Economics
The Uncertain Future of the EU-Mercosur Trade Agreement
In June 2020, the EU and the Mercosur trade bloc, which consists of Argentina, Brazil, Paraguay and Uruguay, concluded negotiations over the Political Dialogue and Cooperation part of their Association Agreement, after the free trade section was completed in June 2019. With a number of EU member states and civil society organisations voicing concerns about the environmental impact of the deal, its ratification is becoming more unlikely in the short-term.
China’s pivot towards domestic-driven growth: not as easy as Xi hopes
China desperately wants to and must recover from its long-lasting dependence on exports as a means of economic growth. This is the objective of the dual-circulation strategy, which is set to become Beijing’s escape plan from the feared middle-income trap. However, with domestic consumption still weak, China is unable to survive without a good injection of public investment to boost its economic engine. The rush of rapid supply-side growth is hard to give up for a country used to abnormally high levels of GDP growth.
IMF Money? Colombia’s Listening!
After a year of bad news due to the COVID-19 pandemic and its economic repercussions, Colombia’s fortune is finally improving: at the end of September, the IMF expanded Colombia’s credit line from USD 10.8 billion to USD 17.2 billion.
European monetary policy faces another crisis: Is the ECB effectively leading the way?
In a little over a decade the European Central Bank found itself fighting three considerable crises: the Great Recession in 2008, the sovereign-debt crisis in 2011-2012 to today’s pandemic-induced recessions. The Euro is a project without precedent and under Mario Draghi the ECB was a leading actor in world monetary policy. In 2019, Christine Lagarde became the new president of the ECB. How does she compare?
‘Suganomics’: What can we expect?
Japan’s new Prime Minister Yoshihide Suga, who took up office on 16th September, faces the challenge of revitalizing an economy still reeling from the effects of COVID-19. There are indications that Suga will continue many elements of his predecessor Shinzo Abe’s ‘Abenomics’ policy. Nevertheless, his economic policies are likely to diverge from Abe’s in a few key areas, owing to the influence of the COVID-19 pandemic and Suga’s tenure as Minister for Internal Affairs and Communications.
Crisis besets Venezuela: A failing regime?
Economic downturn, trading tensions with the USA, and international sanctions have all begun to play a role in the destruction of the Maduro regime. The possible results of this are civil unrest, economic collapse and ultimately, a failed state.
Brazil: How is South America’s biggest economy poised to behave?
Last week Brazil’s COPOM (Committee for Monetary Policy) met to discuss the current economic environment, not only in Brazil but around the world. The meeting had one overall result, which was to maintain current interest rates. The country’s Taxa Selic will stay at 2% p.a. Although this event might not seem newsworthy, it tells us a great deal about the recovery of the South American economy.
Currencies: Is the Dollar in Danger?
Recent declines in the dollar have once again raised questions about its status as the de facto global reserve currency. But the current depreciation in the greenback is more the result of a perfect short-term storm, as opposed to a permanent global retreat from the dollar.
Serbia: Robust Q1 Performance Unlikely to Continue
The Serbian economy performed well during the first quarter of 2020. Structural factors, such as a smaller dependence on tourism, as well as effective fiscal and monetary responses, have significantly alleviated contractionary pressures. However, guiding the economy throughout the rest of the year will be a more laborious endeavour.
Making History: Coronavirus and Negative Oil Prices
Since the beginning of the Coronavirus pandemic, there has been a loss of 1/3rd global demand – more than 30 million barrels per day (BPD). The virus instilled a level of uncertainty for oil traders, but the catalyst for the initial drop in price can be attributed to the escalating price war between Russia and Saudi for market share, eventually leading Saudi to flood the market with oil.
