EMIA Week in Review: Argentine Economy Expands 4.9% in July From Previous Year & More

October 2, 2017


Temer to Inject Almost US$5bn into Brazilian Economy


  • On 28 September, Brazil’s President Michel Temer issued a presidential decree lifting the restrictions on the advance payments of PIS/Pasep benefits paid to low-income pensioners.

  • According to Temer, the measure will inject R$15.9bn (US$4.9bn) into the domestic economic, which should help to boost consumption.

  • Eight million people are set to receive PIS/Pasep benefits now that that the decree has lowered the minimum age of withdrawal from 70 years for both sexes to 65 for men and 62 for women.

  • The Temer government said that the measure is designed both to boost domestic consumption and to help ease financial pressure on lower-income households.


Thailand Launches New Online Service for Work Permits and Visas

ASEAN Briefing

  • Thailand’s Board of Investment (BOI) has launched a new online visa service for BOI-registered companies in order to ease the visa application process.

  • Under the new system, authorities will issue an electronic work permit to the applicants instead of the work permit booklet currently in use.

  • A Single Window System will allow BOI-registered companies to apply for visas, work permits or renewals online.

  • Once an application is made, a confirmation email will be sent to the applicant’s email ID. After due process, the Single Window System will allow successful applicants to schedule an appointment online to collect their visa from the issuing authority.


Siemens Predicts Bright Future for Ugandan Oil and Gas Sector

BizNis Africa

  • The International Monetary Fund recently stated that the oil reserves in Uganda may account for around four percent of the country’s economy annually in the next few years if managed well.

  • These sentiments were echoed by speakers and delegates attending the Uganda International Oil and Gas Summit in Kampala Uganda.

  • Addressing government officials and delegates, Patrice Laporte, Siemens North American Oil and Gas Division Vice President, presented a keynote titled Digitalization in the Oil and Gas Sector.

  • “As more and more technology per barrel is required, oil and gas projects are becoming increasingly complex and the need for an integrated solution is important,” said Laporte.


Argentine Economy Picked Up Speed in July Expanding 4.9% From a Year Earlier


  • Argentina's economic recovery picked up speed in July, expanding 4.9% from a year earlier as President Mauricio Macri's pro-growth policies appeared gain traction.

  • July's year-over-year expansion is the highest posted by Argentina in more than two years and it moves the country closer to hitting its target of 3% growth this year.

  • The economy also grew 0.7% in July from the previous month on a seasonally adjusted basis, the national statistics agency reported Wednesday.

  • “Going forward, we expect the cyclical economic recovery to strengthen and broaden driven by firm private consumption and a growing impulse from public investment,” Goldman Sachs economist Alberto Ramos said in a report.


Shenyang Welcomes Foreign Companies, Chongqing Consumers Buoyed by Investments – China Market Watch

China Briefing

  • China accounts for 45% of all cigarettes consumed globally. The statistic appears to be one that officials are interested in curbing: the government raised taxes on cigarettes from 5 to 11% in 2015, banned foreign investment in the tobacco industry in 2016, and following a number of citywide bans, a countrywide ban on smoking indoors will take effect later this year.

  • The European Union Chamber of Commerce in China (“European Chamber”) made headlines last week after its most recent survey found that its members suffered from “promise fatigue”.

  • However, representatives of foreign firms that responded to the survey said they felt more welcome in the northern city of Shenyang – the capital of Liaoning province – than many other areas of the country.

  • The western city of Chongqing has recently attracted at least US $10bn in investment. The city’s economy has grown more than 10 percent annually in recent years – 10.9 percent in 2014, 11 percent in 2015, and 10.7 percent in 2017.


Presidential Candidates Present Respective Visions for Chile in First Debate


  • On 28 September, the eight candidates seeking election as Chile’s next president in the 19 November general election took part in a first televised debate.

  • During the debate, the candidates presented their respective and largely opposing views on a number of key issues such as the national economy, the state of human rights, and the need to reform the national constitution.

  • The debate also provided the rivals of the current frontrunner in the voting intention polls, former president Sebastián Piñera (2010-2014), the candidate of the main centre-right opposition Chile Vamos coalition, the opportunity to attack him in order to try to reduce his lead in the polls. The debate was the first of three scheduled.

  • The debate was organised by the national press association (ANP) and held in the national congress building in the city of Valparaíso.


