, thanks to improving fundamentals and a positive external backdrop.

11 July. 2016 Lower Inflation in Brazil and Fiscal Tightening Point to Q4 Easing (Publication Centre)

The latest IPCA inflation data in Brazil show the year-over-year rate fell to 8.8% in June from 9.3% in May. This is the slowest pace since May 2015, with inflation pulled lower by declines across all major components, except food. Indeed, food prices were the main driver of the modest 0.4% unadjusted monthto-month increase, rising by 0.7%, following a 0.8% jump in May. The year-over-year rate rose to 12.8% in June from 12.4%.

16 March 2017 The Fed Won't be Able to Dodge the Fiscal Policy Question in June (Publication Centre)

It might seem odd to describe a meeting at which the Fed raised rates for only the third time since 2006 as a holding operation, but that just about sums up yesterday's actions. The 25bp rate hike was fully anticipated; the forecasts for growth, inflation and interest rates were barely changed from December; and the Fed still expects a total of three hikes this year.

16 October 2018 Will Fiscal Stimulus Boost Eurozone GDP growth in 2019 (Publication Centre)

The sovereign debt crisis in the euro area was a macroeconomic horror story

19 Oct. 2015 Slowdown in Store as Fiscal Policy Tightens and Strong Pound Bites (Publication Centre)

A powerful cocktail of cheap money, labour and commodities, allowed to infuse by a hiatus in the government's austerity programme, has reinvigorated the U.K. economy over the last three years. But these supports are now weakening while new headwinds are emerging. The U.K. economy is heading for a pronounced slowdown, one that is under-appreciated by most forecasters and under-priced by markets.

21 March 2018 China's Fiscal Reforms: Economies of Scale won't Reduce the Deficit yet (Publication Centre)

Premier Li Keqiang rounded out the National People's Congress with his press conference yesterday.

11 December 2017 Will Fiscal and Brexit News Prompt More Rate Hike Talk from the MPC? (Publication Centre)

The MPC was a little irked by the markets' reaction to its November meeting.

9 Mar. 2015 Currency Depreciation is Affecting Inflation Expectations in LatAm (Publication Centre)

Brazil's central bank is in a very delicate situation. The economy is on the verge of another recession, but at the same time the BRL is falling, inflation expectations are rising and the inflation rate is overshooting. Fiscal policy is also tightening to restore macro stability magnifying the squeeze on growth.

04 Jan. 2016 Uncertainty in Brazil Contrasts With Mexico's Benign Outlook (Publication Centre)

While we were out, Brazil's economic, fiscal and political position continued to deteriorate further. The recession deepened in the fourth quarter, with Brazil's economic activity index surprising yet again to the downside in October, falling for the eight consecutive month. The index fell 0.6% month-to-month and 6.4% year-over-year, the biggest contraction since the index began in 2004. And the prospects for first quarter consumption and industrial output have deteriorated substantially. Unemployment increased further in November, and inflation continues to rise, with the mid-month CPI--the IPCA-15 index-- increasing 1.2% month-to-month in November, after a 0.9% increase in October.

8 March 2017 Brazil's Economy Struggled Late Last Year, Will it Grow in Q1? (Publication Centre)

Markets have been positively surprised by Brazil's rapid disinflation, the efforts at fiscal reform, and the prospect of growth in the economy this year. The Ibovespa index is now above its pre-crisis high and the real has approached the key level of three per USD in recent months. But the latest GDP report, released yesterday, showed that the economy struggled in Q4. Real GDP fell 0.9% quarter-on-quarter, worse than the revised 0.7% drop in Q3.

1 March 2017 The Chancellor will Bank Most of the £20B Borrowing Windfall (Publication Centre)

At next Wednesday's Budget, the Chancellor will have the rare pleasure of announcing lower-than- anticipated near-term borrowing forecasts. But hopes that he will prevent the fiscal tightening from intensifying when the new financial year begins in April look set to be dashed, just as they were at the Autumn Statement in November.

31 May 2017 Manifestos Point to Very Different Public Borrowing Paths (Publication Centre)

The recent narrowing of the Conservatives' opinion poll lead suggests that investors, particularly in the gilt market, now must consider other parties' fiscal proposals.

28 Apr. Don't Pin Your Hopes on a Post-Referendum Rebound (Publication Centre)

The slowdown in GDP growth in Q1 reflects more than just Brexit risk. The intensifying fiscal squeeze, the uncompetitiveness of U.K. exports, and the lack of spare labour suggest that the U.K.'s recovery now is stuck in a lower gear.

16 May 2017 Eurozone Reforms Likely are Coming, but Patience is Needed (Publication Centre)

Mr. Macron will be in Berlin today with the message that France wants a strong Eurozone and a tight relationship with Germany. Friendly overtures between Paris and Berlin are good news for investors; they reduce political uncertainty while increasing the chance that the economic recovery will continue. But it is too early to get excited about closer fiscal coordination, let alone a common EZ fiscal policy and bond issuance.

28 June. 2016 Will Higher Inflation Keep Further Monetary Easing at Bay? (Publication Centre)

The Chancellor indicated yesterday that the current fiscal plans--which set out a 1% of GDP reduction in the structural budget deficit this year--will remain in place until a new Prime Minister is chosen by September 2. So for now, the burden of leaning against the imminent downturn is on the MPC's shoulders.

11 Sept. 2015 Brazil's Cut to Junk Deepens Its Economic And Financial Woes (Publication Centre)

This year, Brazil has been the perfect example of all the problems faced by EM countries over the last few decades. A long and deep recession, high inflation, fiscal crisis, political chaos, a commodity price crunch, sharp currency depreciation and lack of confidence have all worked together to hammer the economy and investor confidence. These factors all contributed to S&P downgrading Brazil to junk status on Wednesday.

6 June. 2016 Mr. Temer Begins Brazil's Fiscal Overhaul, Despite Political Unrest (Publication Centre)

Brazil's interim government has been trying to put the kibosh on the vicious circle of recession, capital outflows, and political pandering that has dogged the country for so long. In his first few weeks at the helm, despite the political turmoil, Mr. Temer has started to tackle Brazil's fiscal mess, the country's biggest headache.

7 Apr. The Fiscal Squeeze on Household Incomes Just Got Tougher (Publication Centre)

The new fiscal year began on April 6, marking the post-election intensification of the fiscal squeeze for many households. The Office for Budget Responsibility estimates net tax and benefit changes will subtract 1.2 percentage points from year-over-year growth in households' disposable incomes in 2016.

22 August 2018 Sharp Fall in Borrowing Removes Need for Fiscal Tightening in 2019 (Publication Centre)

The latest public finance figures continue to imply that the Chancellor will be able to change course later this year in the Autumn Budget so that fiscal policy doesn't drag on GDP growth next year.

22 June. Fiscal and Monetary Policy Won't Come to the Rescue After a Brexit (Publication Centre)

The Chancellor warned last week that he would hold an Emergency Budget shortly after a vote to leave the E.U. to address a £30B black hole in the public finances. The £30B--some 1.6% of GDP-- is the mid-point of the Institute for Fiscal Studies' estimates of the impact of Brexit on public borrowing in 2019/20, which were based on the GDP forecasts of a range of reports.

