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  • Publication Date: 06-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The China Securities Regulatory Commission issued rules on June 3 outlining the participation of foreign firms in fund management and securities business. Issued earlier than expected, the rules re-state concessions made in the trade and investment agreement China signed with the United States in November 1999. Modernisation and liberalisation of the sector is a prerequisite to channelling more of China's 1 trillion dollars of private savings to equity investment.
  • Topic: Economics, International Trade and Finance, Political Economy
  • Political Geography: United States, China
  • Publication Date: 06-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Fiat announced a sharp fall in May car sales in Italy on June 5 and its debt is under review for a possible ratings downgrade. The world's sixth-largest car maker is one of many manufacturers facing difficult profitability conditions. Global sales volumes in the industry have remained high, but profits have not followed suit. Mergers, the most rational panacea, are confounded by bitter experience.
  • Topic: Economics, Industrial Policy, International Trade and Finance
  • Political Geography: United States, Europe
  • Publication Date: 05-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece is on the international implications of a weaker US dollar. Seventeen weeks of dollar weakness raise the questions of whether the dollar is on a sustained path of decline, and what the implications are internationally. The 6% nominal effective decline in the dollar since January 31 might be sustained due to US financial and macroeconomic factors. Overall, the effect would be positive for Europe and the United States, and might encourage domestic demand growth in export-oriented Asian economies.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United States, Europe
  • Publication Date: 05-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Former IMF First Deputy Managing Director Stanley Fischer expressed support for regional currency arrangements in a speech at the Hong Kong Monetary Authority on May 21. East Asian nations continue to discuss swap arrangements and other forms of cooperation in the hope of defending local currencies. Fischer endorsed the swap plans while throwing critical light on currency 'management' schemes. Such schemes could result in perverse consequences for regional economies.
  • Topic: Economics, International Organization, International Trade and Finance
  • Political Geography: Asia, Hong Kong
  • Publication Date: 04-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: First-quarter GDP grew by 5.8%, the US government announced on Friday, 26 April 2002. The high growth figure will provide sustenance for optimists and help support high stock market valuations. However, the contrast with high-profile corporate earnings disappointments, together with a closer look at sources of demand, suggests a far weaker performance in the rest of 2002 and in 2003.
  • Topic: Economics, Government, Political Economy
  • Political Geography: United States
  • Publication Date: 04-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: A textbook approach to economic growth suggests the world is in for a difficult period. However, there are reasons to believe that the global economy will defy convention. The global economy will continue to support US external imbalances for the medium term, barring marked deterioration in certain areas of US weakness. However, European integration and Asian development could provide alternative sources of global demand, relieving the current imbalance of global dependence on the US economy.
  • Topic: Economics, International Political Economy, International Trade and Finance
  • Political Geography: United States, Europe
  • Publication Date: 04-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece is on policy options for pension funding from an intergenerational risk-sharing perspective. Demographic and business-cycle trends point to a shortfall in pension provision for retiring generations over the medium term.
  • Topic: Demographics, Economics, Government, International Trade and Finance
  • Publication Date: 03-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece examines the outlook for euro-area economic performance. Despite some indications of improvements in the global and euro-area economies, it is too early to assume that these signify a lasting recovery.
  • Topic: Economics, International Political Economy, International Trade and Finance
  • Political Geography: Europe
  • Publication Date: 03-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The United States on March 5 announced tariffs on the vast majority of US steel imports. Despite rumours that he would impose moderate duties, US President Bush levied 30% tariffs on the types of steel accounting for about three-quarters of steel imports. Given that these duties follow hundreds of anti-dumping duties imposed on steel products over the past three years, the decision means that virtually no foreign steel will be sold in the United States. It will also have a host of unforeseen international consequences.
  • Topic: Foreign Policy, Economics, International Political Economy, International Trade and Finance
  • Political Geography: United States
  • Publication Date: 02-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The largest US-based pension fund last week listed 13 emerging markets that its fund managers will be allowed to invest in. Investment firms appointed by the California Public Employees' Retirement System (CalPERS) will actively manage up to one billion dollars in equity investments in 13 countries and unwind CalPERS' equity positions in markets outside them. As a large institutional investor, CalPERS' decisions have an important signalling role for a variety of institutional funds.
