Sergi Lanau @SergiLanauOE Twitter profile

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Sergi Lanau

@SergiLanauOE

5 years

We think Venezuela's economy will shrink 25% this year. Even more if blackouts persist. The cumulative contraction since 2013 is worse than Zimbabwe's in the late 90s, the deepest we could find in modern times.

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Sergi Lanau

@SergiLanauOE

2 years

Petro's plans to reduce Colombia's dependence on oil are impossible in the near term. Even with 4% of GDP in net commodity exports, the current account deficit exceeded 5% of GDP last year. Not selling as much oil as possible would cost a lot of real income and compress imports.

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Sergi Lanau

@SergiLanauOE

5 years

Venezuela's economic collapse is shocking, especially when seen in income per capita terms. We are back to real income levels per person last seen in 1955 and unfortunately there is no end in sight.

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Sergi Lanau

@SergiLanauOE

5 years

We've compared Venezuela to the Soviet Union's collapse in terms of destruction of pricing systems and property rights. By now, Venezuela's economic decline is deeper than in any former Soviet Union state in the 1990s. The worst episode, Ukraine, wasn't as bad Venezuela today.

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Sergi Lanau

@SergiLanauOE

2 years

China has a serious growth problem. It wants more consumption and less reliance on investment and exports but consumers aren't spending like before. Reinforces our call that growth will drop to 3% permanently and faster than many think.

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Sergi Lanau

@SergiLanauOE

4 years

Venezuela goes to the polls tomorrow in the context of a total economic and humanitarian disaster. Real income per capita is down to levels last seen in the 1940s. Unfortunately, economic hardship is unlikely to be the trigger for political change in the near future.

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Sergi Lanau

@SergiLanauOE

5 months

Milei wants to improve Argentina's primary balance by 5.5% of GDP quickly. Almost no IMF program in history did that. The typical program achieves just 1% of GDP in adjustment. Macri tried 4.8% in late 2018 and everything blew up. History will repeat itself.

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Sergi Lanau

@SergiLanauOE

10 months

Milei's party controls 38 out of 257 seats in congress. The rest are people who couldn't fix Argentina for decades. He won't be able to dollarize; he won't do major fiscal adjustment. But there's a mini market rally coming on the misplaced expectation he can change something

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Sergi Lanau

@SergiLanauOE

4 years

Turkey says it'll tap 320bcm of gas starting in 2023. Extracted over 10 years at a price of $2.3 / MMBtu (futures pricing now), it would improve the gas trade balance by about 0.3% of GDP. Not a game changer assuming this back of the envelope calculation is roughly ok.

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Sergi Lanau

@SergiLanauOE

5 years

China's imports continue to fall, a sign of sluggish growth (which we think is significantly below official GDP). Imports from the US are still contracting sharply, a reflection of retaliation in the trade war.

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Sergi Lanau

@SergiLanauOE

2 years

China's real retail sales are a staggering 17% below pre-covid trend. Unless we see a strong and sustained recovery the day zero covid ends, China won't go back to being a high-growth country that can catch up to developed economies.

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Sergi Lanau

@SergiLanauOE

2 years

Brazil's current account deficit has widened a bit but remains very small relative to FDI inflows. Solid external position, we just need to worry about fiscal. As long as spending continues to decline, even if slower than implied by the fiscal rule, Brazil will be fine.

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Sergi Lanau

@SergiLanauOE

9 months

Milei wants spending cuts of 5% of GDP. The average country doing a big fiscal effort achieves just 2.5%. In a sample of 200 adjustment episodes in the world, just 50 countries achieved 5+. Argentina won't enter this club given its track record. Politically & socially impossible

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Sergi Lanau

@SergiLanauOE

2 years

India's $100bn reserve drop is getting a lot of attention. The most important figure is the $45bn the RBI has spent defending an exchange rate that will unavoidably fall more given a big C/A deficit. The other $55 is a mark-to-market loss due to rising rates and a strong dollar.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's high inflation comes from supply shocks. There's a lot of slack in the economy. Even if you assume a +4.5% output gap in 2014 and potential growth of just 1.3% you get a negative gap of 5% now. Demand isn't a source of inflation.