22 March 2017 Improving Fiscal Picture in the South, but Politics Are Key (Publication Centre)

Growth in South America disappointed last year, but prospects are gradually improving on the back of rising commodity prices and the global manufacturing rebound. These factors will help to ease the region's external and fiscal vulnerabilities, particularly over the second half of the year. On the domestic front, though, the first quarter has proved challenging for some countries, hit by temporary supply factors such as a mine strikes, floods, and wildfires.

25 January 2017 The Fiscal Plans Won't Be Softened, Despite December's Better Figures (Publication Centre)

December's public finance figures suggest that borrowing is on track to come in a bit below the forecasts set out in the Autumn Statement in November. But we caution against expecting the Chancellor to unveil a material reduction in the scale of the fiscal consolidation set to hit the economy in his Budget on 8th March.

9 March 2017 The Chancellor Sticks to Plans for an Intense Fiscal Tightening (Publication Centre)

The Chancellor lived up to his reputation for fiscal conservatism yesterday and is pressing ahead with a tough fiscal tightening. He hopes that this will create scope to loosen policy if the economy struggles after the U.K. leaves the EU in 2019, but we remain concerned his "fiscal headroom" will be much smaller than he currently anticipates.

30 August. 2016 Banxico is Waiting for Fiscal Policy Action, and the Fed (Publication Centre)

The minutes from Banxico's August 11 monetary policy meeting--in which Board members unanimously voted to keep rates on hold at 4.25%--confirmed that the bank's policy guidance remains broadly neutral. Subdued economic activity, favourable inflation and gradual fiscal consolidation explain policymakers' position.

27 July. 2016 Can Fiscal Stimulus be a Silver Bullet for the Eurozone Economy? (Publication Centre)

Global economic growth continues to fall short of expectations, and the call for aggressive fiscal stimulus is growing in many countries. This is partly a function of the realisation that monetary policy has been stretched to a breaking point. But it is also because of record low interest rates, which offer governments a golden and cheap opportunity to kickstart the economy. One of the main arguments for stronger fiscal stimulus is based on classic Keynesian macroeconomic theory.

30 June. 2016 Will the New Government Sweeten the Fiscal Pill? (Publication Centre)

Fiscal policy is in limbo until a new leader of the Conservative party has been elected on September 9. Shortly after, however, a new Budget--or a Budget disguised as an Autumn Statement--will be held.

23 October 2017 The Fiscal Squeeze won't be Eased, Despite this Year's Low Borrowing (Publication Centre)

At the halfway mark of the fiscal year, public borrowing has been significantly lower than the OBR forecast in the March Budget.

24 November. 2016 The Fiscal Fetters Remain in Place, Despite the Looming Slowdown (Publication Centre)

The Chancellor's Autumn Statement dashed hopes that the fiscal consolidation will be paused while the economy struggles to adjust to the implications of Brexit. Admittedly, Mr. Hammond has another opportunity in the Spring Budget to reduce next year's fiscal tightening.

23 November. 2016 Don't Expect a Fiscal U-Turn Today, Despite October's Better Figures (Publication Centre)

October's public finance data provided very little relief for the Chancellor ahead of today's Autumn Statement. One month of good borrowing figures do little to compensate for the poor trend in the first half of the fiscal year.

25 November. 2016 Don't Bank on Hammond Being Able to Use His Fiscal Headroom (Publication Centre)

The Chancellor hinted in the Autumn Statement that the fiscal consolidation might not be as severe as it appears on paper because he has built in some "fiscal headroom". By that, Mr. Hammond means that he could borrow more and still adhere to his new, self-imposed rules.

20 December 2016 Fiscal Easing Likely Would Boost Productivity, but not by Enough (Publication Centre)

The two key planks of the argument that a substantial easing of fiscal policy won't be inflationary are that labor participation will be dragged higher, limiting the decline in the unemployment rate, while productivity growth will rebound, so unit labor costs will remain under control.

14 February 2017 Yellen to Keep March Open, and Signal Fiscal Easing not Needed (Publication Centre)

We're not expecting drama from Chair Yellen's semi-annual Monetary Policy Testimony in the Senate today. Dr. Yellen will want to keep alive the idea of a rate hike next month, but she will not signal that action is likely, given the continuing lack of clarity on the path of fiscal policy.

12 September. 2016 Mexico's 2017 Budget Proposals Signal Fiscal Discipline (Publication Centre)

The Mexican government last week unveiled its 2017 fiscal budget proposal. The plan makes clear that the shocks which have battered the economy and public finances since 2015 will linger in to next year. Mexico's government has been eager to cut spending in recent years.

16 Mar. Beware the Contradiction at the Heart of the Fiscal Forecasts (Publication Centre)

The new fiscal projections in the Budget today likely will be based on implausible economic projections, which assume that wage growth will accelerate soon, lifting inflation, but that interest rates won't rise for three more years. You can coherently forecast one or the other, but not both.

17 Mar. Fiscal Squeeze Still Set to Intensify, Despite the Economic Slowdown (Publication Centre)

The Chancellor chose in his Budget to increase the total size of the forthcoming fiscal consolidation, to ensure that the Office for Budget Responsibility continues to forecast that a budget surplus will be obtained in 2019/20.

14 December. 2016 No Change in Median Dots, Yellen Will Stonewall on Fiscal Easing (Publication Centre)

The Fed will raise rates by 25bp today, but we expect no change in the median expectation-the dotplot-for two rate hikes both next year and in 2018. We fully appreciate that fiscal easing on the scale proposed by President-elect Trump, or indeed anything like it, very likely would propel inflation to a pace requiring much bigger increases in rates.

18 July. 2016 Will Fiscal Loosening and Sterling's Drop Stave off Recession? (Publication Centre)

With plenty of evidence emerging that consumer spending and business investment are set to suffer from a collapse in confidence, attention is turning to whether other sectors of the economy are ready to step up and support growth. But the fruits from reduced fiscal contraction and stronger net trade will be small and will take a long time to emerge.

14 November. 2016 Britain Will Not Lead the Way With Fiscal Stimulus (Publication Centre)

Expectations are running high that the Autumn Statement on November 23 will mark the beginning of a more active role for fiscal policy in stimulating the economy. The MPC's abandonment of its former easing bias earlier this month has put the stimulus ball firmly in the new Chancellor's court.

21 February 2017 Fiscal Policy Won't Be Eased, Even If January's Surplus is Huge (Publication Centre)

January's public finance data, released today, take on particular importance because they are the last to be published before the Chancellor delivers his first Budget on March 8. The public finances nearly always swing into surplus in January, primarily because the deadline for individuals to submit self-assessment--SA--tax returns for the previous fiscal year is at the end of the month. Firms also pay their third of four payments of corporation tax for their profits in the current fiscal year.

20 March 2017 If Fundamental Tax Reform Fails, What Happens to Fiscal Policy? (Publication Centre)

The White House Budget for fiscal 2018, released last week, has no chance of becoming law in anything like its current form, so we don't propose to spend much time dissecting it. But we do need to set out our view on what might actually happen to fiscal policy over the next few months, because it potentially could make a material difference to the pace, and ultimate extent, of Fed tightening.