Kenya Positioned to Become Africa’s Most Prominent Success Stories

BizNis Africa

  • As political uncertainty continues to hang like a cloud over Kenya, concerns about the impact on the economy are surfacing.

  • Indeed, the extended election period is slowing the growth of the country. And while the government had projected the economy would expand by 5.9% this year, already first quarter growth was just 4.7%.

  • Amid these concerns it’s more important than ever for the private sector to up its game in partnering with government to drive progress and strengthen confidence in the country.

  • From education to sustainability and employment, private companies are key to driving positive change in the country.


Hamas Reaches Out to Algeria

Global Risk Insights

  • In early June, press reports emerged that, due to external pressure, Qatar had asked members of the Palestinian group Hamas to leave the country.

  • The move by the Qataris occurred in parallel to Saudi Arabia´s decision, along with four other states, to cut off diplomatic ties with Qatar over its alleged support for terrorism.

  • In the following weeks, it was revealed that a Hamas spokesman, based in Algeria, Sami Abu Zuhri, had made a formal request in previous months for the group to open an office in the capital Algiers.

  • Abu Zuhri had been effusive in praising Algeria for its suitability as a base for Hamas. In an Algerian press forum, he noted that, “the land of the martyrs is the first hope for the support of the resistance and the Palestinian people”. In light of the request, the authorities agreed to review the request, but since mid-July, the group have yet to receive an official response.


Côte d’Ivoire Should No Longer be Overlooked in the Market

Global Risk Insights

  • Côte d’Ivoire is a frontier market often overlooked by multinationals as a viable investment opportunity. Here are some brief reasons why investors with a risk appetite should start paying attention:
    - Growing Political Stability
    - Promising Demography
    - Strong Economic Outlook
    - Growing Political Stability

  • Some multinationals are already taking notice. In May 2017, Heineken opened a new state-of-the-art brewery on the outskirts of the country’s capital, Abidjan, having invested €150 million in its construction.

  • Nonetheless, there remain issues that must be addressed including a dearth of reliable market data, high poverty rate—46 percent of the population, high levels of corruption, and limited infrastructure development.


ACP 2017 Congress: Optimism and Debate

Hydrocarbons Colombia

  • The Colombian Association of Petroleum’s (ACP) annual congress took place in Bogotá last week and HCC attended the event.

  • Last year, conversations were about how bad things were; this year, the environment changed into a still-cautious optimism – but at least there is optimism, despite the industry’s challenges.

  • ACP’s President Francisco Jose Lloreda said that the industry had a positive 1H17, as companies were able to fulfill their investment plans.

  • Oil firms planned to invest US$4.3B this year, which is a significant increase compared to last year’s figures. However, he acknowledged that Colombia needs higher investment amounts (between US$6B and US$7B) to maintain oil production at current levels.


Russia Focusing On Blockchain Supply Chain Technologies

Russia Briefing

  • Russian First Deputy Prime Minister Igor Shuvalov has stated that Russia will be concentrating in legalizing blockchain from the viewpoint of it as a mechanism to register data so that the information stored in blockchain could have the same legal force as information stored in other forms.

  • The Russian move places it, along with China and the Northern European countries such as Finland and the Baltic States as ahead of the technology game when it comes to handling supply chains across Eurasia, with specific long term implications for China’s Belt & Road initiative.

  • “Getting Russia up to speed legally in defining blockchain technologies and how they may be implemented in supply chains is a crucial part in the next 5G wave of technology that is cutting sweeping across Eurasia from East to West” says Chris Devonshire-Ellisof Dezan Shira & Associates “Russia is a crucial part of China’s Belt & Road connectivity.”

  • “Blockchain technologies are crucial to the supply of Chinese and other products across borders to Europe and Vice-Versa” says Devonshire-Ellis, “With 1 billion Chinese consumers now online, such technologies are vital for maintaining and securing Chinese and other consumer markets.”


UK Export Finance is Increasing its Support for British Trade with Uruguay


  • UK Export Finance (UKEF) support available for trade with Uruguay is increasing to up to £4 billion, meaning an additional £2.25 billion in support for UK companies exporting to Uruguay and for Uruguayan buyers of UK goods and services.

  • This finance can be used to support projects across numerous sectors including infrastructure.

  • UKEF support is also now available in Uruguayan Pesos, allowing Uruguayan buyers to access finance in their own currency and making sourcing from the UK even more competitive.

