Articles List

Inflation Inevitable From Bond Note Expansion

The Reserve Bank of Zimbabwe's decision to more than double the size of its bond note programme will see inflation move more firmly into positive territory over the coming months as the money supply increases further. The effect will be compounded by the likelihood of shortages of imported goods as the supply of hard currency with which to access foreign goods continues to fall.

Sovereign Risks Higher Than Fiscal Position Implies

The Turkish government's counter cyclical fiscal policy will lead to a deteriorating fiscal position in the years ahead. While the public debt will remain low relative to emerging market averages, growing contingent liabilities - from several off-balance sheet stimulus measures - could pose upside risks to government debt levels if they are eventually realised. As a result, sovereign risks are higher than the headline fiscal position implies.

Recovering, But No Boom Ahead

The Lebanese economy will see some improvements over the coming years, as falling political risk boosts business confidence and as external conditions brighten. That said, the pace of growth will remain modest, owing to structural weakness in the business environment, the poor state of public finances limiting public investment and forcing the government to introduce austerity measures, and the return of inflation.

Airtel: Competition Weighs On Profit, But Investments Boost Future Prospects

Airtel is transitioning away from its core low-cost strategy, which has enabled it to amass a large subscriber base in its 20 developing telecoms markets, towards a focus on value-added services and consolidation to boost profits. Strategic investments, the merger with Telenor India, and the divesting of assets in Africa will support revenue growth on the long term, but the operator currently remains under pressure as it faces competition and regulatory challenges.

Week Ahead: India GDP Figures To Show Slight Recovery

India will be releasing its GDP figures this week and we expect to see a gradual recovery following the demonetisation shock. The Bank of Korea (BoK) will be holding its monetary policy meeting, and we expect the central bank to maintain its monetary policy stance in a bid to provide stability as tensions on the Korean peninsula remain high. Lastly, we expect headline inflation in Thailand to bottom out over the coming months as the country's deleveraging cycle comes to an end.

Indonesia: Diverse Outlooks Across Provinces

Jakarta and its surrounding provinces of West Java and Banten will continue lead Indonesia's construction industry in terms of growth and value, with strong project pipelines across the transport, utilities and real estate sectors. Infrastructure growth in less-developed provinces on Sumatra, Kalimantan and Sulawesi will be focused on improving connectivity and domestic logistics.

Little Room For Democracy To Take Hold

The decision by Hong Kong's High Court on August 17 to imprison three pro-democracy student leaders is a sign that rising dissent will not be tolerated in the city. We maintain our long-held view that there is limited scope for significant change in the city's political environment as Beijing is unlikely to yield on its position for greater democracy in the Special Administrative Region. With greater economic integration with Guangdong province likely to occur over the coming years, interference by the mainland authorities will likely increase.

Monthly Commodities Strategy: Metals Outlook Firming, Grains Wilting

We expect only modest gains in commodity prices over the remainder of the year and performance across sub-categories will be mixed. For instance, we have turned more positive towards industrial metals and coal over the past month and have revised up our price forecasts for aluminium, iron ore and thermal coal. In contrast, we now have a less bullish view on grain prices and have significantly revised down our forecast for wheat prices.

New Inflation Target, But Same Policy Outlook

The Swedish Riksbank is likely to change its inflation targeting regime in September, but we believe the near-term impact on monetary policy will be limited. We remain below-consensus on rate hikes in 2018-19 as the Riksbank is likely to remain cautious of overtightening following years of undershooting its inflation target.

Exports & Consumption Driving Growth

Uruguay will maintain robust growth over the coming quarters, supported by agricultural exports, consumption and an uptick in investment. That said, the pace of growth is likely to slow in H217 relative to preceding quarters as the effects of a strong harvest fade.

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