CNBC - Approving US fiscal stimulus is completely crazy: Pantheon (Media Centre)

Ian Shepherdson, chief economist at Pantheon Macroeconomics, discusses the impact of recent market volatility and fiscal reform in the U.S.

BLOOMBERG - Shepherdson: Lessons Learned on Fiscal Policy, Austerity (Media Centre)

Founder and chief U.S. Economist Ian Shepherdson on U.S. Fiscal Policy and the upcoming jobs report.

Bloomberg - Pantheon Economist Says Markets Are 'Pivoting Towards a Nasty Fiscal Story' (Media Centre)

Claus Vistesen, Pantheon Macroeconomics chief euro zone economist, discusses how volatility has impacted the bond market.

BLOOMBERG - Fiscal spending cushions Chile's first contraction in 6 years (Media Centre)

Senior International Economist Andres Abadia on Chile GDP.

4 Mar. 2015 Brazil's Central Bank Set to Respond As Inflation Fails to Slow (Publication Centre)

Brazil is now paying the price of President Rousseff's first term, which was characterized by unaffordable expansionary policies. As a result, inflation is now trending higher, forcing the BCB to tighten at a more aggressive pace than initially intended--or expected by investors--depressing business and investment confidence.

4 September 2018 Colombia's Recovery Continues, and the Fundamentals are Sound (Publication Centre)

Activity data from Colombia over the past quarter have been strong. Real GDP expanded by a relatively robust 2.8% year-over-year in Q2, and is on track to post a 3.2% increase in Q3.

16 January 2018 Not Quite Bondmageddon, but the Writing is on the Wall (Publication Centre)

The 20bp increase in 10-year yields over the past month doesn't live up to the hype; bondmageddon it was not.

19 December 2016 Yellen Backs Away from the "High- Pressure" Economy (Publication Centre)

Judging by conversations we have had with investors since October, the idea that the Fed will be willing to let inflation overshoot the 2% target for a time has become received wisdom in the markets.

4 June 2018 All the Bogeymen are Back in the Eurozone Economy (Publication Centre)

At the start of the year, #euroboom was the moniker used in financial media to describe the EZ economy.

4 June 2018 The Economy Should be Less Lethargic in 2019 (Publication Centre)

We're relatively optimistic--yes, you read that correctly--on the outlook for the U.K. economy in 2019.

24 April 2017 Brazil's Disinflation Continues, Expect Further Rapid Easing Ahead (Publication Centre)

While we were out, Brazil's data were relatively positive, showing that inflation is still falling quickly and economic activity is stabilizing. The country has made a rapid and convincing escape from high inflation over the past year.

16 November 2017 Japanese Domestic Demand Disappoints, but will Rebound (Publication Centre)

Japanese GDP growth in the third quarter corrected the imbalances of the second. Domestic demand took a breather after unsustainable growth in Q2, while net exports rebounded.

16 July 2018 Mr. Duque Inherits a Colombian Economy Firing on all Cylinders (Publication Centre)

Last week's hard data in Colombia were upbeat, confirming that economic growth accelerated in the first half. Retail sales rose 5.9% year-over-year in May, overshooting consensus.

6 Mar. 2015 The BCB Hikes Again But The Tightening Cycle is Not Quite Over (Publication Centre)

The Brazilian industrial sector started this year on a very downbeat note, despite a 2% month-to-month jump in output. The underlying trend in activity is still very weak. Production fell 5.2% year-over-year.

12 Apr. 2016 Will Mr. Draghi Upgrade his Bazooka to a Helicopter this Year? (Publication Centre)

Two years ago markets believed that the institutional setup of the Eurozone would be a straitjacket on the ECB, preventing QE. Aggressive policy actions since then have proven this hypothesis wrong. But inflation remains low and sentiment data weakened ominously in the first quarter.

11 September 2017 Inflation in Mexico Looks Scary but Soon will Start to Fall Rapidly (Publication Centre)

Mexico's inflation nudged up to a fresh 16-year high in August, but the details of the report confirmed that underlying pressures are easing, in line with our core view.

12 Nov. 2015 US Fed is Set to Hike in December, A Worry For LatAm But not a Crisis (Publication Centre)

LatAm economies this year have faced a tough external environment of subdued commodity prices, weaker Chinese growth, the rising USD, and the impending Fed lift-off. At the domestic level, lower public spending, low confidence, and economic policy reform have clashed with above-target inflation, which has prevented central bankers from loosening monetary policy in order to mitigate the external and domestic headwinds. In these challenging circumstances, LatAm growth generally continues to disappoint, though performance is mixed.

13 March 2018 Scandals Could Take Down Abe Would Abenomics Survive (Publication Centre)

Japan's Ministry of Finance yesterday admitted falsifying documents submitted to the country's parliament during a corruption probe last year.

15 Dec. 2014 Don't Tar All of LatAm With The Same Brush on Weak Oil Prices (Publication Centre)

We have set out in recent Monitors the differences in the economic and political environment across Latin America, but the plunge in oil prices adds a new element to the analysis.

13 September 2017 Brazilian Consumers' Spending set to Keep Rising Steadily (Publication Centre)

Data released yesterday in Brazil are consistent with our view that private consumption will continue to drive the recovery over the second half, offsetting the ongoing weakness in private investment.

10 March 2017 Don't Take the Public Borrowing Forecasts at Face Value (Publication Centre)

Investors in the gilt market would be wise not to take the new official projections for borrowing and debt issuance at face value. The forecast for the Government's gross financing requirement between 2017/18 and 2021/22 was lowered to £625B in the Budget, from £646B in the Autumn Statement.

07 October. 2016 Brazil Advances on Austerity, Expect More Progress Soon (Publication Centre)

On Tuesday, Brazil's Special Committee presented its recommendation for a constitutional amendment capping spending. Currently it is being voted in the Lower House Committee.

6 February 2018 Argentina Ended 2017 Strongly but Challenges are Mounting (Publication Centre)

Argentina's economy was improving late last year, albeit slowing at the margin, according to the latest published indicators. GDP data confirmed that the revival continued during most of Q4, with the economy growing 0.4% month-to-month in November.

6 February 2017 Soft January Hourly Earnings Will Prove Short-Lived (Publication Centre)

Markets over-reacted to the much smaller-than-expected 0.1% increase in January hourly earnings, in our view. We don't have a full explanation for the shortfall against our 0.5% forecast, but that doesn't make it wise to throw out the baby with the bathwater, making the de facto assumption that wage growth now won't accelerate in the future.

4 January 2017 December's ISM looks great, but it's not definitive (Publication Centre)

It probably would be wise to view the increase in the ISM manufacturing index in December with a degree of skepticism. The index is supposed to record only hard activity, but we can't help but wonder if some of the euphoria evident in surveys of consumers' sentiment has leaked into responses to the ISM. That said, the jump in the key new orders index-- which tends to lead the other components--looked to be overdue, relative to the strength of the import component of China's PMI.

