FocusEconomics Insights - Latest Posts
September 15, 2017
Cryptocurrencies and especailly Bitcoin are the talk of the town of late. According to CNBC, the price of a single bitcoin "has gone up at a faster pace than any other speculative vehicle in market history, as investor enthusiasm for the new medium has reached a fever pitch."
Some have likened the Bitcoin craze to Tulip Mania, believing that the bubble is getting ready to burst. But what was Tulip Mania? Before we get into that, ask yourself this question: how much would you pay for a tulip? If you had lived in 17th century Holland, it may have cost you your entire home, and you probably still would have paid up.
Aside from the Bitcoin bubble, there have been a lot of economic bubbles and subsequent crashes over the years such as, the dot com bubble, the stock-market bubble, the real-estate bubble, but one you may have never heard of is the Tulip Bulb Market Bubble of 17th century Netherlands.
As any market trader will tell you, trading involves substantial risk of loss and is not suitable for everyone. Tulip mania is a perfect example of a cautionary tale of price speculation in what is widely regarded as the first recorded financial bubble and crash of all time.
August 28, 2017
With emerging market economies looking as though they are coming out of their slump, we've got a new emerging markets outlook and infographic for you in this post. You can also get a free Emerging Markets report download here.
August 23, 2017
Foreign direct investment (FDI) to Latin America and the Caribbean will drop 5% this year following the 7.9% drop in 2016 over the previous year, according to a new report from the Economic Commission for Latin America and the Caribbean (ECLAC). Although Latin America received 10% of global FDI in 2016—quite high compared to other regions—the amount was actually lower compared to the 2011–2014 period, when it received 14% of all foreign investment.
This fall in investment in the region is due to three fundamental factors. The decline in raw material prices has impacted investments directed toward the natural resources sector; several economies in the region have seen a slowdown; and "technological sophistication and expansion of the digital economy that tends towards a concentration of transnational investments in developed economies," is also having an impact, according to the annual report on Foreign Direct Investment in Latin America and the Caribbean.
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.
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2018 inflation forecast for Central America revised down 0.1 percentage points this month to 3.4%. https://t.co/vCeYnGSmsE
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Israel growth forecast for 2018 downgraded 0.1% to 3.3%. Find out why: https://t.co/phgVA8YdW7
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