EMIA Week in Review: Argentina’s September CPI 1.9%, China’s Free Trade Agreements in South Asia

October 16, 2017


Argentina’s September CPI 1.9% and 17.6% in Nine Months


  • Consumer prices rose 1.9% in Argentina in September, government statistics agency Indec said on Thursday, pushing the nine-month inflation reading to 17.6%, above the upper band of the central bank’s target for the year.

  • The central bank, which has tightened monetary policy, is aiming for inflation between 12% and 17% in 2017, while economists forecast it to be at 22%.

  • In greater Buenos Aires, used as a proxy before the national index was launched in July, prices rose 2% in September and 24.2% in the 12 months through September.

  • That marked the highest monthly reading for greater Buenos Aires since April.


Russia-German Trade Up 25% In 2017

Russia Briefing

  • Vladimir Putin has stated that bilateral trade between Russia and Germany reached US$40.7 billion last year, with some US$18 billion directly invested by German companies into Russia.

  • 2017 has shown bilateral trade growing at 25%.

  • President Putin stated that “More than 5,000 enterprises with the participation of German capital operate in Russia employing 270,000 Russian citizens. The turnover of those companies exceeds US$50 billion.”

  • “Despite all existing challenges in the political area the economic relations with the Federal Republic of Germany are not fading away.”


GST Impact on the Flexi-Staffing Industry in India

India Briefing

  • The introduction of the Goods and Services Tax (GST) regime has increased the demand for temporary jobs and organized flexi-staffing firms in India.

  • Flexi-staffing or contract labor refers to an employment model where employees are hired by a staffing agency (contractor), and lent out to work at and under the supervision of a user company (principal employer).

  • In such a model, the principal employer does not have any direct employment relationship with the flexi-employees, although they may be liable to fulfill certain limited legal obligations.

  • The flexi-staffing industry in India is worth approximately US$280 billion (Rs 27,000 crores), and is expected to develop in a positive way due to the impact of GST.


Meirelles Optimistic about Congressional Approval of Pensions’ Reform


  • Brazilian Finance Minister Henrique Meirelles said on Thursday “there’s a very good chance” that the country’s proposed pension reform bill will be approved by the end of the year.

  • Addressing a question-and-answer session at an Institute for International Finance meeting in Washington Meirelles said that it would be simpler to pass the bill this year than next year because of political challenges that could come with Brazil’s upcoming presidential election in October 2018.

  • “I think there’s a very good chance of having that approved this year, which is more convenient than next year,” Meirelles said, in response to a question about the timing of the measure.

  • “It’s a good moment for the reform to be approved in Brazil.”


China’s Free Trade Agreements in South Asia

China Briefing

  • China is actively seeking to improve its trade relations with South Asia.

  • Deeper connectivity, once achieved under the BRI, will boost the development and commercial aspirations of South Asia’s lagging economies, and open up new markets for China.

  • However, China has yet to convince India; the latter is against the China-Pakistan Economic Corridor due to geopolitical concerns.

  • This article briefly discusses the status of China’s free trade agreement (FTA) talks with the South Asian countries. The talks hold significance for the BRI region, and could lay down the rules and norms that govern the region’s future trade order.


Pemex is Having a Hard Time Giving Up its Monopoly

Hydrocarbons Mexico

  • Several service stations want to try a different brand than Pemex, but they have found problems leaving the NOC’s franchise.

  • Different representatives, anonymously, denounced that Pemex Transformación Industrial (TRI) has puts up obstacles to avoid this change by requesting the same documents to initiate the process over and over again.

  • The NOC (National Oil Company), allegedly, might have even threatened the stations with ending their fuel supply, if they did not sign a new contract.

  • “Pemex is doing its best to make sure no station can change its brand,” representatives said.


Bolivians in the Streets Reject President Morales Attempt to a Fourth Running Reelection


  • Thousands of Bolivians took to the streets to protest against President Evo Morales’ attempt to get re-elected despite the fact that the constitution does not allow for a fourth consecutive term.

  • The demonstrations that took place in the country’s nine regional capitals warned President Morales that the people of Bolivia will not allow him to participate in any more elections.