8 Apr. 2016 Tame Inflation Pressures Leave Banxico Room to Breathe (Publication Centre)

Good news keeps on coming from Mexico, and the outlook is still favourable. Overall inflation pressures remain subdued and the domestic economy remains reasonably solid, despite a modest slowdown in recent months. Job creation remains robust, and real wages have been growing at a solid, non-inflationary pace.

07 Mar. 2016 Will the Chancellor's Rules Compel Him to Announce More Austerity? (Publication Centre)

The Budget on March 16 is set to mark the end of Chancellor George Osborne's lucky streak. Without corrective action, his self-imposed debt rule-- one of the two specified in the 'legally-binding' Charter for Budget Responsibility--looks set to be breached.

8 March 2018 Will President Xi's Power Grab Scare Capital out of China? (Publication Centre)

China's FX reserves fell to $3,134B in February, from $3,161B in January, after a year of gains.

6 April 2018 The Game Theory of Sino-U.S. Relations, the Status quo is Out (Publication Centre)

The meta game between China and Mr. Trump started as soon as he had any possibility of winning the election in 2016.

18 August 2017 Retail Sales Accelerated in June, But Were Weak Over Q2 as a Whole (Publication Centre)

Economic data in Brazil over the second quarter were relatively positive, and June reports released in recent weeks, coupled with leading indicators for July, are encouraging.

27 May. Q1 GDP Just the Beginning of a Prolonged Slowdown (Publication Centre)

The second estimate of Q1 GDP confirmed that the recovery has lost momentum and revealed that growth would have ground to a halt without consumers. GDP growth likely will slow further in Q2, as Brexit risk undermines business investment.

23 Feb. 2015 Mexico's GDP Rising at the Fastest Pace in Two Years - More to Come? (Publication Centre)

Punished by the global economic slowdown depressing commodity prices, the Mexican economy is now making a gradual comeback, thanks to the continuing strength of its main trading partner, increasing public expenditure on key infrastructure projects, and accommodative monetary policy.

19 Jan. 2015 Peru's Central Bank Committed to Boost Economic Growth (Publication Centre)

In a surprise move, Peru's central bank, BCRP, succumbed to the current weakness of the economy and cut interest rates by 25bp to 3.25% last Thursday, for the first time since August last year. The board also lowered the interest rates on lending and deposit operations between the central bank and financial institutions.

15 January 2018 Mexico's Industrial Sector Remains Unresponsive, but Q1 Will be Better (Publication Centre)

Upbeat survey data, a competitive MXN, and the strong U.S. manufacturing sector indicate that Mexican industry should be rebounding.

23 Jan. 2015 Brazil Continues to Combat Expectations for Surging Inflation (Publication Centre)

Brazil's central bank is finally decisively facing its demon, persistently high inflation. The eight-member policy board, known as Copom, decided unanimously on Wednesday to increase the Selic rate by 50bp to 12.25%, the highest level in more than three years, in line with the consensus.

23 January 2017 Threats to Make Britain a Corporate Tax Haven Lack Credibility (Publication Centre)

Both the Prime Minister and Chancellor last week threatened to cut business taxes aggressively to persuade multinationals to remain in Britain in the event of hard Brexit. But these threats lack credibility, given the likely lingering weakness of the public finances by the time of the U.K.'s departure from the EU and the scale of demographic pressures set to weigh on public spending over the next decade.

21 May 2018 How do you Price the Risk of a Political Wildcard in Italy? (Publication Centre)

In our Monitor May 15 we described the initial government program in Italy, drafted by the leadership of the Five-Star Movement and the League parties, as a "macroeconomic fairytale."

24 May 2017 Weak Tax Receipts Cast Doubt on Business Surveys' Optimism (Publication Centre)

April's public finances indicate that the economy has remained weak in Q2, casting doubt on the suggestion from recent business surveys that the slowdown in Q1 was just a blip.

24 October 2017 The Real Income Squeeze has been More Intense than Wage Data Imply (Publication Centre)

It is often argued that the average weekly earnings--AWE--figures exaggerate the severity of the squeeze on households' incomes.

25 May 2018 Brazil's Inflation Remains Low, Mexico's GDP Brings Positive News (Publication Centre)

In a relatively light week in terms of economic indicators in Brazil, the inflation numbers and the potential effect of the recent BRL sell-off garnered all the attention.

26 April 2018 Upgrade to our 2018 China GDP Forecast, Very Bearish to Bearish (Publication Centre)

In yesterday's Monitor, we suggested that China's monetary policy stance is now easing.

22 February 2017 Q4 GDP Likely to be Revised up, but Momentum won't Endure (Publication Centre)

We expect the official estimate of quarter-on-quarter GDP growth in Q4 to be revised up to 0.7% today, from last month's preliminary estimate of 0.6%. The consensus forecast is for no revision, so the data likely will boost interest rate expectations and sterling, if we're right.

22 August 2017 Economic Activity is Turning Up in LatAm, but no Boom Coming (Publication Centre)

LatAm's economies are gradually rebounding, boosted by easier monetary policy in most countries, falling inflation, and a relatively calm external backdrop.

22 August 2017 Don't Hold Your Breath for Euro-Sterling Parity (Publication Centre)

Sterling's renewed depreciation to just €1.10--just below last year's nadir--has fuelled speculation that it could reach parity against the euro within the next year.

22 March 2018 Strong Growth, Gradual Hikes, and Only a bit of Inflation, Here's Hoping (Publication Centre)

The most striking feature of the Fed's new forecasts is the projected overshoot in core PCE inflation at end-2019 and end-2020, which fits our definition of "persistent".

21 Jan. 2015 Welcome Gain in ZEW, but Still Not Confirmed by IFO or PMIs (Publication Centre)

Investor sentiment in the Eurozone showed further signs of recovery yesterday. The ZEW expectations index rose strongly to 48.4 in January from 34.9 in December, and the leap since the trough in October ranks among the strongest rebounds ever recorded in the index.

28 September 2018 The New IMF Agreement Diminishes the Default Risk at Least until 2020 (Publication Centre)

The Argentinian government and the IMF have finally reached a new agreement to "strengthen the 36-month Stand-By Program approved on June 20".

2 Mar. 2015 Falling Confidence, High Inflation, Rising Rates: Brazil in a Mess (Publication Centre)

Brazil's economic data last week were appalling. The IPCA-15 price index rose 1.3% month-to-month, the fastest pace in 12 years, pushing the annual rate to 7.4% in mid-February from 6.7% in mid-January,well above the 6.5% upper bound of the BCB's target range.

20 December 2017 Don't Lose Sleep Over the Possibility of a Corbyn Government (Publication Centre)

The possibility of a Corbyn-led Labour Government has been highlighted by some analysts as a major economic risk. Mr. Corbyn, however, has little practical chance of being elected soon.

4 Feb. 2015 Divergent Manufacturing Stories in LatAm's Biggest Economies (Publication Centre)

The manufacturing indexes for January showed a small improvement for the biggest economies in LatAm: Brazil and Mexico. In Brazil, the PMI manufacturing index increased marginally to 50.7 in December from 50.2 in November, thanks to stronger output and new orders components, which rose together for the first time in ten months.

2 January 2018 Higher Inflation Targets Open the Door for Rate Cuts in Argentina (Publication Centre)

A sharp ARS sell-off was the key highlight while we were away over the holidays.