  • Topic: Economics, Government, International Trade and Finance, Political Economy
  • Political Geography: United States
  • Publication Date: 02-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: US trade officials said last week that EU estimates of damages arising from US export subsidies were exaggerated. EU trade officials have asked the WTO to approve 4 billion dollars worth of trade sanctions against the United States, after the latter lost an appeal before the WTO on the tax treatment of foreign-source income — judged to be illegal export subsidies. Washington must amend its tax laws or face the prospect of retaliatory trade restrictions.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United States, Europe, Washington
  • Publication Date: 02-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The government announced yesterday that productivity increased at a 3.5% annual rate in the fourth quarter of 2001. The figure, previously available in its component form, has been interpreted as evidence of underlying improvement in productivity in the post-1995 period. Sustainability of productivity growth determines the reliability of fiscal forecasts, growth, inflation and unemployment.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United States
  • Publication Date: 01-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece examines the ECB's monetary and communication policy. The Governing Council of the ECB has appeared fairly unmoved either by widespread criticism of its communication policy or by growing pressure for lower interest rates. The ECB has no choice but to remain committed to its price stability mandate, despite the change in economic climate. However, in doing so, it remains vulnerable to the dilemmas posed by the combination of strong independence and a narrow mandate.
  • Topic: Economics, Politics
  • Political Geography: Europe
  • Publication Date: 01-2002
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece examines the impact of strong growth and low volatility in socially responsible investment. Current trends suggest that fund managers and stock index compilers will introduce more socially responsible investment products in 2002. Of all the developments within the SRI (socially responsible investment) industry the high persistency rates of social investors stand out. If the growth of this asset class continues and if financial returns continue to be deprioritised among investors, gradual changes in the style and approach of corporate boards of directors, operations and accounting and disclosure will occur.
  • Topic: Economics, International Trade and Finance
  • Publication Date: 12-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week's piece examines the impact of Argentina's economic difficulties on Chilean firms. As well as its macroeconomic impact in Chile, reflected principally in currency volatility and a reduction of capital inflows, the Argentine crisis is affecting Chilean firms with investments in or exports to Argentina. It will also have an impact on Chile's tourist industry. Following the exit of many Chilean firms from Argentina over the last two years, those that remain are either in export sectors or have a long-term strategy under which they appear willing to ride out the present crisis. However, many will sustain short-term losses and some smaller investors, particularly in consumer sectors, may be forced out of the market.
  • Topic: Economics, International Trade and Finance, Politics
  • Political Geography: Argentina, South America, Chile
  • Publication Date: 10-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Pacific Rim leaders on October 21 signed an accord to re-invigorate progress towards free trade and investment in the region. The Shanghai Accord marks the Asia-Pacific Economic Cooperation (APEC) forum's effort to stimulate a flagging liberalisation agenda and to show leadership in promoting regional recovery. However, the accord may exacerbate the risk of further fracturing the diverse grouping. It will be difficult for APEC to move forward on trade liberalisation given that the organisation's own formulation of consensual, unbound liberalisation has proved unsuccessful in periods of economic crisis. The pathfinder initiative may re-energise the process but at the risk of APEC's fragmentation and without addressing the problems of some members' hesitation and lack of political will for domestic structural reform.
  • Topic: Economics, International Trade and Finance, Politics
  • Political Geography: Shanghai, Asia
  • Publication Date: 09-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The president this week signed into law a 40 billion dollar emergency appropriations package in response to the September 11 terrorist attacks. The package forms part of considerable planned spending increases, which in combination with expected tax cuts, will result in the country's fiscal position deteriorating significantly. This will have important implications for Federal Reserve policy, the bond market, and long-term global interest rates.
  • Topic: Foreign Policy, Economics, Terrorism
  • Political Geography: United States
  • Publication Date: 07-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The outlook for trade ties between the EU and Mercosur. EU-Mercosur trade negotiations earlier this month gave a vigorous push to commercial negotiations between the two regions. The EU presented a detailed proposal for liberalising EU-Mercosur trade during the next ten years. Trade talks between the EU and Mercosur have now reached a more advanced stage than the talks on the Free Trade Area of the Americas (FTAA).
  • Topic: Economics, Politics
  • Political Geography: Europe
  • Publication Date: 07-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: India and Iran have proposed the construction of a natural gas pipeline connection. While the project would be a major engineering achievement, the principal challenge will be gaining Islamabad's consent for it to traverse Pakistani territory. Pakistan's parlous relations with Tehran and Delhi, the latter little improved by last weekend's summit, will make this difficult.