  • “No means no,” was one of the slogans that could be heard on the streets of Bolivia, referring to the opposition’s triumph in choosing “no” during a constitutional referendum that rejected Morales’ previous attempt to run for a fourth term.

  • “Nothing is further from a democratic government than a government that aspires to perpetually remain in power,” President of the Pro Santa Cruz Committee, Fernando Cuéllar, said.


Total Reinforces its Oil Exploration Plans in Guinea

BizNis Africa

  • Total and the National Office of Petroleum of Guinea (ONAP) signed a Technical Evaluation Agreement to study deep and ultra deep offshore areas located off the coast of Guinea Conakry, covering approximately 55,000 square kilometers.

  • “By taking this position on a new under-explored area, Total pursues its exploration strategy targeting deep offshore prospective basins,” declares Kevin McLachlan, Total Senior Vice President Exploration for Exploration and Production.

  • “Therefore, Total has the opportunity to evaluate a very large area, located in an extension of the prolific Mauritania and Senegal basin where we already are. This will allow us to capitalize on our know-how and experience acquired in West Africa.”

  • According to the terms of this agreement, Total will have a year to assess the potential of the basin on the basis of existing data. At the end of this period, the Group will select three licenses to start an exploration program.


China & Pakistan Bypassing India As CPEC Digital Routes Are Developed

Silk Road Briefing

  • The China-Pakistan Economic Corridor  (CPEC) is a major transportation link between far western Xinjiang Province in China and the port of Gwadar in south-western Pakistan.

  • It has been part of the bilateral agenda for both countries for a number of years now, and is considered CPEC’s main objector however is Delhi, who contests that part of the corridor runs through disputed territory belonging to India and not Pakistan.

  • This continues to be a main factor is disunity in China-India relations. The two sides also continue to share two further major border area disputes. However, this has not prevented either China or Pakistan continuing their development of CPEC.

  • The jointly issued “CPEC plan for Pakistan’s digital future” envisions a project set for completion in 2030 and includes:by China to be a key element of its Belt & Road Initiative.


Brazilian Congress Seems Prepared to Again Save Temer from Justice Charges


  • A Brazilian congressional report recommended on Tuesday that President Michel Temer should not face trial for obstruction of justice and membership in a criminal organization, arguing that the charges against him were unfounded.

  • The report by Congressman Bonifacio de Andrada, a Temer ally, also recommended shelving charges against two of his cabinet ministers stemming from a corruption case involving bribes paid by meatpacker JBS SA.

  • The constitutional and legal affairs committee in Brazil's Congress was expected to approve the report next week.

  • The full lower house, which has the power to decide whether a president should be put on trial by the Supreme Court, will likely close the case a week later.


Africa: Infrastructure Should Form Part of the Modern Investment Portfolio

BizNis Africa

  • Direct investment in energy infrastructure have proved very successful in developed markets for decades.

  • However, wind and solar energy projects have not been readily available to South African investors.

  • This is now changing and investing in these assets could offer similar returns to property, at lower risk.

  • The results of a new study, titled Renewable Energy Infrastructure Risk and Return in South Africa, suggests that infrastructure – particularly renewable-electricity assets – deserves a place in the modern investment portfolio, along with conventional asset classes such as equities, bonds, cash, and real estate.


Fracking in Colombia in 2020?

Hydrocarbons Colombia

  • Minister of Environment (MinAmbiente) Luis Gilberto Murillo got us excited after talking about the possibility of using fracking in Colombia, but we do not know if we should believe what we hear.

  • Murillo said that in the next three to five years, the oil industry could use fracking in Colombia and that together with the Ministry of Mines and Energy (MinMinas), MinAmbiente created a plan to approve this technique in the country, using the best international standards to protect the environment.

  • Murillo commented that the first phase of this project is exploration and the country has gained much experience over the last five years.

  • Second stage is related to exploration and production through fracking.


Brazil Relaunching Economic Ties with the African Continent


  • Agricultural powerhouse Brazil aims to revive ties with Africa after a lull and sees a vast export market for food and manufactured goods in a continent whose population is surging, its foreign minister said.

  • Brazil’s presence in Africa surged during the government of former President Lula da Silva, who opened embassies in 35 of 54 African nations and led a flurry of trade and investment missions.

