FocusEconomics Insights - Latest Posts

• What's Vaccine Economics?

  September 9, 2021

  Stop-start Covid-19 restrictions have complicated conditions in emerging markets so far this year, exacerbated by the Delta variant in recent months. That said, the rollout of vaccines has had a dramatic impact on economic prospects. Take the Philippines and Turkey—two important EM economies with large domestic markets—over the past six months for example: Both countries have been hit harder in 2021 by the virus in terms of new cases than last year, but Turkey began its vaccination campaign back in mid-January, roughly two months before the Philippines. As of 6 September, Turkey had been able to administer 116.2 doses per 100 people of the total population—by no means a showstopper—while the Philippines lags at just 32.4. As a result, while Turkey has been able to gradually loosen restrictions, the Philippines has had no choice but to keep tough measures in place.   
   

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• Soaring price pressures and fiscal risks are forcing Brazil’s Central Bank to raise rates: How high can they go?

  September 1, 2021

  Brazil’s Central Bank has hiked the SELIC rate by 325 basis points so far this year—from its historic low of 2.00% in March to the current level of 5.25% at its latest meeting in early August. The decision to raise its key policy rate so aggressively was predominately due to spiraling inflation as a combination of Covid-19-related supply disruptions, shipping container shortages, rebounding global crude oil prices and unfavorable weather conditions sent food and fuel prices soaring.

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• South Africa’s labor market continues to suffer: Is there any relief in sight?

  September 1, 2021

  The unemployment rate in South Africa hit a whopping 34.4% in the second quarter of this year—the highest level since current records began back in 2008. SA’s labor market was already in a sickly way leading up to the pandemic, predominately due to relatively weak private investment levels and a lack of labor market reforms, which have led to an extremely large proportion of inactive workers and low self-employment numbers. Over the last year, the pandemic and its subsequent lockdown measures, power shortages and social unrest have only exacerbated matters. Of particular concern are the roughly 17 million South Africans not playing an active role in the labor force—approximately 43% of the working-age population.

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• As the Covid-19 crisis fades, what’s in store for monetary policy in Latin America?

  August 23, 2021

  Latin American central banks responded decisively to the pandemic, with many lowering interest rates to all-time lows and engaging in less conventional measures such as bond purchases, liquidity injections and lending schemes to SMEs. That said, nominal interest rates in some countries remained fairly high relative to developed markets, in order to keep inflation in check and protect currencies. Moving to 2021, monetary stances have shifted markedly: Authorities in some countries are already tightening their policy in response to faster-than-expected recoveries and building price pressures. In this article, we take a closer look at monetary policy in selected economies of the region.

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• U.S. housing price growth is surging: Should the Fed be worried?

  August 18, 2021

  U.S. home prices have been on a tear since late 2020, with growth in May—the latest available data—hitting the highest level since August 2004. The recent surge in prices has been predominately driven by ultra-low interest rates and the Fed’s aggressive purchases of government bonds and mortgage-backed securities, which have lowered borrowing costs across the yield curve. Moreover, a shift in housing appetite due to remote working caused by the pandemic and inventories of homes for sale nearing record lows has led to bidding wars, pushing prices even higher.

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• Central Bank digital currencies: The future of money?

  August 12, 2021

  While the pace of the transition varies wildly from country to country, the tide of thought is gradually turning in favor of Central Bank digital currencies (CBDCs). In our latest insight piece, we examine what is motivating central banks to take this step, and the potential implications of CBDC adoption for the economy.

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  Tags: centralbanks, Cryptocurrency, digitalcurrencies

• The U.S. economy is storming ahead: What are the key risks to the outlook?

  August 12, 2021

  The U.S. economy has been in rip-roaring form so far this year, buoyed by the lifting of restrictions, vast fiscal stimulus, and consumers running down excess savings. GDP increased solidly in H1, while the unemployment rate continued to tumble and job gains were brisk through July. Our panelists see activity growing at the fastest pace in decades this year, with the economy already above its pre-pandemic level.

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• Latin America GDP growth forecasts surge in recent months: Will the rally continue?

  August 11, 2021

  Over the past three months our LatinFocus Consensus Forecast has jumped 0.9 percentage points, bringing regional GDP growth up to 5.7% for 2021. The stark upward revision has been predominately driven by an accelerating vaccine rollout in key countries such as Argentina, Brazil, Chile and Mexico, while all but Mexico have also seen clear downward trends in new Covid-19 cases since June, boding well for the economic outlook. Moreover, the strong rise in commodity prices since the start of the year, coupled with the ongoing recovery in global economic activity, has supported the external sector, further boosting the GDP outlook in recent months.

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• Belarus: Interview Renaissance Capital and the Polish Chamber of Commerce

  July 12, 2021

  In late June, the EU slapped sanctions on Belarus over the hijacking of a Ryanair flight that occurred on 23 May. Looking back at the range of sanctions applied since the 9 August election last year, these are the most serious yet, with potential for a real impact on the economy. As well as targeting government officials and individuals linked with the regime, the sanctions aim to restrict Belarussian access to European capital markets. They also target key exports, such as potash and petrochemicals, which constitute a major source of foreign currency for the country. To further explore the sanctions and their potential economic impact, we interviewed two of our panelists: Andrei Melaschenko (AM), Russia/CIS+ economist at Renaissance Capital, and Piotr Soroczyński (PS), chief economist at the Polish Chamber of Commerce.

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• Going it alone: Six months after Brexit, how is the UK economy faring?

  June 28, 2021

  Over the coming quarters, the UK is seen growing faster in sequential terms than most European neighbors, spurred by its swift vaccine rollout and ample fiscal support. In the longer term, British growth prospects also compare favorably to those of the EU. Six months on from Brexit then, to the untrained eye the UK economy appears to have emerged relatively unscathed. So what exactly has changed?

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