Though the average capital adequacy ratio of Chinese banks is higher than the required minimum, banks still need to raise more capital for both regulatory and business reasons. Chinese policymakers have introduced new rules and instruments to help bank capitalization. 

Real convergence in Sub-Saharan Africa has been weak despite robust growth. We believe that low total factor productivity growth is partially responsible. Furthermore, relatively weak investment is weighing on economic activity. As population growth slows, both will be key for standard-of-living gains.

Growth has come to a halt, mainly due to weak investment. While external headwinds exist, domestic policy uncertainty has been a drag, especially for non-residential investment and domestic machinery. Lacking more decisive measures to boost investment, macroeconomic conditions could quickly worsen. 

Romania’s fiscal picture continued to deteriorate significantly in 2019. Corrective measures are needed, including a delay of pension increases. Early elections could provide a new government with the needed mandate. In the absence of fiscal consolidation, the loss of investment grade looms.

The fixed exchange rate was not adequately supported by other policies. Loose fiscal policy pushed public debt to unsustainable levels, while a slowdown of capital inflows, corruption, and regional conflicts weakened economic prospects. A viable economic program with international financing is key. 

Economic sanctions are a form of government market intervention and can have significant unintended and uncertain consequences—particularly if they are placed on an economy highly integrated into the global economy and the international financial system. In this respect, the measures taken by the United States and its allies against Russia beginning in 2014 represented a paradigm shift.

Sanctions on a highly-integrated economy such as Russia are still unprecedented. Unforeseen and unintended consequences could significantly shake up markets. The impact is likely most significant for asset managers and banking institutions. But further consequences for the underlying market infrastructure are possible.

Despite some fiscal consolidation, public finances are fragile. If fully implemented, the fiscal rule would imply a sizable adjustment. Nonetheless, gross public financing needs will likely remain high this year and next.