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Sergi Lanau

@SergiLanauOE

3 years

Argentina is accumulating reserves, unlike past episodes of capital controls. Combination of high soy bean prices, tightly enforced capital controls and light debt service. Unfortunately, a setup that encourages politicians to delay necessary reform and dialogue with the IMF.

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Sergi Lanau

@SergiLanauOE

2 years

Colombia has attracted big "hot money" flows despite political uncertainty. Any and all kinds of flows are needed when you run a current account deficit of 5-6% of GDP. Until imbalances shrink, it's very risky to tax 'hot' flows. If flows dry up imports & growth will collapse

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Sergi Lanau

@SergiLanauOE

6 years

Maduro starts his 2nd term as president of Venezuela amid a GDP collapse that by now is almost unprecedented. The Latam crises of the 80s look small in comparison. Only comparable episode is the collapse of the Soviet Union.

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Sergi Lanau

@SergiLanauOE

3 years

If Brazil spends 0.4% of GDP more in income support for the poor, the fiscal rule is breached but primary spending won't be higher than in 2019. Not a terrible outcome; most emergency covid spending is gone. There will be many exceptions to the fiscal rule in coming years.

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Sergi Lanau

@SergiLanauOE

2 years

Good news out of Brazil. Lula's fiscal package was approved for 1 year, not 2. Modest increase in spending relative to 2022 and still below 2019's level. If it was Bolsonaro not Lula doing this, markets would be happy. Issue is policy uncertainty beyond the budget. (1/2)

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Sergi Lanau

@SergiLanauOE

5 years

We think Venezuela's economy will shrink 30% in 2019 and a further 10% in 2020. Income per capita in 2019 will be down to levels last seen in 1954, an absolute collapse that is unprecedented absent war.

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Sergi Lanau

@SergiLanauOE

4 years

Even if Argentina manages to issue >3% of GDP in local bonds, a primary deficit target of 4.5% means a lot of money printing (red bar). If money velocity normalizes, inflation will rise even if the BCRA tries to sterilize a lot. w/ @mcastellano44

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Sergi Lanau

@SergiLanauOE

5 years

Venezuela stopped publishing data long ago but its trading partners still put out exports by destination. Venezuela's imports in 19Q1 were 85% below the 2007-15 average. This implies a total collapse of domestic demand and living standards.

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Sergi Lanau

@SergiLanauOE

5 years

Even if Venezuela's economy somehow stabilizes this year, the magnitude of the disaster will remain shocking. The collapse since 2013 dwarfs the end of the Soviet Union and is nearly unprecedented. Only Zimbabwe experienced something similar absent civil war.

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Sergi Lanau

@SergiLanauOE

2 years

There are quite a few EMs running twin current account and fiscal deficits. Usually a risky combination, especially in cases like Colombia where markets are pricing a big political risk premium. w/ @IifPaola

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Sergi Lanau

@SergiLanauOE

1 year

Right now Argentina doesn't have usable FX reserves to dollarize. Not even at more than a 1000 pesos per $. Problem is that rational people know that if the government was to try with a loan from who knows where, the conversion would be at a horrible exchange rate. Risk of panic

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Sergi Lanau

@SergiLanauOE

1 year

India's goods imports are falling faster than exports and services are doing really well. We no longer think the rupee is a clear overvaluation case. With the RBI done or almost done hiking, Indian bonds look like a good proposition.

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Sergi Lanau

@SergiLanauOE

6 years

Trade war might be on pause. How much is China suffering so far? We're tracking accurately 82% of Chinese exports subject to 25% tariffs with @GregBasileIIF . These exports are falling sharply but the rest are growing due to front-loading of future tariffs & strong US GDP growth

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Sergi Lanau

@SergiLanauOE

2 years

China has a serious growth model problem under zero covid. Consumption has grown very little in the last year and a half. Hard to see what can replace dependence on public investment and exports in this context. Our view is that potential growth will fall quickly to 3%.