19 September 2018 Brazil's Economy is Muddling Through, but the Election is a Risk (Publication Centre)

Brazil's economy surprised to the upside in early Q3, despite downbeat data released in recent days.

2 Feb. 2015 Mexico, Colombia and Chile on Hold - Brazil to Keep Tightening (Publication Centre)

Central banks in Mexico and Colombia kept their main interest rates on hold last week, due to recent volatility in the currency markets. Policymakers acknowledged the downside risks to growth, particularly from low commodity prices, but inflation fears, triggered by currency weakness, mean they will not be able to ease if growth slows.

30 January 2017 Will the Inflation Report Support Markets' 2017 Rate Hike View? (Publication Centre)

Markets' expectations for official interest rates have shifted up over the last fortnight, and the consensus view now is that the MPC will hike rates before the end of this year. As our first chart shows, the implied probability of interest rates breaching 0.25% in December 2017 now slightly exceeds 50%.

20 February 2018 Everyone is Talking About Current Accounts Again (Publication Centre)

The euro area's current account surplus stumbled at the end of 2017, falling to €29.9B in December from an upwardly-revised €35.0B in November.

24 March 2017 Rapid Disinflation will Allow the BCB to Ease More Quickly (Publication Centre)

Brazil has made a convincing escape from high inflation in the past few months, laying the groundwork for a gradual economic recovery and faster cuts in interest rates. Mid-March CPI data, released this week, confirmed that inflation pressures eased substantially this month.

29 January 2018 Strong Q4 GDP Requires us to Tweak, not Overhaul, Our Rate Call (Publication Centre)

The preliminary estimate of Q4 GDP was unambiguously strong and has forced us to modify our view of the likely timing of the next interest rate increase.

23 Nov. 2015 If the Chancellor Wants A Budget Surplus, Taxes Will Have to Rise (Publication Centre)

The Chancellor claims he can eliminate public borrowing without raising taxes. But the latest borrowing overshoot and the continual optimistic bias of the OBR's forecasts cast doubt on whether his approach will be sufficient to meet his self-imposed surplus target.

29 May 2018 EM Markets Remain Under Stress, but will LatAm Resist the Pressure? (Publication Centre)

A long period of extremely accommodative U.S. monetary policy generated sizable capital inflows and asset price appreciation in EM countries.

21 August 2018 Chile's Fundamentals are Improving This Likely Will Offset External Risks (Publication Centre)

Chile's Q2 GDP report, released yesterday, confirmed that the economy gathered strength in the first half of the year, consolidating a strong recovery that started in Q3 2017.

24 Mar. February Retail Sales to Highlight Weakening Trend in Spending (Publication Centre)

The economic recovery would have lost more momentum last year had consumers not delved so deeply into their pockets. Real household spending increased by 0.7% and 0.8% quarter-on-quarter in Q3 and Q4 respectively, in contrast to investment and exports, which fell in both quarters.

3 September 2018 Brazil's Economy was Resilient in Q2, but the Recovery is Sluggish (Publication Centre)

The Brazilian economy enjoyed a decent Q2, with GDP rising 0.2% quarter-on-quarter, despite the disruptions caused by the truck drivers' strike, after a 0.1% decline in Q1.

U.S. H1 2017 Outlook - Inflation Pressure is Building, Even Before Fiscal Easing (Publication Centre)

The U.S. faces greater uncertainty now than at the start of any previous year in recent memory...

31 July 2018 Brazil's Solid External Accounts Offsetting Fiscal Risk, For Now (Publication Centre)

Brazil's external accounts remain solid, despite the recent modest deterioration.

9 September. 2016 Political Turbulence in Mexico Won't Derail Fiscal Consolidation (Publication Centre)

Political developments are clouding the horizon in Mexico, at least temporarily. Mexico's Finance Minister Luis Videgaray, the mastermind behind President Enrique Peña Nieto's most important economic reforms, resigned on Wednesday. José Antonio Meade, a former finance chief, has been tapped to replace him.

22 October 2018 Budget to Ensure Fiscal Policy Doesn't Slow the Economy in 2019 (Publication Centre)

The Chancellor probably can't believe his luck. Public borrowing has continued to fall this year at a much faster rate than anticipated by the OBR, despite the sluggish economy.

21 March 2017 LatAm's Gradual Recovery will Ease Concerns on the Fiscal Front (Publication Centre)

Latin American markets have been relatively resilient this year, despite Fed tightening and high global political risks. The LACI index has risen more than 5% year-to-date, and the MSCI index has been trending higher since late last year.

22 August. 2016 Fiscal Problems Will be Exposed as Brazil's Political Mess Clears (Publication Centre)

Brazil's economic performance has improved marginally in recent months, with inflation falling and economic activity and sentiment data stabilizing, or even increasing modestly. The latest regional economic activity report, for instance, showed that although overall output declined again on a sequential basis in March-to-May, three of the five regions expanded.

20 December 2017 Brazil's Fiscal Outlook is Blurred, But Argentina's Has Just Improved (Publication Centre)

Politics will be the key factor in LatAm over the coming quarters, as presidential and legislative elections take place throughout the region.

16 January 2018 Brazil's Macro Conditions are Improving, But Fiscal Progress is Key (Publication Centre)

The IBC-Br index, a monthly proxy for Brazil's GDP--rose 0.5% month-to-month in November, pushing the year-over-year rate down to 2.8%, from an upwardly-revised 3.1% in October.

05 October. 2016 Construction Still Set to Struggle, Despite the Looser Fiscal Stance (Publication Centre)

Promises of new money to facilitate construction on public sector land from the Chancellor and the pick-up in the construction PMI have fostered optimism that the sector's downturn is over.

14 September 2018 A Tough Fiscal Overhaul to Avoid a Collapse Can Macri Succeed (Publication Centre)

Argentina's central bank held interest rates at 60% on Wednesday, as was widely expected.

23 August 2017 Fiscal Restraint, not a Surging Economy, Drove July's Surplus (Publication Centre)

Yesterday's public finance figures showed that the public sector, excluding public sector banks, ran a surplus of £0.2B in July, a modest improvement on borrowing of £0.4B a year ago.

23 February 2017 Fiscal Easing Could Boost Growth Substantially, but not for Long (Publication Centre)

The White House budget proposals, which Roll Call says will be released in limited form on March 14, will include forecasts of sustained real GDP growth in a 3-to-3.5% range, according to an array of recent press reports.

27 October 2017 Korean GDP Rebounds on Exports and Mr. Moon's Fiscal Spending (Publication Centre)

Korean real GDP growth rebounded to 1.4% quarter-on-quarter in Q3, from 0.6% in Q2. The main driver was exports, with government consumption also popping, and private consumption was a little faster than we were expecting.

27 May. 2016 Mr. Temer Starts to Deliver - Fiscal Measures are Positive, Overall (Publication Centre)

Recent political and economic developments in Brazil make us more confidence in our forecast of a gradual recovery. On Wednesday, interim President Michel Temer scored his first victory in Congress, winning approval for his request to raise this year's budget target to a more realistic level. Under the new target, Brazil's government plans to run a budget gap, before interest, of about 2.7% of GDP this year.

