Contradictory Argentine policies mar stability hopes

2017 ◽  
Keyword(s):  
Policy Making ◽  
Capital Investment ◽  
Balance Of Payments ◽  
Public Works ◽  
Economic Recovery ◽  
Medium Term ◽  
Monetary Policies ◽  
Content Type ◽  
Tax Amnesty ◽  
Primary Deficit

Subject The difficulties of economic policy-making. Significance The first-quarter primary deficit reached 0.4% of GDP, below the quarterly goal of 0.6%. The rise in revenues, mainly due to the tax amnesty that ended in March, helped offset higher spending in areas such as social security payments and capital investment, driven by the pre-election revival of public works. However, in the absence of extraordinary revenues during the rest of the year, it will be harder to meet fiscal targets. Impacts The lack of coordination between fiscal and monetary policies raises concerns over macroeconomic stability. This will further discourage consumption and investment, preventing a sustained economic recovery. Growing fiscal and external deficits will raise risks of a balance-of-payments crisis in the medium term.

Russia's budget reflects caution on future spending

2016 ◽  
Keyword(s):  
Budget Deficit ◽  
Public Spending ◽  
Oil Price ◽  
Economic Recovery ◽  
Education Spending ◽  
Monetary Policies ◽  
Content Type ◽  
Low Levels ◽  
Spending Cuts

Significance A three-year budget cycle is intended to create predictability after a year in which the initial budget had to be revised as the oil price outlook grew gloomier. Spending cuts are envisaged to continue beyond 2017 as revenue predictions are modest amid low rates of economic growth, and the objective is to cut the budget deficit progressively. Impacts The diversion of reserve money to sustain public spending will undermine economic modernisation programmes. Low levels of health and education spending will harm human capital in the medium-to-long term. The Central Bank is unlikely to relax monetary policies significantly prior to 2018, and then only if inflation recedes to the targeted 4%. Tight monetary policy will restrict credit growth and thus economic recovery.

South Sudan's economic recovery requires deeper reform

2018 ◽  
Keyword(s):  
Foreign Investment ◽  
Oil Production ◽  
Economic Recovery ◽  
Medium Term ◽  
Peace Agreement ◽  
Content Type

Subject Management of South Sudan's economy Significance A framework peace agreement reached in Khartoum on June 27 comprised only five substantive articles; it was therefore striking that one focused on re-starting oil production. The potential -- and the desire -- for economic recovery are real, but turning potential into actual development and growth will require more than just getting the oil flowing again. Impacts Attempts to strengthen oilfield security in Unity State could trigger new fighting. Unity’s oilfields could potentially add 70,000 barrels per day by the end of 2019. Foreign investment inflows will remain minimal in the short-to-medium term.

Maritime rights are sore point in Indonesia-China ties

2020 ◽  
Keyword(s):  
Foreign Policy ◽  
Political Islam ◽  
Economic Recovery ◽  
Medium Term ◽  
Content Type ◽  
Indonesian Government ◽  
Main Challenge ◽  
Economic Ties

Significance Jakarta has repeatedly protested Chinese incursions into its EEZ. At the same time, China and Indonesia have burgeoning economic ties. Impacts ASEAN membership will remain the cornerstone of Indonesia’s foreign policy. Indonesia’s main challenge in the medium term will be to contain the spread of COVID-19 and spur post-pandemic economic recovery. Political Islam will be increasingly influential under the current Indonesian government.

Puerto Rican budget and statehood wrangles will worsen

2018 ◽  
Keyword(s):  
Puerto Rico ◽  
Puerto Rican ◽  
Policy Making ◽  
Economic Recovery ◽  
Foreign Investor ◽  
Control Board ◽  
Content Type ◽  
Investor Confidence ◽  
The Us

Significance Fiscal pressures are causing controversy in Puerto Rico, but so too is fiscal policy-making. On July 5, Governor Ricardo Rossello announced that he would seek a court injunction that would prevent the budget he has signed from being disallowed in favour of the nearly 9-billion-dollar budget devised by the US-based federal fiscal control board. Impacts Domestic and foreign investor confidence in Puerto Rico is likely to fall further, complicating economic recovery and reform. The episode will further damage Puerto Rican politicians’ credibility when they make representations to Washington. The polarisation over Puerto Rico’s long-term future, and the US statehood question, will deepen. Delays in repairing the island’s economy, and then reforming it for the future, could see worker outflows.

IMF deal will have mixed impact in Argentina

2018 ◽  
Keyword(s):  
Central Bank ◽  
Policy Coordination ◽  
Medium Term ◽  
Treasury Bonds ◽  
Monetary Policies ◽  
Foreign Investors ◽  
Content Type ◽  
Investor Confidence ◽  
Combined Operation ◽  
The Government

Significance Driven by the currency run that saw a depreciation of 24.1% in just three weeks, the government has begun talks with the IMF in a bid to restore investor confidence. The peso run ended on May 15 owing to a combined operation by the Central Bank and the Finance Ministry: the Central Bank put a floor under the exchange rate by offering 5 billion dollars at 25 pesos to the dollar while the Finance Ministry reopened its tender of Treasury bonds to attract foreign investors. Impacts The sharp peso depreciation will boost inflation; workers will demand a reopening of wage negotiations. Falling real incomes will undermine economic recovery. Investors will demand more policy coordination and coherent fiscal and monetary policies. IMF funds will ease medium-term default fears, but fiscal tightening will be required to lower dependence on foreign finance.