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Sergi Lanau

@SergiLanauOE

2 years

Argentina's parallel FX premium is the highest ever except for a couple of spikes in the late 1980s. Remarkable given the absence of external pressure (no C/A deficit or bond redemptions). It's 100% about policies that make people dump local currency as fast as possible.

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Sergi Lanau

@SergiLanauOE

2 years

Part of China's slowdown is cyclical but a big chunk is permanent. At China's level of development, few countries managed to grow more than 3% in per capita terms. Since China's population is stagnant, this works out to 3.0-3.5% GDP growth. China won't go back to 5-6% growth.

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Sergi Lanau

@SergiLanauOE

2 years

Colombia attracted capital flows to finance big current account deficits for years. The "deal" was conservative policymaking and a "market friendly" speech. Without those financing could disappear. Expanded and sustainable social policies will only be possible with higher taxes.

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Sergi Lanau

@SergiLanauOE

2 years

Pakistan will probably avert near-term default at the cost of deep economic crisis and maybe some arrears. Stabilization requires at least $10bn in fresh commitments from official lenders in 2023. Won't be easy to pull off even if some Chinese money continues flowing.

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Sergi Lanau

@SergiLanauOE

4 years

Argentina monetized record amounts in 2020 but inflation was "just" ~40%. Low money velocity due to lockdowns and high sterilization saved the day. However, an intolerable parallel FX premium emerged. The trick can't be repeated this year. No choice but cutting the fiscal deficit

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Sergi Lanau

@SergiLanauOE

2 years

The RBI is spending $3bn per week defending the rupee. Will be futile. The current account deficit is headed to 3.5% and the real exchange rate hasn't depreciated since late 2019 (although oil is up 60%!). A weaker rupee is unavoidable.

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Sergi Lanau

@SergiLanauOE

2 years

Large outflows from Chinese govies continued in Jun. War in Ukraine made investors reassess geopolitical risk. China has seen bond outflows every month since Russia's invasion. The RMB is very far from being a global reserve asset, no matter how much the US weaponizes the dollar.

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Sergi Lanau

@SergiLanauOE

3 years

Argentina is accumulating reserves due to tight capital controls, high commodity prices, and relatively subdued imports. Past episodes of capital controls saw reserve losses. However, durable stability won't come until fiscal deficit monetization slows significantly.

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Sergi Lanau

@SergiLanauOE

4 years

Electricity consumption data suggest economic activity in India improved somewhat upon partial easing of a very strict lockdown. But still 12% below pre-lockdown levels.

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Sergi Lanau

@SergiLanauOE

2 years

We expected Argentina to start running current account deficits next year (not in 2022), opening a funding gap in the IMF program as the elections approach. It is happening faster than we thought, making devaluation more likely even if politically difficult.

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Sergi Lanau

@SergiLanauOE

2 years

In March, China bulls said outflows from local govies were driven by Russia selling its RMB assets. Not really according to our estimates. Central banks accounted for just 11% of outflows. Investors are getting out of China as geopolitical risk rises.

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Sergi Lanau

@SergiLanauOE

2 years

In isolation, Brazil's spending package isn't reckless. 0.3% increase in primary spending relative to 2022; still spending a bit less than in 2019. Problem is the overall fiscal position coupled with policy uncertainty. Tax cuts for 0.9% of GDP were extended, (1/2)

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Sergi Lanau

@SergiLanauOE

5 years

What could Venezuela's eventual recovery look like? In past economic collapses with hyperinflation like Bolivia (1980) output recovered fully in 7 years. In extremely deep depressions like Ukraine's (1992) and Zimbabwe's (1998) it took much longer.

