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Global Macro Views: Argentina's Sudden Stop

The sharp drop in the Peso reflects another BoP “sudden stop,” which is likely to carry far-reaching consequences for the economy. The IMF forecast of -1.3% growth in 2019 assumes a recovery in H2, but that is now unlikely and a number at or below -2.5% is conceivable. As a counterpart to this, current account adjustment will accelerate, with the Peso now significantly undervalued in our fair value model.

Economic Views: Capital Flows and Argentina’s Elections

Resident outflows were a source of pressure in 2018. They are unlikely to abate as the election approaches since Argentina’s electoral cycles often prompt outflows. We are far from the outflows seen in the 2001 crisis, but the external funding picture will remain tough given limited resources left under the IMF program.

Egypt: Resilient Against External Headwinds, But Challenges Remain

Egypt has successfully completed the 3-year EFF arrangement with the IMF. Growth has accelerated, unemployment has decreased, the twin deficits have narrowed, core inflation has fallen, and the public debt ratio has started to decline.

IIF August Global Regulatory Update

The August 2019 IIF Global Regulatory Update provides updates on the Financial Stability Board along with current work streams in Regulatory Capital, Recovery and Resolution, Cyber Security, Digital Finance, Sustainable Finance, Insurance and upcoming events.

FRT Episode 45: TechSprint Takeaways With Jo Ann Barefoot

Jo Ann and the IIF’s Adrien Delle-Case give us their readout of the 2019 Global AML and Financial Crime Tech Sprint.

CEEMEA Views: Debt Distress in Zambia

Zambia borrowed extensively from abroad after 2015, leading to considerable external financing requirements. Fiscal and monetary policy will have to be contractionary, however, the level of adjustment needed is very large. Thus, Zambia is a prime candidate for an IMF program.

IIF Submits Response to the IAIS Consultation on the Holistic Framework

On August 15, IIF submitted a response letter to the IAIS consultation Revisions related to the Holistic Framework for Systemic Risk in the Insurance Sector.

Weekly Insight: Sustainability in focus

Record high economic policy uncertainty is a key risk for business sentiment; Wall of worry prompts bets on rising gold prices and stronger JPY—and a further drop in stocks; Synchronized global easing could drive another round of synchronized global debt accumulation; China’s Belt and Road Initiative—concerns about debt and environmental sustainability

Global Macro Views: Rising Capital Outflows from China

US tariffs should be imposing a strain on China’s balance of payments, most obviously in the current account. But the surplus is rising, in part due to quite healthy exports. Instead, trade tensions may be manifesting in capital outflows, which are above 2012 levels and half 2015/6 levels. Tariffs may be raising RMB depreciation expectations, an issue of great importance to China’s policy makers and the rest of EM.

CEEMEA Views: Automation Risk in CEE

The risk of automation in CEE is relatively low compared to other EMs, but differs considerably within the region, with EU member countries facing less risk. The skill composition of employment appears to play an important role, as does an economy’s relative urbanization and labor market diversification.

 

 

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