  • Topic: Economics, Energy Policy, Politics
  • Political Geography: Pakistan, South Asia, India, Asia
  • Publication Date: 07-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Despite the continuing fragility of the economy, prompt policy action and the resilience of the US consumer are likely to prevent a full-blown recession, thereby shaping the probable path of the US economic downturn. Therefore, the risk of negative balance sheets and potential inflationary problems could arise from too rapid a recovery.
  • Topic: Economics, Politics
  • Political Geography: United States
  • Author: Caspar Fithin
  • Publication Date: 06-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Opposition Peronist party governors and trade unions this week broke off institutional dialogue with the federal government over recent economic measures and pending debts. The fourteen governors in question, their minds on mid-term legislative elections, believe that the political cost of supporting the government will be greater than the cost of being seen to scupper its initiatives, and that opposition constitutes a more effective means of pressing their demands. Their decision puts the prospects for Argentina's economic recovery at risk. The Peronist governors' decision to distance themselves from the government both reflects and compounds the weakness of the federal administration. While their new approach to force concessions from the government could ease social problems in the short term, there is a danger that it will do so at the expense of economic recovery and political stability in the longer term.
  • Topic: Economics, Government, Political Economy, Politics
  • Political Geography: South America
  • Author: Caspar Fithin
  • Publication Date: 05-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Weather derivatives trading is undergoing exponential growth. The current size of the weather derivatives market is 8 billion dollars, and it is expected to grow to at least 300 billion dollars within a few years. The opportunity to reduce exposure to natural risks will be exploited by large corporate groups and, eventually, smaller players too. It is important for the future development of the weather market that players have confidence in their own ability to determine fair prices, and that of the market to deliver these. Such confidence will encourage liquidity in the market from the end-users. However, traditional derivatives exchanges may find it difficult to obtain volume (and hence liquidity) in weather markets.
  • Topic: Economics, Science and Technology
  • Author: Caspar Fithin
  • Publication Date: 04-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The ruling Liberal Democratic Party (LDP) will elect a new president on April 24. Given that the LDP is the largest party in parliament, its president will also become the country's prime minister. While the media and the public are demanding genuine leadership from the government, the LDP's structure militates strongly against forthright policy-making.
  • Topic: Economics, Government, Political Economy, Politics
  • Political Geography: Japan, East Asia
  • Author: Caspar Fithin
  • Publication Date: 03-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: On March 15, Defence Minister George Fernandes resigned. Fernandes' resignation follows last week's revelations about cash-for-influence exchanges with journalists posing as arms dealers. Although the Union coalition government is likely to survive the affair, its prestige has been severely damaged. The most serious potential of the Tehelka scandal is the government's loss of the moral authority to forge ahead with its economic reform programme. Opponents of liberalisation, both on the right and the left, are attempting to draw political capital from the affair.
  • Topic: Economics, Government, Politics
  • Political Geography: South Asia, India
  • Author: Caspar Fithin
  • Publication Date: 03-2001
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The Bank of Japan (BoJ) announced a new approach to monetary policy which effectively targets money supply growth and inflation on March 19. The BoJ has indicated that the immediate consequence of its measures to boost financial system liquidity will be to push short-term interest rates back to zero or virtually zero. It has pledged to maintain rates at this level until deflationary pressures are reversed and the consumer price index becomes positive. The BoJ's actions have the potential to lead to a revival in share prices, corporate activity and bank lending. If the initiative results in a sustained weakening of the yen, the economy may also benefit from stronger export growth. However, the effect of all of these measures will be blunted unless they are accompanied by the structural reforms which the government has for some time foreshadowed, but which have suffered from delay and indecision.
  • Topic: Economics, Government, International Trade and Finance
  • Political Geography: Japan, East Asia
  • Author: Caspar Fithin
  • Publication Date: 11-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Government spending is increasing in the run-up to general elections next month and attempts to liberalise the cocoa trade appear half-hearted. The effectiveness of liberal economic reforms will be constrained as long as Ghana remains vulnerable to fluctuations in the prices of a narrow range of exports. Moreover, anti-corruption measures will lose their bite if they are seen to be directed in part against the government's opponents.