Argentina debt deal hangs in balance amid COVID-19

2020 ◽  
Keyword(s):  
Sovereign Debt ◽  
Economic Recovery ◽  
Medium Term ◽  
Debt Restructuring ◽  
Content Type ◽  
The Government ◽  
Interest Payments

Significance The government announced its sovereign debt restructuring proposal on April 16, including a three-year moratorium, and an average haircut of 62% on interest payments (equivalent to 37.9 billion dollars) and 5.4% on capital (3.6 billion dollars). The proposal has already been rejected by the main bondholders, but Economy Minister Martin Guzman warns there will be no further offer. Impacts A deal would ease liquidity problems and facilitate access to fresh funds in the medium term, aiding post-COVID-19 economic recovery. A new default would hinder recovery and increase the risk of a new bout of hyperinflation. Global economic weakness will limit prospects for any export-led recovery.

Political crisis to hinder Nicaragua economic recovery

2021 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Sector ◽  
Business Environment ◽  
Balance Of Payments ◽  
Economic Recovery ◽  
Political Crisis ◽  
Public And Private ◽  
Content Type ◽  
Vulnerable Communities ◽  
Sustained Recovery

Significance However, the prospects of a sustained recovery are clouded by fiscal weakness, a precarious balance-of-payments position, a deteriorating business environment and the threat of international sanctions on the financial sector. The country's most vulnerable communities are yet to recover from the damage wrought by Hurricanes Eta and Iota. Impacts An accommodative monetary policy will be maintained in an effort to support economic recovery. Ortega’s control over the judiciary will heighten legal uncertainty and erode the ability of investors to enforce contracts. The prolonged depreciation of the Cordoba will increase servicing costs of public and private dollar-denominated debts. Refugee outflows will intensify after November’s elections, with knock-on effects for the rest of the region.

Unrest and COVID-19 will reduce South African growth

2021 ◽  
Keyword(s):  
Economic Growth ◽  
South African ◽  
Unemployment Rate ◽  
Energy Sector ◽  
Economic Recovery ◽  
Medium Term ◽  
Content Type ◽  
High Unemployment ◽  
The Government

Significance This chokes off an unexpectedly strong economic recovery in the first half of 2021. Meanwhile, unemployment has hit a record high at 35%, or 47% according to the expanded definition which includes people who have given up looking for work. Impacts Without higher economic growth, the unemployment rate will not substantially improve. The combination of low growth and high unemployment heightens the chance of further violent unrest. The government will have difficulty sticking with debt reduction plans without further dampening growth. Planned reforms in the energy sector could ease some of the country’s electricity woes in the medium term.

Argentina's 2021 budget bill highlights uncertainties

2020 ◽  
Keyword(s):  
Central Bank ◽  
Financial Constraints ◽  
Public Works ◽  
Content Type ◽  
Primary Deficit ◽  
The Government ◽  
Global Investors

Significance The bill forecasts a fall in the primary deficit next year, mainly due to an expected drop in COVID-19-related welfare payments. The government also aims to boost public works to fuel growth and thus boost its support in the October 2021 mid-term elections. With global investors still reluctant to lend, Central Bank transfers will remain the main source of financing. Impacts If growth is weaker than expected, hoped-for reductions in social aid spending will prove impossible. Reliance on Central Bank transfers to finance the deficit will put pressure on prices, undermining the goal of lower inflation. Financial constraints will hinder the government’s ability to implement expansionary policies.

Revisiting intangible capital and labour productivity growth, 2000–2015

2020 ◽  
Vol 21 (5) ◽  
pp. 671-690
Author(s):  
Felix Roth
Keyword(s):  
Productivity Growth ◽  
Capital Investment ◽  
Labour Productivity ◽  
Strong Relationship ◽  
Economic Recovery ◽  
Intangible Capital ◽  
Content Type ◽  
Labour Productivity Growth ◽  
Econometric Evidence ◽  
European Economies

PurposeThis paper aims to revisit the relationship between intangible capital and labour productivity growth using the largest, up-to-date macro database (2000–2015) available to corroborate the econometric findings of earlier work and to generate novel econometric evidence by accounting for times of crisis (2008–2013) and economic recovery (2014–2015).Design/methodology/approachTo achieve these aims, this paper employs a cross-country growth accounting econometric estimation approach using the largest, up-to-date database available encompassing 16 EU countries over the period 2000–2015. The paper accounts for times of crisis (2008–2013) and of economic recovery (2014–2015). It separately estimates the contribution of three distinct dimensions of intangible capital: (1) computerized information, (2) innovative property and (3) economic competencies.FindingsFirst, when accounting for intangibles, the paper finds that these intangibles have become the dominant source of labour productivity growth in the EU, explaining up to 66 percent of growth. Second, when accounting for times of crisis (2008–2013), in contrast to tangible capital, the paper detects a solid positive relationship between intangibles and labour productivity growth. Third, when accounting for the economic recovery (2014–2015), the paper finds a highly significant and remarkably strong relationship between intangible capital and labour productivity growth.Originality/valueThis paper corroborates the importance of intangibles for labour productivity growth and thereby underlines the necessity to incorporate intangibles into today's national accounting frameworks in order to correctly depict the levels of capital investment being made in European economies. These levels are significantly higher than those currently reflected in the official statistics.

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