25 May. The Chancellor is Still Headed for a Mid-Parliament Fiscal Crunch (Publication Centre)

April's public finances show that borrowing still is falling more slowly than the Chancellor had envisaged. This casts further doubt over whether he will be able to keep his pledge to run a budget surplus before the end of this parliament in 2020.

30 November. 2016 Brazilian Political Risk is Rising, But Won't Derail the Fiscal Adjustment (Publication Centre)

Political volatility is a recurrent theme in Brazil. Six members of President Michel Temer's cabinet resigned last Friday due to allegations of conflict of interest on a construction deal. Rumours that President Temer was involved in the affair stirred up market volatility and revived political risk concerns

23 May 2018 The Fiscal Squeeze can be Paused Soon, Unshackling the Economy (Publication Centre)

Yesterday's public finance figures brought more good news for the Chancellor.

BUSINESS INSIDER - Britain's government could make the pound's crash even worse (Media Centre)

Chief U.K. Economist Samuel Tombs on the government's fiscal policy

9 February 2018 Congress Set to Spray Yet More Fuel on the Fire, Over to You, Mr. Powell (Publication Centre)

The budget sequestration process, which cut discretionary government spending by a total of $114B in fiscal 2013 and fiscal 2014, was one of the dumbest things Congress has done in recent years.

16 January 2017 Inflation Pressure Remains High in Argentina, but Will Fade This Year (Publication Centre)

Inflation pressure remained relatively high in Argentina last year, due mostly to the legacy of the Kirchner era. But we think inflation will ease this year, given the lagged effects of the recession and the fiscal consolidation.

16 Mar. 2016 Central Banks Will Set the Tone for Markets In Coming Days (Publication Centre)

This week's Monetary Policy Committee meetings in Chile, Mexico and Colombia look set to dominate market events in LatAm. On Friday, we expect Mexico's Banxico to keep rates on hold at 3.75%, after its unexpected 50bp increase in mid-February. At that time, the board cited growing concerns about financial markets, Mexico's weakened currency, and the country's fiscal situation, as reasons for its move.

15 Jan. 2016 Equity Price Drop Not Yet Big Enough to Darken Growth Outlook (Publication Centre)

The FTSE 100 fell further yesterday, briefly to levels not seen since November 2012, but its drop over recent months is not a convincing signal of impending economic disaster. The economic recovery is likely to slow further, but this will reflect the building fiscal squeeze and the sterling-related export hit much more than the wobble in market sentiment.

15 December 2016 Congress, Growth and Inflation Will Determine What the Fed Does Next (Publication Centre)

The Fed's unanimous vote for a 25bp rate hike was overshadowed by the bump up in the dotplot for next year, with three hikes now expected, rather than the two anticipated in the September forecast. Chair Yellen argued the uptick in the rate forecasts was "tiny", but acknowledged that some participants moved their forecasts partly on the basis that fiscal policy is likely to be eased by the new Congress.

14 Mar. Will the MPC Mull an Interest Rate Cut this Week? (Publication Centre)

This week's key market event likely will be the Monetary Policy Committee's meeting on Thursday, rather than the Budget on Wednesday, which probably will see the Chancellor stick to his previous tough fiscal plans.

17 March 2017 Colombia's Economy is Slowing Rapidly, BanRep to Cut Further (Publication Centre)

The Fed's insistence this week that U.S. rates will rise only twice more this year helped to ease pressures on LatAm markets this week, particularly FX. The way is now clear for some LatAm central banks to cut interest rates rapidly over the coming months, even before U.S. fiscal and trade policy becomes clear. We expect the next Fed rate hike to come in June, as the labor market continues to tighten. If we're right, the free-risk window for LatAm rate cuts is relatively short.

18 Feb. 2016 Has the Chancellor's Room for Manoeuvre Disappeared? (Publication Centre)

The stubbornly slow rate of decline of public borrowing casts doubt on whether the Chancellor will run a budget surplus before the end of this parliament, as his fiscal rule stipulates. But downward revisions to debt interest forecasts by the Office for Budget Responsibility are likely to absolve him again from intensifying the impending fiscal squeeze in the Budget on March 16.

19 May. Retail Sales Set to Bring Further Signs of a Consumer Slowdown (Publication Centre)

April's retail sales figures, released today, likely will show only a partial reversal of the sharp 1.3% month-to-month fall in sales volumes in March. This would reinforce the impression that the recovery in consumer spending has been becalmed by slower job growth, the intensification of the fiscal squeeze and heightened uncertainty about the economic and political outlook.

2 December 2016 Copom is Still Cautious but Hints at Larger Cuts, BRL Permitting (Publication Centre)

Copom's meeting was the focal point this week in Brazil. The committee eased by 25bp for the second straight meeting, leaving the Selic rate at 13.75%, and it opened the door for larger cuts in Q1. Rates sat at 14.25% for 15 months before the first cut, in October. In this week's post-meeting statement, policymakers identified weak economic activity data, the disinflation process--actual and expectations--and progress on the fiscal front as the forces that prompted the rate cut.

19 Dec. 2014 Further Signs of Diverging Growth Paths in Mexico And Brazil (Publication Centre)

This year has proved to be challenging for retailers in Mexico. The combination of fiscal reform, the economic slowdown over the first half of the year, and the collapse of consumer sentiment took a significant toll in the sector.

18 October. 2016 Conditions are Right For Brazil to Ease Tomorrow, More to Come (Publication Centre)

Inflation pressures in LatAm are moderating, and governments have been taking steps to pursue fiscal consolidation. These factors, coupled with a relatively favourable external environment, are providing policymakers with the opportunity to start relaxing monetary policy.

18 November. 2016 Yellen Still Thinks Inflation Will Hit the Target in Two Years. Hmm. (Publication Centre)

Fed Chair Yellen's Testimony yesterday pretended the election hadn't happened, and ignored the incoming administration's plans for a huge fiscal stimulus. She did address the issue under questioning, though, pointing out that fiscal stimulus could have inflationary consequences and that the Fed will have to factor-in to its decisions whatever Congress decides to do to taxes and spending.

13 September. 2016 Manufacturing is Improving in Mexico, Other Sectors Weaker (Publication Centre)

Economic growth in Mexico will remain relatively modest over the second half of the year, and the outlook for 2017 remains cloudy, for now. The core fundamentals suggest that growth will increase, but we think that depressed mining output and fiscal tightening might limit the pace of the upturn.

13 February 2017 What Would it Take to Persuade the Fed to Hike in March? (Publication Centre)

Our argument that rates could rise as soon as March has always been contingent on two factors, namely, robust labor market data and a degree of clarity on the extent of fiscal easing likely to emerge from Congress. On the first of these issues, the latest evidence is mixed.

02 Feb. 2016 EZ Public Spending will Support GDP Growth in 2016 (Publication Centre)

Economic theory tells us that government spending should be counter-cyclical, but recent experience in the Eurozone tells a slightly different story. The contribution to GDP growth from government spending rose during the boom from 2004 to 2007, and remained expansionary as the economy fell off the cliff in 2008. As the economy slowed again following the initial recovery, the sovereign debt crisis hit, driving a severe pro-cyclical fiscal hit to the economy.

