FocusEconomics Insights - Latest Posts
August 21, 2017
Daniel Lacalle, PhD, author of Escape from the Central Bank Trap, is back with a new guest post on the FocusEconomics Insights blog. In this post, Daniel tells us why he believes the skyhigh public debt currently owned by central banks across the world is so dangerous.
August 21, 2017
Avindar Mohamad was 18 years old when he was forced to flee with his family from his hometown of Aleppo after the Syrian civil war broke out in 2011. Until then, he had led a relatively comfortable life: His father worked as a baker, and his mother had a job at a large pharmaceutical company. When the conflict started, his father flew ahead to Denmark, while Avindar sought refuge in neighboring Lebanon along with his mother and two sisters. It was only several months later that the family finally found itself together again, this time on Danish soil, under Denmark’s family reunification program.
In recent years, the number of people like Avindar seeking asylum in the European Union has skyrocketed, from around 200,000 in 2006 to around 1.3 million in both 2015 and 2016 according to Eurostat figures. The continent has witnessed one of the largest forced migrations since World War II, as civil war in Syria and Iraq and instability in Afghanistan have led to a wave of refugees moving westwards in search of safety. Unlike Avindar and his family, many have been forced to make the journey on foot. The potential effect of this surge in refugees on the economies of European countries is still very much up in the air, with a multitude of factors at work.
August 17, 2017
What a renegotiation of NAFTA could mean for Mexico, and for the economies of Latin America as a whole, has been at top of mind for markets and the region since 18 May when U.S. Trade Representative Robert Lighthizer sent formal notice to Congress of the administration’s intention of renegotiating the agreement.
President Trump has repeatedly stated that the main objective of his trade policy is to reduce trade deficits with several of the U.S.’ trading partners and to review 20 of its agreements that contain "possible abuses and violations." The executive order explicitly states that all trade relations and preferential trade programs must contribute favorably to the United States’ trade balance and strengthen its manufacturing industry. Yet many of the agreements are failing in this regard.
Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
August 10, 2017
This year’s economic outlook for Latin America and the Caribbean is optimistic. However, in 2015 and 2016, the region experienced a deep economic recession, which was felt across all of the countries in the region, although it affected Brazil, Argentina and Venezuela in particular. Against this backdrop, how was it possible for the region to sustain the social advances it had achieved in the decades before the recession?
July 19, 2017
Uranium, the silvery radioactive metal, is a very important element because of its use in generating electricity in nuclear power stations. As the world moves on from the Fukushima disaster, nuclear power may be making a comeback and consequently, so may uranium prices. Nonetheless, the price is currently down around 25% from the same time last year having plummetted over 40% in 2016 according to a report by Frik Els of Mining.com. A uranium supply glut and falling demand along with negative sentiment based on a series of events in early 2017 has kept the price low, but analysts are becoming bullish on the medium and longer-term outlooks for uranium despite the metal still technically in a bear market.
July 18, 2017
The study of macroeconomics is an interesting one, as it explores the behaviour of the aggregate economy and the complex relationships that exist between factors such as inflation, interest rates and the underlying value of currency.
The impact of taxation within the economy makes for an equally interesting study particularly over the course of modern history. This seems even more relevant in the modern age, with Donald Trump's proposed tax plans expected to slash corporate taxes and trigger a boom in the business world.
More specifically, Trump's proposed corporate tax reforms would lower the maximum rate for small and medium-sized businesses from 38% to 15%. The new President has also proposed a one-time repatriation on any income that corporations earn overseas, with a potential rate of 10% enabling U.S.-based businesses to reinvest money back into the American economy.
How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
July 6, 2017
Latin America will soon enter into an electoral cycle that will last about a year and a half and, depending on the results, some countries could face difficulties in terms of their credit ratings. This is because of one important factor: The ongoing fiscal consolidation continues to be a challenge for many governments that are facing a context of low economic growth and lower tax revenues, especially those related to low commodity prices, which makes it even more difficult to curb the current debt dynamics in the region.
*Guest blog post from Latinoamerica21.
Presidential elections are scheduled in seven countries: Brazil, Chile, Colombia, Costa Rica, Mexico, Paraguay and Venezuela. All of the countries, with the exception of Venezuela, will see their current presidents’ terms ending and new leaders taking on the role. In addition, congressional elections will be held in Argentina— which could test Mauricio Macri’s reform agenda—and in El Salvador, where months of political paralysis has led to a significant decline in sources of funding for the government in addition to a debt default.
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The elections will be of particular importance for the future of credit ratings for countries that have a negative outlook: Brazil, Chile and Mexico.
July 6, 2017
On 4 July, a Goldman Sachs executive appeared on CNBC to discuss investing in emerging markets. According to her, emerging markets may be a better investment than the U.S. despite growing concerns over higher debt levels and a stronger USD, U.S. market's may actually offer more uncertainty than emerging markets.
"Look at what's going on in the U.S. If you think about the moves in the U.S. both in the fixed income and equity markets there's a lot hinging on policy options which may or may not occur. Does tax reform going to happen? What happens to health care? What happens to infrastructure?"
With that said, we brought back our emerging markets economic outlook. Read our latest summaries for the emerging markets below.
July 5, 2017
Chile's economy has slowed in recent quarters, as the once booming mining sector has performed poorly and fixed investment has fallen sharply, taking business and consumer confidence with it. These issues continue to plague the economy as we move into Q3, with that in mind FocusEconomics Economist Oliver Reynolds interviewed Senior Economist for the Chamber of Commerce of Santiago, Maria del Pilar Cruz, about the potential future of the all-important mining sector as well as future economic growth prospects, President Bachelet's reforms, and inequality in Chile.
July 4, 2017
Where do CEOs see the most important prospects for business growth in the next 12 months? The U.S., China and Germany top the list, according to PwC Global’s 20th annual CEO Survey of nearly 1,400 CEOs from around the world. The UK, Japan, Brazil, India, Mexico, France and Australia round out the list of the top 10.
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We took closer look at what economic analysts see on the horizon for these economies in the next 12 months:
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