Fiscal policy latest publications
Mexico is facing important fiscal challenges. On the one hand, its tax collection is very low: tax revenue as a share of the GDP (only 14%) is not only the lowest in the OECD, but it is also low when compared to other Latin American economies.
A couple of years ago, the risk premium paid by the Portuguese 10-year government bond against its German counterpart was hovering between 350 and 400 basis points (bp). Meanwhile, the Spanish 10-year bond was paying between 100 and 125 bp.
The first budget execution data for 2019 slightly worsens last year's dynamics. In an environment of extended budget and policy uncertainty, the economic cycle will reduce the deficit, although the current fiscal targets will be missed.
Activity slowed at the beginning of the year due to the decline in public investment and mining production. Going forward, there will be a better performance .We continue foreseeing GDP will grow by 3.9% in 2019 supported by mining investment. However, in comparison with the previous report, now our forecast has a downward …
Mexico’s Ministry of Finance and Public Credit (SHCP) has recently issued indications that I view as positive and that have been well received by the markets. The most important of these concerns the recently announced preliminary criteria for economic policy.
The expansionary spending measures in 2018 have had a detrimental effect on the primary structural balance, leading to non-compliance with the stability goal for the third time in the last five years. In a scenario with no changes to fiscal policy, the deficit will not fall below 2% of GDP at the end of the 2019-2020 period.
Firm policies helped to stabilize Turkish Financial Markets and the economy is re-balancing fast. The economic activity adjustment gained momentum at the end of 2018 but there are early signs of bottoming-out. We expect policymakers stick to sound policies.
We estimate that GDP advanced around 4.6% yoy in Q4 2018. As a result, GDP growth in 2018 would have been around 3.9%. This year, due to a strong increase in mining investment, but also more restrained public spending and less favourable external conditions, we forecast that GDP will advance 3.9% in 2019, a similar figure t…