economic & country risk review for the ictf’s global credit professionals symposium chicago,...
TRANSCRIPT
![Page 1: Economic & Country Risk Review For the ICTF’s Global Credit Professionals Symposium Chicago, April 16, 2013 By H. Belcsak, President, S.J. Rundt & Associates,](https://reader031.vdocuments.net/reader031/viewer/2022020320/56649f3c5503460f94c5ac6f/html5/thumbnails/1.jpg)
Economic & Country Risk ReviewEconomic & Country Risk ReviewFor the ICTF’s Global Credit Professionals Symposium
Chicago, April 16, 2013By H. Belcsak, President, S.J. Rundt & Associates, Inc.
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LOGO
Nuclear Proliferation
Islamic Terrorism
BRICS Unity?
The Money Machine
Megatrends
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Nuclear ProliferationNuclear Proliferation
• The threat from North Korea• Dangers in Pakistan• Iran in the background• Sunni-Shiite confrontation
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Islamic TerrorismIslamic Terrorism
• Al Qaeda metastasized• A world-wide net• Aqab, Aqim, Al-Shabaab, Boko
Haram• From local terrorism to attacks
abroad• Can these movements be
defatted?
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BRICS Unity?BRICS Unity?• The Durban meeting• Brazil-China accord ($30 billion)• $100 billion currency fund (BoP or
currency crisis) 41-18-5• Development bank• 43% of world population, $4.4 trillion in
reserves, $282 billion trade, $263 billion FDI
• But…How will the currency fund operate? How will bank be funded? Pay-in for bank? China’s role? More differences than similarities
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The Money MachineThe Money Machine
• Japan’s unprecedented experiment
• Fed, BofE, ECB• Asset inflation• Currency wars• Protectionism• No exit plans• Potentially grave
consequences down the road
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LOGO
Latin America
Our Backyard
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GeneralGeneral
• Two policy trends persist• Brazil-style approach is
winning, moderate inflation• Change of leadership in
Venezuela will not make much difference
• Lessened upward pressure on currencies
• Difficulty with economic unions such as Mercosur
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ArgentinaArgentina
• Deal for bond holdouts?• Pressure on peso• Devaluation inevitable• Kirchner can still win, but
challenges from within Partido Justicialista
• Price and pay freezes• Fed-up farmers
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ChileChile
• Slight slowdown (4.8% for 2013)
• Poor outlook for copper• Diversified economy• Inflation just 1.5%• Interest rates relatively high• Elections in November (will
Bachelet run?)
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ColombiaColombia
• Negotiations with FARC halted• Unacceptable demands• Rash of new attacks• Impact on oil – coal due to
strikes, but no threat to international liquidity ($37 billion in reserves)
• GDP +4%, inflation 1.83%• Interest rates low, peso softer
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MexicoMexico
• Resilient economy (3.5% this year) inflation 3.7%
• Peso +8.4% in 2012, now slowed ascent
• PRI leadership brings no major shift in direction
• Re-shoring• “Pact for Mexico”
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PeruPeru
• Remarkable performance past ten years
• GDP nearly doubled• Strong capital inflows• Reserves $64 billion• No need to worry about the
external accounts• President Humala and mining
investment
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VenezuelaVenezuela
• Maduro victory was narrow• Challenges from Capriles and
from within• Increased Cuban dominance• No improvement in relations
with US• New Sicad FX market• Won’t remedy dollar shortages,
food shortages
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LOGO
The euro is still in trouble
Europe
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GeneralGeneral
• The importance of the Cyprus bailout
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FranceFrance
• 75% tax rate shot down• No big blow for budget, but
personal setback• Unemployment 10.6%, going
up• 27% job approval ten months
into Hollande’s tenure• Public spending = 57% of
national wealth, tax burden = 46% of GDP
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GermanyGermany
• Mixed economic news• Exports remain vital• Now drives things in Europe• A mean power?• September elections• The outcome will be interesting
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LOGO
Middle EastArab Summer
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EgyptEgypt
• Keystone• Sliding toward crisis• Morsi the autocrat• Opposition plans to boycott
elections• Shortage of food, bread
rationing• Burnt through reserves, despite
help from many sides
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IraqIraq
• No external account problems• GDP gain 12%-13% in 2012• But all oil-based• Maliki regime keeps losing
credibility• A number of simultaneous
crises• Secessionist trends
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LOGO
Asia
A Source of Growth
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ChinaChina
• Weak 2013 start• But still 7.0%-7.5% for the year• Imports help global economy• Concern about inflation now
greater than that for slowed economic growth
• Yuan’s role as international payment medium growing fast
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JapanJapan
• Bold monetary experiment• Needs structural changes, too• GDP just 0.2% fourth quarter• CPI -0.3%• Yen down 29% since
September, warnings from other countries
• J-curve effect
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LOGO
On the Verge of a Boom
Africa
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AfricaAfrica• The Colonial curse• Difficult to do business• Oil
• Old• Angola, Nigeria,
Congo Brazzaville• New
• Ghana, Uganda, South Sudan
• Mining• Mozambique, DR of the
Congo, Tanzania, Zambia
• Agriculture• Ethiopia, Kenya,
Malawi,
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Open DiscussionOpen Discussion