  • UKEF is the UK’s export credit agency. Its role is to provide support to UK companies who wish to export goods and/or services, and overseas buyers sourcing from the UK.


Referendum in Kurdistan: A Risky Gamble in a Volatile Region

Global Risk Insights

  • Nearly 93% of eligible voters in Kurdistan have cast their ballot in favour of independence. Although technically the referendum is non-binding, it does represent a new and potentially dangerous phase in the relationship between Erbil and Baghdad, bringing with it a risk of civil war.

  • It was pragmatism, rather than ideology, that motivated President Barzani to call a referendum for Kurdistan’s independence. The economic reasons are straightforward: Kurdistan is going through a major economic crisis due to its conflict with Baghdad.

  • The 2005 constitution stipulated that Iraq’s central government would return parts of its Kurdish oil revenues back to Kurdistan’s regional government. However, Baghdad has stopped those payments – which represent around 17% of the national budget – after Erbil’s decision to export its oil directly to international markets.

  • From a strategic perspective, in the war against the Islamic State (ISIS), the refusal of western countries to deploy troops in the ground has allowed the Peshmerga to become a major military force very useful to the coalition. This strengthened Kurdish forces and allowed them to control a large territory while remaining close to the United States.


Colombia: Seeking Ways to Boost the Domestic Economy

Latin News

  • Proposals presented by Colombia’s national federation of retailers (Fenalco) for boosting depressed domestic consumption levels have been rejected by the government led by President Juan Manuel Santos.

  • The government considered that the initiatives, which mainly revolved around temporarily easing the tax burden on consumers in the final months of the year, would be counterproductive to its efforts to balance the fiscal books.

  • But with Colombia’s domestic economy set to register moderate growth once again this year, the dual challenge of stimulating consumption and maintaining fiscal stability looks set to dominate the debate over the draft 2018 national budget.

  • Fenalco presented its proposals to the government on 15 August. The lobby group called for the government to suspend the three-percentage-point increase in the value added tax (VAT) introduced in its 2016 tax reform for the months of November and December to boost domestic consumption.


Vietnam’s Real Estate Industry: Poised for a Major Structural Funding Shift

Vietnam Briefing

  • Contrary to other nations, Vietnam is primarily reliant on bank loans and associated bank guarantees.

  • This both plays to the current inefficiencies plaguing other capital access points and is characteristic of a nascent market in a developing frontier-status market country, as well as reveals an additional point of risk developers currently take on.

  • For the most part, developers in Vietnam are beholden to the quality of the negotiated bank loan and associated bank guarantee that they receive. In many cases, a bank guarantee can make or break many a real estate development project.

  • This leaves many developers in a position where they aim to diversify their funding streams as much as possible in order to avoid reliance solely on the whim and funding decisions of domestic and international partner banks.


Mexican Oil Industry: Pemex’s Chance

Hydrocarbons Mexico

  • Recent oil rounds have generated positive effects for the Mexican oil industry; the last rounds have resulted in drilling several wells in the country, equaling Pemex’s performance of the past few years.

  • According to the National Hydrocarbons Commission (CNH), the first three auctions (Round 1.1, 1.2 and 1.3) led to the drilling of 13 offshore exploration wells and 38 onshore development wells.

  • Winning companies in Rounds 1.4, 2.1, 2.2 and 2.3 committed to drill 53 exploratory wells (26 onshore and 17 offshore).

  • New players will drill 104 wells in total; 66 exploratory and 38 development wells, meaning that companies will match Pemex’s recent figures in a short time, since the NOC has drilled an average of 66 exploratory wells in the last three years.


Argentina’s Peña Rules Out Post-Electoral ‘Adjustment’


  • On 25 September, Argentina’s cabinet chief, Marcos Peña, denied that the government led by President Mauricio Macri is planning to undertake an economic adjustment after the midterm federal legislative elections on 22 October.

  • Peña is clearly seeking to rebut the claim made by former president Cristina Fernández (2007-2015) that just such an adjustment is in the offing.

  • Fernández, who is running for a seat in the federal senate representing the province of Buenos Aires, has made the claim in several recent interviews and political rallies.

  • The Macri government is concerned that the scare tactic could impact the closely contested senate race in the country’s largest province.


The Slow Recovery of Libya’s Oil Industry

Global Risk Insights

  • In early July, oil production in Libya reached 1 million barrels per day for the first time in four years.

