Special Dutch version
Latin American currencies have weakened substantially against the US dollar during 2015. The prospect of a Fed hike, fallen commodity prices and weaker global demand in general weigh on currency valuations, particularly the Brazilian real.
Special Dutch version
Latin American countries not appear to be breaking out of the middle-income trap. Productivity growth has been disappointingly low in recent decades. There are several big structural issues, such as severe human capital and infrastructure constraints.
Special Dutch version
Throughout history Latin America’s fortunes have been tightly linked with commodity prices. It seems we are currently at the end of yet another commodity price cycle. Where does Latin America stand now?
Special Dutch version
A number of Latin American countries have pursued populist policies with tailwind from the commodity price bubble. Now commodity prices are no longer propping up political stability, political risk in the region is set to rise.
Special Dutch version
Latin America is slowing down and lower commodity prices play a prominent role. The region is vulnerable to external environment developments, but fairly resilient. Domestic factors give most countries little firepower against external shocks.
Special Dutch version
Latin America is an agricultural powerhouse and is likely to remain so given significant resources of unexploited land. The region has achieved respectable productivity growth in the past and it is important to sustain such gains in the future.
Country Report
Despite low copper prices, growth picks up modestly on the back of government stimulus and external rebalancing, but risks remain tilted to the downside. Economic reality and Bachelet’s low popular approval rates hold back reform ambitions.
Economic Comment
On September 15th the Dutch government presented its plans for 2016 at Budget Day. The most important budget proposal was a five billion euro tax reduction package, mainly aimed at reducing taxes on labour. However, the tax system will not be reformed, what we view as a missed opportunity.
Economic Comment
Brazil lost its investment grade with S&P on 9 September. The downgrade underlines Brazil’s enormous fiscal challenges. Political headwinds could further darken the fiscal and economic outlook.
Country Report
Brazil is experiencing the strongest contraction in the last two decades on the back of an unfavourable environment, a frontloaded adjustment of economic policy and prevailing negative sentiment. Increasing political tensions complicate the situation.
Special
In this Special we show that the Euro Area faces considerable challenges for the mid-term. Structural problems on the labour market, sluggish labour productivity caused by declining firm dynamics and an unfavourable interest environment are causes of concern.