03 Mar. 2016 Construction Slowdown is Symptomatic of Wider Malaise (Publication Centre)

The revival in the construction sector is slowing on all fronts as the fiscal squeeze intensifies, business confidence fades and the recovery in housebuilding loses momentum. These headwinds are likely to ensure that construction output only holds steady this year, thereby contributing to the broader economic slowdown.

*Jan. 2017 - U.S. Economic Chartbook* (Publication Centre)

The Fed is fretting over fiscal easing......upside risk to growth, inflation and interest rates

*Feb 2017 - U.S. Economic Chartbook* (Publication Centre)

How and when will the Fed respond to Fiscal Easing?

*December 2017 - U.K. Economic Chartbook* (Publication Centre)

Brexit and fiscal headwinds have lessended...but consumers' spending will struggle in 2018

05 Jan. 2016 Credit Flows Aren't Strengthening Enough to Prevent a Slowdown (Publication Centre)

November's money and credit figures brought welcome news that the recovery in bank lending is strengthening. This revival should continue, now that banks have completed most of the work required to improve their capital positions. But we doubt lending will recover quickly enough to prevent the economic recovery slowing in 2016, as the downward pressure on growth from the fiscal squeeze and the strong pound builds.

08 Jan. 2016 Colombia's Economic Resilience Will be Challenged - Oil Is Still Key (Publication Centre)

Colombia was likely the fastest growing economy in LatAm in 2015, but it is set to slow this year as monetary and fiscal policy are tightened, and commodity prices remain under pressure during the first half of the year, at least. Economic activity was surprisingly resilient during 2015, especially during the second half, despite the COP's sell-off, high inflation, and subdued consumer confidence.

12 January 2017 How Can Trump Deliver Quickly on his Tax Cut Pledges? (Publication Centre)

As far as we can tell, most forecasters expect the impact of fiscal stimulus this year to be gradual, with perhaps most of the boost to growth coming next year. At this point, with no concrete proposals either from the new administration or Congress, anything can happen, and we can't rule out the idea of a slow roll-out of tax cuts and spending increases.

12 December. 2016 Participation Won't Rise Enough to Prevent Higher Inflation (Publication Centre)

It appears to be something of an article of faith among economic advisors to President-elect Trump that substantial fiscal stimulus will generate faster growth without boosting inflation, because both labor participation and productivity growth will rise.

11 Mar. 2016 Don't Hold Your Breath for a Budget Surplus (Publication Centre)

Chancellor George Osborne has invested considerable personal capital in attaining a budget surplus by the end of this parliament, and he has passed a 'law' to ensure he and his successors achieve this goal. But the current fiscal plans, which will be reviewed in the Budget on March 16, make a series of optimistic assumptions on future tax revenues and spending savings.

10 June. 2016 Brazil's Copom Waiting For New Chief, and Inflation to Fall Again (Publication Centre)

Brazil's interim government has been trying to put the kibosh on the vicious circle of recession, capital outflows, and political pandering that has dogged the country for so long. In his first few weeks at the helm, despite the political turmoil, Mr. Temer has started to tackle Brazil's fiscal mess, the country's biggest headache.

*Dec. 2016 - U.S. Economic Chartbook* (Publication Centre)

Brace for the Fed's Pushback...But only when Fiscal Easing is in front of Congress

2 February 2017 March is Alive as the FOMC's Tone Becomes More Direct (Publication Centre)

The FOMC statement did enough to keep alive the idea that rates could rise in March, but the ball is now mostly in Congress' court. If a clear plan for substantial fiscal easing has emerged by the time of the meeting on March 15, policymakers can incorporate its potential impact on growth, unemployment and inflation into their forecasts, then a rate hike will be much more likely.

30 Oct. 2015 Brazil's Central Bank Minutes Underline Policymakers' Problems (Publication Centre)

The key message of the minutes of the Copom meeting, released yesterday, is that policymakers remain worried about the inflation outlook and, in particular, about uncertainties surrounding fiscal tightening. But the Committee reinforced the signal that the Selic rate is likely to remain at the current level, 14.25%, for a "sufficiently prolonged period". The economy is in a severe recession and the rebalancing process has been longer and more painful than the Central Bank anticipated.

5 July 2017 BoJ to Jettison Quantity Target as Voters Express Discontent (Publication Centre)

Mr Abe's Liberal Democratic Party took a drubbing at the polls in Tokyo's Assembly election over the weekend. The consequences for fiscal spending probably are minimal but the vote strengthens the case for increased emphasis on the structural reform "arrow" and less focus on monetary policy.

30 May 2017 How Durable is the Euro's Rally Against the Dollar? (Publication Centre)

Fiscal stimulus, partly financed by a border adjustment tax, and Fed rate hikes, were supposed to be a powerful cocktail driving a stronger dollar in 2017. But so far only the Fed has delivered--we expect another rate hike next month--while Mr. Trump has disappointed in the White House.

3 July. 2015 Surprising But Not Sustainable Jump in Brazil's Industrial Output (Publication Centre)

The second quarter is over but it is too early to give a reliable forecast of the pace of Brazilian GDP growth. However, an array of leading and coincident indicators points to a steep contraction in Q2 and a bleak second half of the year. Unemployment is leaping higher, along with inflation and household debt, and the ongoing monetary and fiscal tightening will further hurt the real economy ahead.

2 May 2018 Fed to Acknowledge Higher In ation, but no Policy Shi Signal is Likely (Publication Centre)

The Fed will do nothing and say little that's new after its meeting today. The data on economic activity have been mixed since the March meeting, when rates were hiked and the economic forecasts were upgraded, largely as a result of the fiscal stimulus.

5 July. 2016 Argentina's Economy is Still Shrinking, But Growth will Come (Publication Centre)

Argentina's overdue policy tightening, aimed at dealing with the country's severe inflation and fiscal problems, is underway. Printing of ARS at the central bank, the BCRA, to finance the budget, deficit has slowed and will be curbed further. Welfare spending, which accounts for nearly half of government spending, has been put on the chopping block.

5 Oct. 2015 Less Bad Than Expected Data in Brazil, But the Crisis is Not Over (Publication Centre)

Brazil's economic and fiscal outlook has worsened in recent months, and economic activity will likely contract even further in the short-term. Some of last week's economic reports, however, were a bit less bad than of late. The latest industrial production data were less bad than expected in August, but the picture is still very grim. Industrial output plunged 1.2% month-to-month, above the consensus, and allowing the annual rate to stabilize at -9% year-over-year.

9 August. 2016 Further Evidence of Divergence in the Andean Economies (Publication Centre)

Colombia's economy has continued to slow, due mainly to lagged effect of the oil price shock since mid-2014, and stubbornly high inflation, which has triggered painful monetary tightening. Modest fiscal expansion and capital inflows have helped to avoid a hard landing, but the economy is still feeling the pain of weakening domestic demand. And the twin deficits--though improving--remain a threat.

