Category: Economics

Will we see a return to 1990’s style “Washington Consensus” economic policies in Latin America?

  • Latin America experiencing apparent end of "pink tide" of left wing (populist, anti-American) governments, and now seeing possible improved relations with the US.
  • Does this mean "Washington Consensus" unfettered free markets economic policies are back in the region?
  • No, because China is heavily invested (now the region's 2nd biggest trade partner) and here to stay.

Structural shift in global economic system?

  • After WW2, US established Bretton Woods Institutions (IMF & World Bank) - by doing so it underwrote, and hence set the tone for the global economic system (post Cold War known as "Washington Consensus").
  • Over the last few years, due to pressures from the right, the US refused to give developing countries a bigger say in these institutions.
  • China has therefore set up rival institutions, and recently managed to get US allies to join - represents comprehensive failure of US strategy & tactics of global economic policy.

Macrosnap of Mexico economy?

  • 2 years into painful and unpopular austerity, and little to show for reforms except for slow growth and tax hikes.
  • But some signs of better fundamentals, e.g. inflation down and exports better.
  • Good news is Mexico shadows US with a lag, and with US growth looking good, expect healthier Mexico growth later in the year.

Macrosnap of the big one?

  • The biggest single structural issue in global financial markets for 2015 is the timing of the US Fed rate rise - a fundamental driver of where the global savings that swish around the planet are parked.
  • As the US is poised to tighten monetary policy (interest rates up) and most other major countries are loosening or neutral, the US$ has soared.
  • The health of the US job market is the key determinant of timing - 1Q15 was looking strong so markets expected rate rise in June, but recent job market numbers weaker - for dinner party kudos, fine to suggest it will happen between June and Aug :)

US/China battle to influence Asia?

  • Round one goes to China as approx. 50 countries poised to join China-led Asian Infrastructure Investment Bank (AIIB).
  • Round two will be about US proposed Trans-Pacific Partnership (TPP), a 12 country trade deal that excludes China.
  • But progress on TPP has been bumpy - likely it will be watered down & possibly might not even happen - would be very embarrassing for the US.

Venezuela economy Macrosnap?

  • Total mess.
  • Years of overspending & mismanagement under former president Chavez.
  • Reliant on energy exports, so oil price fall proving disastrous.

Canada growth?


Quick Greece bailout macrosnap?

  • Big chunk of bailout funds being withheld by creditors until Greece shows it's making credible economic reforms.
  • Meanwhile Greek government struggling to find cash to pay monthly pension + civil service salary obligations.
  • Possible that government will be unable to repay the IMF EUR540m due on 09 April and will soon default.

Current Brazil recession?

  • Looks like it will be the worst in 25 years.
  • Consumption-led growth model has run its course (high consumer debt levels + weak labor market).
  • Huge budget deficit after years of heavy government spending so painful austerity now needed.

Have you seen the Macrosnap Growthometer?

  • Continually updated, graphic snapshot of global growth trends.
  • Growth rates depicted as weather symbols.
  • Click here to see it.
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