Entries for 'Global Focus'

The NBU has financed roughly 30% of the fiscal deficit with monetization. Ukraine’s deficit is ~$4 bn due to higher military and social spending. Fiscal dominance is undermining the monetary transmission mechanism. Cutting spending is neither possible nor prudent during the war with Russia. Small adjustments can be made on the revenue side and monetary framework. Ukraine needs more external financing and a sound macro framework.

Russia stopped publishing some key statistics since February 2022. The authorities say the measure is to protect Russia from sanctions. Hidden data make independent economic analysis challenging. In the near term, it allows the authorities to control the narrative. It also incentivizes institutions to embellish reporting to the center. With time, accurate macro-analysis will become nearly impossible. Russia’s observance of the IMF’s SDDS appears sufficient for now.

Russia’s current account surplus reached $180 bn by end-August. Well on track to hit the forecast of $250-$280 bn surplus in 2022, followed by a current account surplus of about $80 bn in 2023. Russian banks are accumulating FX as the BoR is under sanctions. Due to the risk of further sanctions, Russia is keen to de-dollarize. Despite the creative schemes, progress has been limited so far.

Russia’s fiscal accounts continue to benefit from high commodity prices. Debt-to-GDP stands at 17%, and the NWF fund is 8% of GDP in 1H2022. However, ~40% of federal budget revenues come from oil and gas. Revenues will fall due to energy wars and the EU oil embargo in 2023. We expect a federal budget deficit of about 2% in 2022 and 3% in 2023.

ASEAN-5 is highly dependent on China for exports. The region is also an important indicator of global activity. External demand remained surprisingly robust in 1H2022. However, we expect some deceleration in 2H2022. China’s slowdown remains the key risk for ASEAN-5.

Ecuador’s dollar spreads have risen to prohibitive levels since June.  Rollover from China and oil prices will determine the external outlook. We se...

• Shortly after Russia invaded Ukraine in late February, … • we switched to forecasting recession in the Euro zone, … • in addition to projecting a fa...

Non-residents have cut their holdings of Lira-denominated bonds to historic lows, while still keeping sizable positions in Turkish Eurobonds. Turkey might need to attract more non-resident deposits going forward, unless external debt rollover ratios could be pushed higher.

Kenya is one of the frontier markets cut from the bond market. The IMF program promises a lot of frontloaded fiscal adjustment, … by the standards o...

Indonesia has faced less pressure than other ASEAN countries. Favorable terms of trade and fiscal subsidies helped contain energy prices. Bank Indonesia can afford to be patient with hikes as core CPI remains moderate. Policy normalization through term structure and government bond sales, should help ease capital outflow pressures amid global tightening.

El Salvador’s funding gap through the January bond payment, …  could be 4% of GDP in the mild scenario we presented last week. Already falling rollo...

We discuss potential external financing gaps in frontier markets, … focusing on countries that face external bond redemptions soon. We see financing...

Many frontier markets have lost bond market access, … but have to meet sizable external financing needs soon. We estimate such funding needs for six...