9 December. 2016 The Oil Hit Spread Widely Across the Economy - Now, it's Over (Publication Centre)

A core element of our relatively upbeat macro view before the implementation of fiscal stimulus under the new administration is that the ending of the drag from falling capex in the oil sector will have quite wide, positive implications for growth. The recovery in direct oil sector spending is clear enough; it will just track the rising rig count, as usual.

8 March 2017 Rising Interest Payments may Slash the Chancellor's Rainy Day Fund (Publication Centre)

The Chancellor's Budget today looks set to prioritise retaining scope to loosen policy if the economy struggles in future, rather than reducing the near-term fiscal tightening. In November, the OBR predicted that cyclically-adjusted borrowing would fall to 0.8% of GDP in 2019/20, comfortably below the 2% limit stipulated by the Chancellor's new fiscal rules.

8 June. 2016 Colombia's Inflation Picture Still Ugly, but it Will Improve (Publication Centre)

Brazil's interim government has been trying to put the kibosh on the vicious circle of recession, capital outflows, and political pandering that has dogged the country for so long. In his first few weeks at the helm, despite the political turmoil, Mr. Temer has started to tackle Brazil's fiscal mess, the country's biggest headache.

6 Feb. 2015 Chilean Growth Is Improving, But China's Slowdown Is A Worry (Publication Centre)

Chilean GDP growth hit bottom in August, but activity is now picking up and will gather speed over the coming quarters. The tailwinds from lower oil prices and fiscal stimulus will soon be visible in the activity data.

27 January 2017 Will Mr. Trump Single out Germany for its Large Trade Surplus? (Publication Centre)

The uncertainty over the new U.S. administration's economic policies new is clouding the outlook for the Eurozone economy. The combination of loose fiscal policy and tight monetary policy in the U.S. should be positive for the euro area economy, in theory. It points to accelerating U.S. growth--at least in the near term--wider interest rate differentials and a stronger dollar. In a " traditional" global macroeconomic model, this policy mix would lead to a wider U.S. trade deficit, boosting Eurozone exports.

29 June. 2016 New BCB Boss Takes a Hawkish Tone, Rates on Hold in Q3 (Publication Centre)

The publication yesterday of the first BCB quarterly inflation report under the new president, Ilan Golfajn, revealed his initial views on inflation, the currency, and monetary policy. Overall, Mr. Golfajn has taken a hawkish approach. We think Brazil's first rate cut will come no earlier than Q4, likely at the final meeting of the year, providing the government continues the fiscal consolidation process and inflation keeps falling.

22 Dec. 2015 Miserable Economic And Political News Keeps Coming For Brazil (Publication Centre)

Brazil's recent political and economics news has shifted the near-term outlook from bad to worse. President Rousseff on Friday replaced hawkish Finance Minister Joaquim Levy, appointed just over a year ago, with a close partner, Planning Minister Nelson Barbosa. Mr. Levy resigned after continued conflicts with the government, including frustration by the Congress of his attempts to rein in the fiscal mess. Mr. Barbosa is known to be less market friendly, and will likely defend countercyclical measures, delaying any rapid fiscal consolidation. The appointment will deteriorate investors' confidence even further, placing the markets under enormous strain.

26 July 2017 Preliminary GDP to Confirm Growth Remained Sluggish in Q2 (Publication Centre)

Today's preliminary estimate of GDP likely will show that the economy continued to struggle in response to high inflation, further fiscal austerity and Brexit uncertainty.

21 October. 2016 Government Spending Higher Next Year? (Publication Centre)

It has become pretty clear over the past couple of weeks that Hillary Clinton will be the next president, so it's now worth thinking about how fiscal policy will evolve over the next couple of years.

21 Jan. 2016 Could the Chancellor Still Reduce Borrowing This Year as Planned? (Publication Centre)

By any yardstick, progress in reducing public sector borrowing so far this fiscal year has been poor. While the borrowing trend should improve in the final four months of this year--including December's figures, published Friday--the Chancellor has only a slim chance of meeting the forecasts set out in the Autumn Statement.

20 Oct. 2015 Slowdown in U.K. GDP Growth to Dent EZ Exports Next Year? (Publication Centre)

Our new Chief U.K. economist, Samuel Tombs, initiated his coverage yesterday with a sombre, non-consensus, message on the economy. Headwinds from fiscal tightening and net trade will weigh on GDP growth next year, but the BoE will likely have to look through such cyclical weakness, and hike as inflation creeps higher. An intensified drag from net trade in the U.K. will, other things equal, benefit the Eurozone. But a slowdown in U.K. GDP growth still poses a notable risk to euro area headline export growth, especially in the latter part of next year.

22 September 2016 Poor Borrowing Trend Reduces Scope for Stimulus in November (Publication Centre)

Public borrowing continues to falling at a very slow pace, despite the major fiscal consolidation implemented this year. Public sector net borrowing excluding public sector banks--PSNB ex.--was £10.5B in August, only 8.1% less than the £11.5B borrowed a year ago.

22 November. 2016 Sweeteners for the 'JAMs' Will Be Spread Thinly on Wednesday (Publication Centre)

In recent public appearances, the Chancellor has made a concerted effort to downplay expectations of fiscal loosening in Wednesday's Autumn statement. On Sunday, he labelled the deficit "eye-wateringly" large and he warned that he was "highly constrained".

25 April 2017A Government Shutdown Would Say More About Politics Than Economics (Publication Centre)

A shutdown of the federal government, which could happen as early as this weekend, is a political event rather than a macroeconomic shock. But if it happens--if Congress cannot agree on even a shortterm stop-gap spending measure in order to keep the lights on after the 28th--it would demonstrate yet again that the splits in the House mean that the prospects of a substantial near-term loosening of fiscal policy are now very slim.

22 September 2017 Don't Expect a Giveaway Budget, Despite low Borrowing this year (Publication Centre)

Public borrowing was below consensus expectations in August, fuelling speculation that the Chancellor might pare back the remaining fiscal tightening in the Autumn Budget on November 22.

24 October. 2016 Tax Receipt Shortfall Casts Doubt on Economy's Resilience (Publication Centre)

Progress in reducing the budget deficit has ground to a virtual halt, despite the ongoing fiscal consolidation. Public sector net borrowing excluding public sector banks--PSNB ex.--was £10.6B in September, exceeding the £9.3B borrowed in the same month last year.

23 Oct. 2015 BCB Stuck Between Inflation Risks and Deep, Long Recession (Publication Centre)

Brazil economic and political outlook is still opaque, but grim, after a vast array of negative news. Impeachment of President Rousseff remains a possibility; the process of fiscal consolidation is messy and politically bloody; rumors that Finance Minister Levy might leave his post next year have intensified; and the latest data showed that the recession worsened in Q3. As a consequence, the BRL and interest rates have been under pressure and we see no clear signs that the turmoil will ease soon.

25 Apr. Preliminary GDP Data to Confirm Q1 Slowdown (Publication Centre)

The preliminary estimate of first quarter GDP likely will confirm that the economic recovery lost considerable pace in early 2016. Bedlam in financial markets in January and business fears over the E.U. referendum are partly responsible for the slowdown. The deceleration, however, also reflects tighter fiscal policy, uncompetitive exports, and the economy running into supply-side constraints.

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