Fiscal adjustment may prove painful in Uruguay

2016 ◽  
Keyword(s):  
Trade Union ◽  
Public Spending ◽  
High Income ◽  
Content Type ◽  
Public Finances ◽  
Fiscal Adjustment ◽  
Economic Climate ◽  
The Government ◽  
First Time ◽  
Economic Outlook

Subject Uruguay's economic outlook. Significance The government has determined a fiscal adjustment, with tax increases for middle- and high-income earners, delays in public spending plans and a reform of military pensions, in a bid to address worsening public finances. It is the first time that the leftist Frente Amplio (FA), in government since 2005, has faced an adverse economic climate. Impacts Austerity in a context of 'stagflation' will generate political and trade union tensions. Rising unemployment will drive a deterioration in real family incomes. Growth will remain paltry this year and next.

Monetary tightening carries high cost in Argentina

2018 ◽  
Keyword(s):  
Exchange Rate ◽  
Current Account Deficit ◽  
Public Spending ◽  
Medium Term ◽  
Content Type ◽  
Financial Volatility ◽  
Fiscal Adjustment ◽  
Debt Default ◽  
Floating Exchange Rate ◽  
The Government

Significance Despite its commitment to a floating exchange rate, the government has been forced to prioritise exchange rate stabilisation. After the change of Central Bank (BCRA) authorities in mid-June failed to stop the latest currency run, the government further tightened monetary policy. Aiming to alleviate fears of a new medium-term debt default, the government is emphasising its commitment to fiscal adjustment, even including the possibility of new taxes, which runs counter to efforts to reduce tax pressure. Impacts Interest rate rises and closer control of monetary aggregates may prompt a recession. Depreciation will help to reduce the current account deficit in 2018 but will worsen debt indicators. Growing political uncertainty and difficulty in cutting public spending will sustain financial volatility.

China may struggle to achieve a job-rich GDP recovery

2020 ◽  
Keyword(s):  
Economic Recovery ◽  
Gdp Growth ◽  
Export Demand ◽  
Industrial Output ◽  
Content Type ◽  
Defence Spending ◽  
The Government ◽  
First Time ◽  
People's Congress ◽  
Economic Outlook

Subject The economic outlook for China following the lifting of the COVID-19 lockdown. Significance The economic uncertainties due to the economic impact of the COVID-19 pandemic made this year’s National People’s Congress (NPC) unusually important. After GDP fell 6.8% year-on-year in the first quarter, the government for the first time announced no annual GDP growth target, indicating extreme uncertainty over the extent and durability of recovery. Impacts China’s industrial output will outpace export demand; trade tensions such as anti-dumping cases could rise. US-China tensions will rise, but both sides will be warier than last year of major moves that could jeopardise economic recovery. China’s commitment to high military spending is undiminished by its economic troubles; defence spending will rise as a share of GDP.

Nigerian economic policy likely to stutter

2016 ◽  
Keyword(s):  
Economic Policy ◽  
Policy Formulation ◽  
Growth Potential ◽  
Content Type ◽  
National Assembly ◽  
Investor Confidence ◽  
Oil Sector ◽  
The Government ◽  
First Time ◽  
Economic Outlook

Subject Nigeria's economic outlook. Significance The economy contracted by 2.24% year-on-year in the third quarter, sharper than the 2.10% registered in second quarter, led by the oil sector’s continuing decline. The non-oil sector experienced a slight rebound, expanding for the first time this year. However, results here may prove fleeting as the policy environment becomes inimical to growth into 2017. Implementation of next year’s budget is already at risk from the ongoing stand-off between lawmakers and the presidency, while proposed new foreign exchange (forex) controls could further delay the return of crucial investments. Impacts The medium-term expenditure framework is unlikely to ease investor concerns over the government’s economic policy formulation capacity. Potential lenders may demand external policy assistance -- possibly from the IMF -- before considering extending credit to the government. Delays in the national assembly approving the 2017 budget could further undermine investor confidence and hamper growth potential.

Macron will struggle to control French public spending

2017 ◽  
Keyword(s):  
European Commission ◽  
Public Services ◽  
Public Spending ◽  
Labour Law ◽  
Sustained Improvement ◽  
Content Type ◽  
Public Finances ◽  
The Government ◽  
Tax Cuts

Significance Macron was elected on a programme calling for cuts in public spending and tax of 60 billion euros (69 billion dollars) and 20 billion euros respectively by 2022. France’s deficit-to-GDP ratio should thus decline over the five-year period of his mandate. Impacts The tax cuts, combined with the planned labour law reforms, could improve Paris's attractiveness for banks looking to relocate after Brexit. A sustained improvement in public finances is unlikely as long as public services and policies are not systematically evaluated. The government hopes that the European Commission will be amenable to the revised draft budget and the planned reforms.

Japan economic trends point to slowdown or recession

2019 ◽  
Keyword(s):  
United States ◽  
The United States ◽  
Annual Rate ◽  
Consumer Sentiment ◽  
Content Type ◽  
Real Gdp ◽  
Economic Trends ◽  
The Government ◽  
First Time ◽  
Economic Outlook

Subject The macroeconomic outlook for Japan. Significance For the first time in six and a half years, businesses are pessimistic about the economic outlook, according to the results of a Nikkei-Markit survey of manufacturing purchasing managers released today. This comes just days after Japan’s first-quarter 2019 real GDP data surprised forecasters with a solid 2.1% growth over the previous quarter (seasonally adjusted, annual rate). Nominal growth was an even more surprising 3.3%. Impacts Even a recession is unlikely to deter a tax rise; the government would increase the immediate stimulus accompanying the rise. New US tariffs on China will mean lower exports from China to the United States, in turn reducing Chinese demand for Japanese components. Growth of jobs and labour income could boost consumer sentiment eventually, reversing an 18-month slide in confidence and consumption.