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Sergi Lanau

@SergiLanauOE

5 years

Our tracker of nonresident portfolio flows to Turkey continued to show outflows the week of April 5. These outflows are now larger than in May and August 2018. Turkey may be experiencing a second sudden stop.

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Sergi Lanau

@SergiLanauOE

4 years

India's GDP rose further in 20Q4 and is just 3% below pre-covid levels. In the bigger picture, there's a wider gap relative to the pre shadow banking crisis and pre-covid trend. We are talking about an output gap of at least 8%.

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Sergi Lanau

@SergiLanauOE

6 years

Our China activity tracker softened further in October. Activity is slowing more than suggested by GDP growth figures. Signs of tariff-induced weakness are still scant. Domestic deleveraging efforts earlier this year are behind the slowdown

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Sergi Lanau

@SergiLanauOE

2 years

Turkey continues to run a big current account deficit while not losing reserves. In November, it was cross-border bank deposits that saved the day. Flows from friendly countries can keep Turkey going but medium-term the external position w/o policy change is unsustainable.

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Sergi Lanau

@SergiLanauOE

2 years

Venezuela's oil production remained stuck below 700k bpd in April. Without radical policy and political change big output increases look impossible. Venezuela won't play a role in making up for Russian oil supply any time soon.

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Sergi Lanau

@SergiLanauOE

5 years

Venezuela will experience another gigantic economic contraction this year. 25% if not more. In historical perspective, this takes the country to real income levels last seen in 1979. Oil reserves are an upside in a reform scenario but the road to full recovery will be very long.

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Sergi Lanau

@SergiLanauOE

4 years

Argentina wants a deficit of 4.5% of GDP in 2021. We think it'll takes 3% in spending cuts if tax hikes are avoided. If implemented and maintained, it would qualify as a large adjustment episode by historical standards. Looks hard in an electoral year (so tax hikes coming?).

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Sergi Lanau

@SergiLanauOE

3 years

Turkey is suffering a large devaluation. The typical episode of this sort involves a 30% drop in imports. Turkey in 18Q3 was 20%, Argentina much more. We'll see a lot of import compression, which will eventually be positive for the currency.

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Sergi Lanau

@SergiLanauOE

6 years

Argentina vs Turkey. Somewhat higher external debt in Turkey. Argentina is a public debt story, Turkey private

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Sergi Lanau

@SergiLanauOE

9 months

Devaluation to 800 doesn't make dollarization possible in Argentina. It would still take $20bn to dollarize M1 at this exchange rate. More deval doesn't do the trick either because usable reserves are literally zero. Dollarization and shutting down the BCRA are side shows.

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Sergi Lanau

@SergiLanauOE

5 years

Lots of discussion on whether sanctions caused the massive decline in Venezuela's oil production. The drop accelerated with sanctions in 2017 and Jan 2019, but by mid 2017 output was already down a cumulative 40% since 1997. Sanctions have an effect but the story is more nuanced

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Sergi Lanau

@SergiLanauOE

3 years

Argentina didn't lose reserves in October as a result of very tight capital controls and import restrictions (and no big payments due to the IMF). The kind of distortions this approach creates are unsustainable. Sooner or later the official exchange rate will have to adjust.

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Sergi Lanau

@SergiLanauOE

5 years

Venezuela's GDP can easily shrink more than 25% this year, making the country's collapse almost unprecedented. Real income will be back to levels last seen in 1979. Forty years of progress undone.

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Sergi Lanau

@SergiLanauOE

1 year

Argentina's current account deficit in H1 was almost as large as in 2018. Unlike then, the IMF won't increase its exposure to Argie much. Totally unsustainable. We will see a lot of import compression after the election as any new government will try to avoid immediate default.

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Sergi Lanau

@SergiLanauOE

4 years

The Mexican peso is under extreme market pressure. It's not quite a reflection of external vulnerability in Mexico. No current account deficit after years of low growth and not much external amortization. It's a sign investors don't want any risk assets.