  • Topic: Economics, Government, Politics, Reform
  • Political Geography: Africa, Ghana
  • Author: Caspar Fithin
  • Publication Date: 11-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: A leaked Shanghai Stock Exchange report has detailed the extent of trading irregularities within China's domestic equity markets. In the primary market, a series of companies have falsified records on profits, assets and even entire businesses in order to publicly issue and list shares. In the secondary markets, insider trading, the spreading of false information, coordinated stock purchases, price ramping and sales of stocks by large institutional investors are common practice. The extent of trading irregularities reflects the government's preference for market growth over regulatory standardisation. This approach is undermining the CSRC's credibility. Unless regulatory practices are tightened, institutional investors will not have the maturing effect on markets and stabilising impact on prices the government seeks.
  • Topic: Economics, Government, Markets
  • Political Geography: China
  • Author: Caspar Fithin
  • Publication Date: 10-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Finance Minister Paul Martin announced new tax reductions in his annual economic statement this week. The mini-budget is part of the Liberal government's preparations for a general election that is expected to be called later this week. In order to secure another majority in the House of Commons, the federal Liberals will need to maintain their popularity in Ontario and increase their support in Atlantic Canada. If the Liberals fail to regain their majority, they will probably rely on the support of New Democratic legislators. If this happens, the new government would place less emphasis on tax cuts and debt reduction, and more stress on spending, than would otherwise have been the case.
  • Topic: Economics, Government, Politics
  • Political Geography: Canada
  • Author: Caspar Fithin
  • Publication Date: 10-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: This week, the Majlis approved a government bill authorising immediate use of the 2000-01 budget surplus. The windfall surplus, largely the result of increased oil revenues, should amount to 6-10 billion dollars by the end of the fiscal year in March. It will certainly transform Iran's external finances, but its impact on the domestic economy will be less immediate, and it will do little to ease investor concerns. Khatami's efforts to attract greater foreign investment depend on reform of the judiciary and other key changes to the regulatory climate. In the meantime, continuing political turmoil will deter all but those investors prepared to take a long-term view of Iran's economic potential.
  • Topic: Economics, Government, International Trade and Finance, Politics
  • Political Geography: Iran, Middle East
  • Author: Caspar Fithin
  • Publication Date: 10-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The recommendation reflects a conflict between the bank and the finance ministry over whether or not the economy is overheating. Increasingly, the conflict is being fought in public circles after months of low-key clashes. The uncharacteristic rift between the monetary and fiscal authorities is likely to widen over the final two months of the Zedillo administration, as signs of overheating continue to accumulate. While pressure for a substantial fiscal adjustment is likely to be irresistible when Fox takes over on December 1, concerns are growing regarding his capacity to execute such a policy.
  • Topic: Economics, Government, Political Economy, Politics
  • Political Geography: North America, Mexico
  • Author: Caspar Fithin
  • Publication Date: 09-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Corruption deters foreign lending and investment. Except in the oil and gas sector, Nigeria's economic advantages are not sufficiently countervailing. The national reputation for corruption encourages further abuse since no one's reputation suffers through acting dishonesty. Despite reforming efforts, grand corruption is likely to persist because of the continuing large flows through official hands of unearned income from natural resources.
  • Topic: Economics, Government, International Trade and Finance
  • Political Geography: Africa, Nigeria
  • Author: Caspar Fithin
  • Publication Date: 09-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Although the transition from Nelson Mandela's to Thabo Mbeki's presidency has been marked by continued political stability and conservative economic management, Mbeki's political judgement is increasingly being questioned in several key policy areas. Unless Mbeki succeeds in allaying concerns about his leadership, the stability of South Africa's present political arrangements will be undermined.
  • Topic: Economics, Government, Politics
  • Political Geography: Africa, South Africa
  • Author: Caspar Fithin
  • Publication Date: 09-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Not all capital outflows from developing countries should be characterised as capital flight; some are simply the analogues of outward FDI and portfolio diversification in the more advanced economies. Nonetheless, a substantial proportion is classic flight capital, linked to tax evasion or criminal activity, and transferred abroad via misinvoicing and complex financial transactions. Capital flight leads to a significant loss of investment in the most affluent developing countries, and a crippling one in the poorest. However, staunching the flow is likely to prove extremely difficult. It will require greater economic stability and institutional certainty in the source countries, and more rigorous tax enforcement and cooperation in the destination states.