  • His successor Dilma Rousseff showed little interest in foreign affairs and practically ignored Africa.

  • “We want to take up relations with Africa again and reaffirm its importance for Brazil,” Foreign Minister Aloysio Nunes said in an interview before he set off to visit Morocco, Ghana, Nigeria, Botswana, Ivory Coast and South Africa this week.


China’s Sinopec Considering Selling Assets in Santa Cruz, Argentina


  • Argentina’s losses on its oil and gas assets, as well as its labor disputes, have prompted China’s Sinopec to consider selling its operations in the country.

  • Sinopec advisors have offered up some of its assets to about a dozen large firms from the U.S., Latin America, Europe, Africa, and Russia, it was reported on Monday and confirmed in Beijing media.

  • The assets, mostly in the Santa Cruz province in southern Argentina, could be worth between US$750 million and US$1 billion. This price tag would be way less than the US$ 2.45bn Sinopec paid back in 2010 to buy Occidental Petroleum’s assets in Argentina.

  • The 2010 acquisition marked Sinopec’s entry into Argentina at a time when Chinese companies were looking to buy assets abroad to offset domestic production declines. But the oil price crash has caused Sinopec to start booking large losses on its Argentinian operations.


Off-Grid Solar Set to Triple Electricity Services Across Africa

BizNis Africa

  • A new report has confirmed that Solar is now the fastest growing energy source in the world, and is making a major impact in Africa.

  • The International Energy Agency’s 2017 report on renewables forecasts that off-grid solar capacity in Africa is set to almost triple in the next five years, saying that it will bring basic electricity services to almost 70 million more people in Asia and sub Saharan Africa.

  • The IEA has found that the amount of power from solar grew by more than 50%, and has officially increased energy output globally at a faster rate than any other fuel.

  • The report specifically highlights off-grid solar as a dynamic sector set to accelerate this growth.


Cuba’s Expanding Ties with Russia


  • Having replaced its long-traditional economic patron – the US – for Russia in the early 1960s, Cuba then replaced Russia with Venezuela at the turn of the century.

  • Almost 20 years later, the perennially cash-strapped Communist regime is switching course again, circling back to Russia once more as bankrupt Venezuela loses utility to the island as an economic and financial partner.

  • Meanwhile, Russia is slowly but surely building up its economic and commercial presence in the region, with the state oil company Rosneft key to this strategy.

  • Rosneft, which is slowly gathering up oil schemes (and potentially other assets) in Venezuela as the Russian government led by President Vladimir Putin plays lender of last resort to the Caracas government, is also looking to increase business with Cuba.


Macri Celebrates Victory of Staunch Ally in Corrientes Province


  • Argentina's ruling coalition of president Mauricio Macri celebrated on Sunday victory in the Corrientes province governor race, a significant boost a couple of weeks before the crucial midterm elections.

  • Candidate Gustavo Valdés supported by “Let's Change” grouping won the Corrientes gubernatorial dispute with 54.06% of the votes.

  • Valdés, who belongs to the Radical party, UCR, Macri's coalition senior ally beat Peronist candidate Carlos “Camau” Espínola, who was supported by 45.19% of votes.

  • That difference means Valdés will be able to take office without having to face the runner-up in a runoff.


Challenges for China: The Path Towards a Knowledge Economy

Global RIsk Insights

  • China’s developmental success has largely hinged upon the country’s ability to manufacture cheap, low-added value goods  and whilst this has brought prosperity to hundreds of millions of people, the export model is stagnating with the rise of labour costs which has seen Western multinationals move production elsewhere.

  • Moreover, China’s current manufacturing role is monopolised by Western tech giants like Apple, which squander a large proportion of the profits from products assembled in Chinese factories.

  • As a result, it makes sense for China to move in the direction of a knowledge based economy, and the Chinese government has certainly expressed a desire to do so in it’s Five-Year Plans

  • But what exactly is a knowledge economy, and what kind of obstacles must China overcome to become one?


Manufacturing in Eastern Cape Unleashes Potential for Intra-Africa Trade

BizNis Africa

  • The Eastern Cape economy is increasingly modern and export oriented, with great potential for growth of existing industry and establishment of new industry.