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Sergi Lanau

@SergiLanauOE

4 years

Venezuela's oil sector collapse is nearly unprecedented. Only comparable to Iran (1976) and as noted by @AKurmanaev Libya right now. Libya is in a civil war; Venezuela's regime at war with its own people it seems, regardless of the economic cost.

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Sergi Lanau

@SergiLanauOE

2 years

The average IMF program improves the primary fiscal balance by 1% of GDP. Argentina tried 3.8% but the program fell apart. Sri Lanka is aiming for 4%. Recovery from a deep recession will do part of the job but it'll be a really tough IMF program.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil selling off on increased risk of breaching the spending cap. The cuts the fiscal rule calls for aren't huge, but Brazil has never done anything similar in an electoral year. The end game will be yet another small departure from the rule that markets can digest well.

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Sergi Lanau

@SergiLanauOE

3 years

Iran and Venezuela together produced ~5.8 mbpd of oil before sanctions hit both. Now it's 3.2. Russia produces 11 mbpd. Maybe Iran & Venz can ramp up production but going to pre-sanctions output fast seems hard from a diplomatic and technical point of view.

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Sergi Lanau

@SergiLanauOE

2 years

Colombia is running large fiscal & current account deficits. It "spends a lot more than it produces". In this context the only sustainable option the new government has to address social issues is higher taxes or spending reallocation. Increasing deficits won't work. w/ @IifPaola

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's fiscal rule would undo a decade of fiscal profligacy in 5 years. In a spreadsheet, it's the recipe for debt sustainability. On the ground impossible to implement politically and socially. Expect many deviations in coming years but still traveling in the right direction.

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Sergi Lanau

@SergiLanauOE

5 years

India's ambassador to the US announced they are halting oil imports from Venezuela. This works out to around 250k bpd or 35% of total oil exports that need to be sent elsewhere. Sanctions and their indirect effects are certainly having an impact.

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Sergi Lanau

@SergiLanauOE

3 years

Chile surprised hiking 75bps. Monetary policy managing the surge in consumption and possible overheating from repeated rounds of early pension withdrawals. A great example of how sometimes fiscal and monetary policies go in very different directions.

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Sergi Lanau

@SergiLanauOE

2 years

Several EMs are in stagflation. Output is still well below trend but core inflation net of base effects is way above target. Except in Chile and Colombia, EM inflation isn't driven by demand. It's all about supply shocks. If they recede EM inflation will fall faster than expected

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Sergi Lanau

@SergiLanauOE

3 years

Argentina didn't monetize fiscal deficits in Q1, unlike a year ago. Issue is that money velocity is back up to very high levels meaning inflation when later this year monetization becomes unavoidable. We don't think they can issue enough to fund a primary deficit of 3.5% of GDP.

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Sergi Lanau

@SergiLanauOE

5 years

Guaido's government hired Lee Buchheit to help Venezuela handle a heavy debt load. The biggest challenge lies in the diverse composition of Venezuela's debt. Bonds account for less than half of total external debt, something unusual in emerging markets.

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Sergi Lanau

@SergiLanauOE

3 years

Turkey's trade deficit was already under control before the ongoing currency collapse, even though oil prices are high. Now we can expect a sharp drop in imports that will push the trade deficit lower and eventually support some currency appreciation.

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Sergi Lanau

@SergiLanauOE

3 years

It's perfectly possible for Brazil's inflation to go back to target. Core inflation has been on a trend decline and pre-covid was very low net of FX pass-through. Depreciation is a common supply shock in Brazil but yet, underlying inflation may not be as high as some think.

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Sergi Lanau

@SergiLanauOE

5 years

We estimate that last year Venezuela used more FX to pay principal and interest to China&Russia than to import essential goods. Quite remarkable.