Algerian energy sector's success hinges on investment

2019 ◽  
Keyword(s):  
Oil And Gas ◽  
Public Spending ◽  
Political Crisis ◽  
The Political ◽  
External Financing ◽  
Content Type ◽  
Oil Companies ◽  
Taking Charge ◽  
The Government ◽  
Economic Outlook

Subject Algeria's economic outlook. Significance The ongoing political crisis which led to the resignation of former President Abdelaziz Bouteflika has not yet made any measurable impact on the economy. Yet whoever ends up taking charge of the country’s affairs will face the challenge of galvanising an economy beset with deep structural flaws, amid growing financial pressures as oil and gas revenue is in decline and popular demands for higher public spending have become more insistent. Impacts Oil companies will remain engaged, although they may delay new major investments until there is more clarity on policy. Pressure on the dinar will mount, although thus far the exchange rate has remained stable despite the political turbulence. The government and other political stakeholders’ stance not to seek external financing may not be tenable for much longer.

Saudi subsidy reforms unlikely to spark major protests

2016 ◽  
Keyword(s):  
Fuel Oil ◽  
Basic Part ◽  
Content Type ◽  
The Social ◽  
Political Impact ◽  
The Face ◽  
The Government ◽  
Crown Prince ◽  
Economic Outlook

Subject Political impact of subsidy reform. Significance Saudi Arabia introduced its first major cut to energy subsidies in January, leading to a rise in petrol, diesel, fuel oil, natural gas and electricity prices. Further cuts will be necessary to avert a fiscal crisis -- but with cheap energy seen as a basic part of the social contract between the government and the population, such measures are expected to have wide-reaching political repercussions. Impacts A decision to reverse subsidy cuts in the face of protest would undercut government credibility and reduce the prospect of further reforms. Yet persisting with subsidy reforms could damage government legitimacy and political capital among the youth and lower classes. Successful reforms will improve the long-term economic outlook, and the succession prospects of Deputy Crown Prince Mohammed bin Salman.

Gender equality will see uneven progress in Mexico

2016 ◽  
Keyword(s):  
Gender Equality ◽  
Gender Gap ◽  
National Development ◽  
State Level ◽  
Content Type ◽  
Development Goals ◽  
The Government ◽  
Employment Of Women ◽  
First Time

Subject The Mexican government's advances towards greater gender equality. Significance President Enrique Pena Nieto has been active in promoting gender equality at home and abroad, and his government has repeatedly voiced its commitment to the UN's Millennium Development Goals, particularly regarding female empowerment. The Pena Nieto administration included a gender dimension in its National Development Plan for the first time, and has allocated significant resources to supporting women. Efforts have focused not only on the federal level, but also at state level, as illustrated by the signing of a collaboration agreement in December 2015 between the government and the National Conference of Governors. Impacts Bridging the gender gap across all government levels will be an expensive and difficult task, with uneven success across the country. Any reductions in domestic violence rates will require long-term efforts to change attitudes from the bottom up. Quotas that encourage the employment of women, regardless of merit, may perpetuate politics' reputation for being corrupt and nepotistic.

Uruguay's economy will avoid recession, narrowly

2016 ◽  
Keyword(s):  
Economic Growth ◽  
Content Type ◽  
Near Term ◽  
The Government ◽  
Foreign Ministers ◽  
Cellulose Plant ◽  
Economic Outlook

Subject The near-term economic outlook. Significance The statist model preferred by the governing Frente Amplio (FA) coalition clashes with the plan designed by President Tabare Vazquez and his economy and foreign ministers, Danilo Astori and Rodolfo Nin Novoa respectively, to try to attract greater inward investment. This adds to intra-coalition tensions after the defection of a centre-left legislator caused the government to lose its congressional majority. Impacts The fear of losing support may help to concentrate FA minds on smoothing over party splits. A new cellulose plant would boost economic growth but not diversification. The economy will avoid recession, but growth will not pick up strongly in the near term.

Morocco's parliamentary poll will be tight contest

2016 ◽  
Keyword(s):  
Education System ◽  
House Of Representatives ◽  
Prime Minister ◽  
Coalition Government ◽  
Focus Attention ◽  
Content Type ◽  
Justice And Development Party ◽  
Lower House ◽  
The Government ◽  
First Time

Significance The election for the House of Representatives, the lower house of parliament, will be the second since the constitution was revised in 2011. This specified that the leader of the party winning the largest number of seats should be given the first opportunity to form a government. The revision led to the moderate Islamist party, the Justice and Development Party (PJD), leading the government for the first time after its victory in the November 2011 poll. Impacts The election will focus attention on contentious reforms to pensions, subsidies and the education system. The months ahead will be dominated by speculation about party alliances and the likely shape of a future coalition government. The palace seems ready to accept a second term for Prime Minister Abdelilah Benkirane, but is also keen to see PAM within government.

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