- Cyprus – a plea in vain for a revamp of the rescue terms;
- Indonesia – higher interest rates to shore up the rupiah;
- Morocco – the government is in jeopardy and may have to call early elections.
ALBANIA: The country has a new Prime Minister and a new President, but this is not likely to derail the drive to join a hesitant EU. Albania has successfully avoided a serious economic slow-down since the global crisis. Now activity has slowed, however, and macroeconomic imbalances persist.
BRAZIL: Congress has been driven to unusually rapid action by the civil unrest that has played out in the streets of Brazil’s cities. It has not, however, so far agreed on much political change. Pres. Rousseff’s standing has been weakened, yet one would be premature writing her off as a candidate for re-election next year.
GERMANY: With elections approaching, the government has issued a raft of expensive promises and a proposed budget for 2014 that looks quite unrealistic. At the same time, key European ambitions have been put on ice until after the balloting, especially as the outcome may bring the opposition Social Democrats back into the picture.
INDIA: The rupee is a bit stronger thanks to actions aimed at containing speculation. The government has suspended its “buy India” guidelines, saying it will rework them before the policy will be re-implemented. On the other hand, the authorities are risking their fiscal goals on a massive, USD 21-billion food plan. They are also taking a risky step to boost banks.
JAPAN: The pause in the yen’s weakening shows that Abenomics is not a guaranteed success, but so long as investors are comfortable with the US Fed’s exit plan the JPY will almost certainly move still further down. There are signs that the economy is picking up and deflation is bottoming out.
MEXICO: Ironic as it may be, the election blow the PRI suffered in Baja California last Sunday was exactly what was needed to keep the Pact for Mexico alive and with it the odds favoring two key components, opening up Pemex to foreign investment and reforming the tax system.
PAKISTAN: The IMF, though it has an unhappy history with Pakistan, is apparently prepared to consider a USD 5.3-billion emergency accommodation to shore up the country’s dwindling FX reserves along with confidence in the troubled economy. China will also be asked to help ease food and power emergencies.
TURKEY: The risks of a major cave-in by the lira are growing, not only because the country is particularly vulnerable due to its economic slowdown and its yawning current-account BoP deficit, but also because the regime is making things worse with its unprecedented Forex “inquiry.” At risk, too, are the Kurdish peace talks