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Sergi Lanau

@SergiLanauOE

2 years

Brazil's latest set of fiscal measures would lift the primary balance by 2.3% of GDP if approved. It would make spending much lower than in 2019 and even marginally lower than 2022. We're slowly going back to the last administration's ok-ish fiscal policy. A positive for markets.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's GDP surpassed pre-pandemic levels in 21Q4. Good news but what matters to understand the struggle to meet the fiscal rule & achieve political stability is the dismal growth track record since the 2015-16 recession. Huge loss of real income relative to pre-recession trend.

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Sergi Lanau

@SergiLanauOE

4 years

Venezuela asked the IMF for $5bn to fight coronavirus under the RFI, which is free of traditional conditionality. The RFI still requires "cooperation" with the IMF and describing planned policies. Not sure Venezuela can meet these requirements. (1/2)

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Sergi Lanau

@SergiLanauOE

3 years

Turkey's current account was already in surplus before the ongoing currency crisis. This surplus will grow more with the import compression we are about to see, eventually supporting some lira appreciation even if monetary policy remains too loose indefinitely.

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Sergi Lanau

@SergiLanauOE

2 years

Oil output fell off the cliff in Iran and Venezuela upon imposition of heavy sanctions. The story is very different in Russia, where oil sanctions are light until the EU import ban comes into force. Minimal decline in output.

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Sergi Lanau

@SergiLanauOE

2 years

Brazil's trade surplus in the first four months of the year was very large by historical standards. Even if commodity prices fall due to sliding global growth, Brazil's current account deficit in 2022 will be perfectly manageable.

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Sergi Lanau

@SergiLanauOE

2 years

If Brazil wants to eventually stabilize debt it needs to roll back tax cuts and find 1.7% of GDP in spending cuts (so offsetting Lula's package). Not unprecedented by the standards of large fiscal adjustments elsewhere. Tough in Brazil politically and socially.

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Sergi Lanau

@SergiLanauOE

1 year

The IMF approved Sri Lanka's program and will disburse some 330mn immediately. Roughly a 15% increase in FX reserves that will allow for higher imports of basic goods and the beginning of the recovery. Bonds still look cheap given debt restructuring targets.

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Sergi Lanau

@SergiLanauOE

5 years

Our China activity tracker diverges substantially from official GDP, which is oddly smooth. Activity slowed a lot in 18Q2-Q3 due to deleveraging efforts, not trade tensions. Since then it's been roughly stable, as policy support (eg, infrastructure) offset trade headwinds.

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Sergi Lanau

@SergiLanauOE

2 years

Venezuela's oil output is back to pre-covid levels, which means positive economic growth. In the bigger picture, the oil industry's collapse remains catastrophic, making it impossible to restore any kind of acceptable living standards for the broad population.

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Sergi Lanau

@SergiLanauOE

5 years

The collapse of Venezuela's oil industry is nearly unprecedented. The only worse case in history is Iran starting in 1976. The other 20 or so episodes of large output declines look like nothing compared to Venezuela.

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Sergi Lanau

@SergiLanauOE

2 years

Our China activity tracker dropped to zero percent y/y in April, a sign that recession is coming. We expect a GDP contraction of -3% q/q saar in Q2, adding to our worries that global recession risk is tangible. w/ @genemaIIF

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Sergi Lanau

@SergiLanauOE

2 years

El Salvador just paid an external bond out of reserves. Less than $2bn left in FX reserves (1.5 months of reserves). Even if regional IFIs continue to disburse, paying the Jan 2025 bond looks nearly impossible unless policies improve after the election next March.

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Sergi Lanau

@SergiLanauOE

3 years

Good one by @gideon_long on Venezuela: .With income/capita down to 1945 levels, even 10 years of 10% GDP growth won't get Venezuela past 1976 income levels. It'll take wholesale policy and political change to restore living standards.

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Sergi Lanau

@SergiLanauOE

3 years

Argentina avoided reserve losses for most of this year but from now on repayments to the IMF will empty the piggy bank quickly, as September data show. We don't think Argentina can make it past 22Q1 without a new IMF program. w/ @mcastellano44

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Sergi Lanau

@SergiLanauOE

2 years

Even with Lula's fiscal package, Brazil's primary spending wouldn't be higher than before covid. Others in EM have increased spending more. Problem is revenue will fall and the interest bill is astronomical so the fiscal deficit wouldn't look good at all.

