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Macro Economic Newsletter July 2016


After Brazil’s first quarter 2016 GDP surprised on the upside with a contraction of 0.3% quarter-on-quarter (from -1.6% and -1.3% in the third and fourth quarters of 2015 respectively) Brazil’s economy contracted more than anticipated in May as Brazil contends with the worst recession in many years. The Brazil Central Bank stated that the economic activity index (proxy for GDP), declined by 0.5% in May from April’s 0.07% increase. This reinforces analysts’ views that GDP will perform worse in Q2 than in the previous quarter. However, the second half of 2016 is expected to see improvement due to better consumer and business sentiment as a result of the change in government in May 2016 and appreciation of the currency since the start of the year.

Bloomberg 14 July 2016; NKC 14 July 2016

Chile has cut its forecast growth for the year from 2% in March to a current growth forecast of 1.75%. The unemployment rate is at a five year high. Debt is likely to be funded through sovereign wealth fund resources.

Bloomberg 11th July

Whilst GDP in Q1 2016 was up 0.8% on previous quarter owing to more robust industrial activity. Q2 forecasts are not looking so promising with monetary and fiscal policy tightening as a result of the market volatility post Brexit.

Reuters 29th April/ Oxford Economics 5th July

South Africa

The South African economy grew 1.3% in 2015 down from 1.6% in 2014. GDP growth turned negative in the first quarter of 2016 by 0.2% year-on-year and by 1.2% quarteron-quarter. The economy is struggling with the impact of 2015’s severe drought and a slump in the mining sector.


South East Asia
Positive news from manufacturing and services has helped Singapore grow GDP at a faster rate in Q2, growing by 2.2% year on year, rising from 2.1% in Q1. There are concerns that this growth rate will not be sustained owing to the vulnerability of Singapore to external economic pressures. In Indonesia, growth is expected to be between 4.9% and 5% in Q2 2016 from 4.92% in Q1. Growth in Indonesia in particular is slowing down through lack of improvement in household consumption spending.

Economies 11th July, FT 13th July

GDP growth in Q2 was unchanged at 6.7%. The latest figure, beating forecasts of 6.6% was due primarily to focused and intense government stimulus measures that heightened demand for factory output as well as an ongoing healthy property market. Factory gate deflation eased for the sixth month in a row in June and exports declined less than analysts forecast.

FT 15th July, Bloomberg 15th July

Indian credit ratings agency, Crisil predicts a GDP growth of 7.9% for 2016-17. This will be achieved by a prudent fiscal policy and ramping up infrastructure investment. The approach being taken is to focus on ‘’quality’’ in determining what is being spent and also in repairing the existing financial system.

Times of India 11th July

Tunisia’s economy grew by only 1% yearon-year in the first quarter of 2016 due to contractions in the agriculture and energy sectors. In addition, fear over terrorism continues to hamper the economy and the expectation is that economic growth will slow further over the remainder of 2016.


Egypt’s GDP is showing signs of recovery, rising from 2.2% in fiscal year 2013/2014 to 4.2% in fiscal year 2014/2015. Signs of recovery have been ascribed by the Ministry of Finance to implementation of new national projects, including the development of Suez Canal area and road networks. However, the tourism sector is still facing challenges, which has negatively impacted GDP growth and Egypt’s foreign currency revenues.

Daily News Egypt 2 July 2016

Kenya recorded the highest first quarter economic growth in five years, due to good weather, improved security, continuing investment in public infrastructure and a rebound of the tourism sector. The economy expanded by 5.9% in the first three months of 2016, compared to 5% over the same period last year. The expansion is attributed to expansion in all sectors of the economy.

Reuters 30 June 2016

GDP growth for 2016 is expected to be 0.4%, following a slowdown from 6.3% in 2014 to 2.7% in 2015 due to lower oil prices. There is a very real concern that Nigeria will experience a recession (defined as two consecutive quarters of negative growth) as the economy contracted by 0.36% year-on-year in the first quarter and that the second quarter is likely to record very low or negative growth. However, the last two quarters are expected to see some improvement due to the end of the currency peg and marginally higher oil production as negotiations continue with the militants in the Delta region.

NKC; EIU July 2016

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