  • The increase in production has sparked hopes that Libya’s oil industry is on a path to recovery.

  • The state-owned National Oil Company (NOC) predicted that oil output would increase to 1.25 million barrels by the end of the year.

  • At a recent meeting, OPEC countries maintained oil cap exemptions for Libya to allow the country to rebuild its capabilities. Libya’s political deadlock and ongoing security threats, could nonetheless, pose serious challenges to the recovery of the oil sector.


Will Privatization Kick-Start the Brazilian Economy?


  • The politically embattled government of President Michel Temer is turning to large-scale privatisation of public sector assets as a way of stimulating investment and growth.

  • On 21 August, the federal government announced that it would sell its stake in the power giant Eletrobras; two days later it said a further 57 state companies would also be put up for sale.

  • While many investors and analysts have responded enthusiastically, opinions remain divided as to whether this will unleash the hoped-for economic rebound in Brazil.


Exporters in India Suffer under GST Regime – Delays in Refund Processing, Malfunctioning System

India Briefing

  • The improper administration of the goods and services tax (GST) regime is adversely affecting exporters in India.

  • Exports are taxed under the Integrated Goods and Services Act, 2017 as per which exporters are supposed to enjoy ‘zero rated supply’, i.e. taxes and duties paid on input goods or services or final goods or services are to be refunded.

  • However, since the implementation of the GST, the online refund mechanism has either delayed processing or been non-operational due to technical glitches.

  • Consequently, exporters are facing major financial and compliance related burdens. Some of the other challenges faced by the exporters are discussed below.


Argentina to Suspend Fuels Price-Setting System in October


  • The government of Argentina is planning to suspend a price-setting system for domestic fuel sales next month thanks to the recent rise in global oil prices, the country’s energy and mining minister said Monday.

  • Domestic fuel prices in Argentina are currently set by the government and companies that produce and refine oil.

  • The system is designed to sustain interest in domestic drilling when global oil prices are low but allows for the market to determine fuel prices when they are deemed high enough.

  • Energy and Mines Minister Juan Jose Aranguren said the recent recovery in global crude prices should let the government suspend price-setting for domestic fuel starting in October. He added that a drop in global oil prices could bring it back.


Chinese FDI in Vietnam: Growing Economic Ties, Despite Strains

Vietnam Briefing

  • For the past 25 years, Chinese investments in Vietnam and bilateral trade between the two nations has grown steadily despite issues such as the South China Sea and increasing cooperation between Vietnam and countries such as US, India, and Japan.

  • The Chinese mainland has emerged as the eighth largest investor in Vietnam, with the actual FDI much higher if we include their affiliates in Hong Kong and Macau.

  • Over 60 percent of all Chinese FDI focuses on manufacturing and processing, with a majority of the investment focused on labor-intensive industries.

  • Both countries are parties to the ASEAN China FTA, which created the largest free trade area in the world. Apart from ASEAN China FTA, both countries are currently negotiating the Regional Comprehensive Economic Partnership (RCEP).


Brazilian Central Bank Optimistic about Next Year; Growth 2,2% and Inflation 4.3%


  • Brazil’s central bank trimmed its inflation forecast on Thursday and said it expected economic growth to pick up into next year, painting a rosier picture for Latin America’s largest economy as interest rates approach record lows.

  • In a quarterly inflation report, the central bank forecast economic growth of 0.75% in 2017, up from a previous estimate of 0.5%.

  • For 2018, the bank forecast growth of 2.2%.

  • Inflation is estimated at 3.2% in 2017 and 4.3% in 2018, down from 3.3% and 4.4% respectively that it expected previously.


Canada will Impose Targeted Sanctions Against 40 Venezuelan Top Officials Including Maduro


  • Canada will impose targeted sanctions against 40 Venezuelan senior officials, including President Nicolás Maduro, to punish them for “anti-democratic behavior,” the foreign ministry announced.

  • Canada’s move, which followed a similar decision by the United States, came after months of protests against Maduro’s government in which at least 130 people have been killed.

  • Critics say he has plunged the nation into its worst-ever economic crisis and brought it to the brink of dictatorship.

  • “Canada will not stand by silently as the government of Venezuela robs its people of their fundamental democratic rights,” Foreign Minister Chrystia Freeland said in a statement

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Posted in Global, Macro Economics, Macro Economics