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Sergi Lanau

@SergiLanauOE

2 years

Argentina's external bond coupons are a tiny fraction of gross external financing needs between now and the election next October. Another sovereign default can be avoided in the near-term if there is political will to do so. w/ @mcastellano44

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Sergi Lanau

@SergiLanauOE

3 years

Argentina's real official exchange rate appreciated in 2021 because the crawl is too slow given high inflation. We don't expect a step devaluation under a new IMF program. Just faster crawling and maybe not for too long.

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Sergi Lanau

@SergiLanauOE

2 years

Unlike EM, frontier markets are running large current account deficits and have no market access. And unlike EM, they peg their exchange rates often. A problem when external adjustment is needed as real depreciation hardly ever happens in the pegs FMs run.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's growth is weakening and a lot of it has to do with fiscal headwinds. The fiscal impulse was -10% of GDP mid last year, which can easily shave 5pp off growth over 12 months. On the upside it'll help lower inflation. The fiscal drag will ease in 22H2.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's exports going through the roof. There may be some one-offs in April data but commodity prices and global growth are definitely supportive of strong exports. A comfy external position that could translate into BRL strength if politics & fiscal policy don't flare up.

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Sergi Lanau

@SergiLanauOE

3 years

Brazil's rate hikes have big fiscal implications. The annual cost of floating rate debt has already increased 1.5% of GDP since March. Could be as much as 2.7% of GDP if the policy rate goes up to 12%. It might not be long before we start talking about fiscal dominance.

3

23

88

Sergi Lanau

@SergiLanauOE

5 years

Venezuela's oil production dipped in the 1970-80s and again in the early 2000s but the drop since 2015 is completely unprecedented in the country's history. This collapse translates into shortages of essential goods as there's no other source of dollars to finance imports.

3

81

85

Sergi Lanau

@SergiLanauOE

2 years

Pakistan very few reserves left. Can it last if the IMF doesn't disburse until late Mar? Stabilizing reserves requires 25% import compression and at least 70% rollover on the $5bn due. The former will likely happen via FX restrictions & economic crisis. The latter less clear 1/2

9

44

86

Sergi Lanau

@SergiLanauOE

3 years

Brazil's fiscal rule freezes real spending at 2016 levels, using Jun inflation to update the nominal spending cap. A proposal to shift to Dec inflation buys breathing room in 2022 as prices are rising fast now. But in 2023 it goes into reverse. Can't get lasting gains this way.

6

23

90

Sergi Lanau

@SergiLanauOE

3 years

Pemex's output drop since the 2000s rivals the biggest collapses in history. The 2019 business plan was ambitious: 20% increase in two years. Actual production has been flat and energy sector policies will not help turn things around. Making Mexico grow will be really hard.

5

40

89

Sergi Lanau

@SergiLanauOE

2 years

When the US sanctioned Venezuela, India increased oil imports from Venezuela (some went to refineries partly owned by Rosneft). They eventually fell to zero but initially India was of the few markets left for Venezuela. Looks like a similar story is playing out with Russian oil.

3

35

87

Sergi Lanau

@SergiLanauOE

2 years

Outflows from Colombian local bonds built up in the week of Oct 21 but moderately. Outflows mtd are a modest $53mn. A sign of investor confidence despite political & policy uncertainty. That said, macroeconomic fragility remains high due to twin current account & fiscal deficits.

1

26

89

Sergi Lanau

@SergiLanauOE

3 years

Positive surprise in Brazil's 21Q1 GDP components. Real investment is picking up strongly after years and years at very depressed levels. However, headline growth of 2.3% y/y includes a contribution of inventories of +2pp. But def great news on investment.

5

23

85