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Macro Economic Newsletter September 2016


Brazil’s economy suffered its sixth consecutive decline in Q2 ‘16, with GDP down by 0.6% compared to the previous quarter. This contraction was due to another large decline in consumer spending. GDP contracted 2.3% q-o-q compared to market expectations of a 2% contraction. Even though the economy is showing some promising early green shoots, conditions remain challenging with high inflation, high unemployment and high interest rates.

Rio Times 31 Aug ‘16; Econotimes 2 Sep ‘16

Gross Domestic Product slowed in Q2 2016 to 1.5% from 1.9% in Q1. Slowdown is primarily due to a contraction in the mining sector owing to declining copper prices. Chile is the worlds largest producer of copper. Chile is hopeful for future economic growth as it is expected that recent energy auctions will cut electricity prices by 20% and will add 2.5% to economic growth, owing to productivity increases through lower energy costs.

Wall Street Journal, 18th Aug

A slight contraction in GDP for Q2, down 0.2% from previous quarter but up 2.5% over the year. The drop was due primarily to slowing industrial production. Figures were better than expected and analysts expect a pick up in the 2nd half of the year.

Wall Street Journal 22nd Aug

Economic growth was very strong in August with industrial production showing 6.3% annual growth, the fastest since March. Stimulus measures introduced earlier in the year have been successful and it is expected that China will meet its GDP target of 6.5% to 7% for full year.

FT 13th Sept

GDP growth slowed in the 2nd quarter to 7.1%, down from 7.9% in Q1. In spite of this, India is still the fastest growing major economy in the world. As an oil importer, growth has been sustained by falling energy prices but with oil now at around $50 a barrel again, the focus will be on keeping inflation in check possibly at the expense of further growth.

FT 31st Aug

Egypt’s Ministry of Planning released GDP data for the first three quarters of the 2015/16 fiscal year (Jul ‘15 – Mar ‘16). Real GDP figures show a stronger yearon-year growth of 4.3% at market prices, but a substantially weaker rate of 2.3% growth at factor cost (which excludes indirect taxation but includes the effects of government subsidies).

EIU 30 Aug ‘16

Tunisia’s economic growth rate was up by 1.4% in Q2 ‘16, in comparison to the same period last year and 1.2% in the first half of 2016. The uptick is due to a strong improvement in the manufacturing sector. However, GDP growth will not see a marked improvement until there is an increase in EU demand for Tunisian exports as well as a recovery in the tourism sector.

Zawya 17 Aug ‘16; EIU 16 Aug ‘16

Kenya’s economy showed continuing momentum earlier in 2016, with the most recently released GDP number for Q1 ‘16 at 5.9%. This strong growth figure reflects solid growth across many sectors including recovery in the tourism sector. However, there are concerns around the impact of Kenya’s expansionary budget with expenditure set to increase by 23%.

Oxford Economics 20 Aug ‘16

Nigeria’s GDP contracted by 2.06% in Q2‘16, sending the economy into a recession. The non-oil sector suffered a decline due to the impact of the unpegging and subsequent steep depreciation in the naira. In addition, the oil sector remains under pressure due to the continuing lower oil price.

Reuters 31 Aug ‘16

South Africa
South Africa’s economy avoided a technical recession in Q2 after recording seasonally adjusted and annualised growth of 3.3% which surprised the market, where expectations were 2.7% growth. The country is still in the grip of a drought and recovery will be slow, in addition to low commodity prices and political uncertainty among other headwinds.

Business Day 6 Sep ‘16

South East Asia
GDP growth for Q3 in Singapore is likely to be subdued, down from Q2 growth of 2.2%, primarily due to a declining manufacturing output. Similarly, in Indonesia, the central bank has reduced its GDP forecast from the previous 5 to 5.4% to between 4.9 to 5.3% owing to the spending cuts put in place to keep the deficit in order.

Jakarta Globe 19th Aug, Singapore Business Review 13th Sep, EconoTimes 13th Sep

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