  • Its geographic location, quality sea and air ports, abundance of natural resources and world-class infrastructure bodes particularly well for the growth of export-oriented industry.

  • The province is committed to providing high-value goods to the world rather than cheap raw materials.

  • The province is using innovative ways to draw rural people, who survive mostly on subsistence agriculture, migrant labour and welfare grants, into the mainstream economy.


Argentina Preparing to Auction Offshore Hydrocarbons Exploration Next Year


  • Argentina plans to auction offshore oil and gas exploration rights next year, in the hope of developing fields off its Atlantic coast like those in neighboring Brazil, the energy minister said on Thursday.

  • Earlier this year Argentina hired Norway’s Spectrum to do a seismic survey in cooperation with state-run oil firm YPF SA.

  • A spokesman for the energy ministry said Australia’s Searcher Seismic was also surveying the area, which to date has been little explored.

  • “There is a high probability that the subsalt basin that exists on the coast of Brazil continues south and so we see the discovery of any formation of oil and conventional gas in the area as very attractive. It could be very profitable for the country,” Minister Juan Jose Aranguren said at a conference in Buenos Aires.


Malaysia-Thailand Trade and Economic Relations

ASEAN Briefing

  • Thailand and Malaysia have both agreed to foster co-operation on trade and investment.

  • Both countries emphasised on economic development and rail and road connectivity along their borders.

  • To abolish the challenges of development, poverty and unemployment in Southern Thailand, the government is now pushing forward the development of the Sadao-Padang Besar Special Economic Zone in the south in order to generate employment and income for local people.

  • The six sectors where Thailand plans to urge Malaysian investors to conduct more border trade are oil and energy, rubber, automobiles, sugar and rice and tourism.


UK and Brazil Sign MoU to Enhance Cooperation and Promote Direct Investment


  • Apex-Brasil, the Brazilian Trade and Investment Promotion Agency, announced on Friday it has signed a Memorandum of Understanding (MoU) with the UK’s Department for International Trade (DIT) that aims to enhance cooperation to promote foreign direct investment between Brazil and the UK.

  • The agreement seeks to encourage bilateral investments between the two countries.

  • Under the agreement, both countries have agreed to share relevant market intelligence industry information, knowledge, expertise and best practices on key industrial sectors, as well as regulatory information.

  • The agreement has a key focus on, but is not limited to, sectors such as energy, oil & gas, life sciences, infrastructure, and agricultural technology. The agreement anticipates the active participation of stakeholders from the private and public sectors as well as unions.


Vietnam Proposes New Incentives for Special Administrative-Economic Zones

Vietnam Briefing

  • Vietnam’s Ministry of Planning and Investment has submitted for approval, a new draft law on special administrative-economic zones (SAEZ) to attract more investments in three special administrative-economic zones.

  • The zones are located in Van Don (Quang Ninh Province), North Van Phong (Khanh Hoa Province) and Phu Quoc Island (Kien Giang Province).

  • All three SAEZ’s are predicted to contribute heavily to the economy from 2020 and can achieve an average per capita income of 12,000-13,000 USD by 2030.

  • Offering greater investments, increasing transparency, and reducing restrictions in SAEZs will increase competitiveness and lead to a favorable business environment, especially for foreign investors.


Tumaco Incident Highlights Coca Issue in Colombia’s Peace Process


  • On 9 October, Colombia’s national police announced the suspension of four officers who last week fired into a crowd of protesters in Tumaco, Nariño department, killing at least six civilians and wounding a further eighteen.

  • The incident in Tumaco took place when a group of protestors had formed a cordon to around a field to try to prevent the forceful eradication of illegal coca plantations by government officials who were escorted by the police and the military.

  • The Tumaco incident is a major blow to President Santos and all those tasked with advancing Colombia’s peace process.

  • Although the Farc has now disarmed, and peace talks appear to be progressing with the ELN, the incident serves as a reminder that the eradication of illegal coca plantations, a key tenet of the peace process, will not be an easy task.

Tags: argentina, brazil, china, colombia, cpi, eln, emerging markets, emia, farc, frontier markets, fta, germany, gst, headline news, india, russia, south asia, trade, weekly roundup
Posted in Global, Macro Economics, Macro Economics