  • Topic: Economics, Emerging Markets, Government, International Trade and Finance, Third World
  • Publication Date: 07-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Official attention has shifted from the need to avert recession towards the problems of managing growth. There is some evidence that higher interest rates have begun to slow the expansion to a more sustainable pace in the Anglo-Saxon economies, but it remains unclear whether the principal central banks have done enough to bring demand growth back into line with sustainable increases in supply. The markets expect any further tightening to be limited, but the current position of the monetary authorities should probably be characterised as a pause in the tightening cycle, rather than the peak.
  • Topic: Economics, Markets
  • Publication Date: 05-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The US economy is experiencing its longest-ever recorded period of sustained growth. The current expansion, which began in March 1991, is the longest of the 32 which have been registered by the Bureau of Economic Analysis since 1854 and is now in its tenth year and 110th month. Moreover, since 1995, real GDP has grown at an average annual rate of more than 4.25% -- a rate not experienced since the 1960s. The expansion is consistent with the changing pattern of business cycles, insofar as the average length of economic expansions has nearly doubled from about 2.5 years during 1900-53 to about 5 years in the second half of the century (while the average length of contractions has fallen to less than twelve months). However, even allowing for this transformation, the current expansion seems to be exceptional, both for its duration and its strength. The coincidence of a long and inflation-free expansion with the boom in information and communication technologies (ICT) has sparked a debate about their interdependence.
  • Topic: Economics
  • Political Geography: United States
  • Author: Oxford Analytica
  • Publication Date: 05-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Inflation has begun to accelerate throughout the OECD-area, mainly as a result of higher oil prices. The increase comes from a low base and official forecasts suggest that the price outlook is generally benign. However, a further tightening of monetary policy in order to contain inflation at these low levels is now probably the most important threat to asset market valuations and the continued expansion of the global economy. Product market liberalisation, globalisation and the advent of the internet have brought real and lasting changes in pricing behaviour that will not disappear with a global upturn. These trends have been reinforced by improvements in the operation, credibility and effectiveness of national monetary policies. Nevertheless, historical experience suggests that inflationary pressures could accelerate rapidly as the major economies enter their first period of coincident growth since 1988-90. The result is likely to be tighter monetary policy rather than permanently higher inflation and long-term interest rates.
  • Topic: Economics, Globalization, International Trade and Finance, Science and Technology
  • Political Geography: United States, Canada
  • Author: Oxford Analytica
  • Publication Date: 06-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The current bubble in 'technology stocks' has led to official concern about over-enthusiasm by investors and the banking consequences of a sudden price collapse. The first signs of the long awaited shift emerged last week, as investors shifted from fashionable technology, media and telecoms (TMT) stock back into traditional 'old economy' blue chips. Capital flooding in from Europe and Japan to the United States has been attracted to booming markets led mostly by these stocks. The rest of the market (misleadingly known as the 'old economy') has risen comparatively little.
  • Topic: Economics, International Trade and Finance, Science and Technology
  • Political Geography: United States, Japan, Europe
  • Author: Oxford Analytica
  • Publication Date: 03-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: While the region has now emerged from recession, economic reforms remain incomplete and politically contentious. There is a risk that complacency and intransigence will weaken the momentum behind reforms before their full benefits can be felt. For countries not immediately enveloped by it, the East Asian crisis laid bare the risks associated with postponing economic reform without necessarily producing change.
  • Topic: Economics, Political Economy, Politics
  • Political Geography: East Asia
  • Author: Oxford Analytica
  • Publication Date: 02-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: China's relatively rapid growth cannot mask the fundamental problems the economy faces. The government will be forced to continue to apply stimulus to the economy, but the sustainability of this approach is limited. The positive impact of eventual WTO membership will take time to be felt, while accession–related reforms and increased foreign competition will prove disruptive. The country has a limited time in which to prepare.
  • Topic: Economics, Government, International Trade and Finance
  • Political Geography: China
  • Author: Oxford Analytica
  • Publication Date: 01-2000
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Gone are the days when the large investment banks defined their global reach in terms of the emerging markets of Eastern Europe. Indeed, the emerging markets label is fading away in favour of new 'global' buzzwords. However, just one year on from the emerging market crisis that threatened the bull of the world financial market, is this rethinking of the emerging markets premature?
  • Topic: Economics, Emerging Markets
  • Political Geography: Eastern Europe
  • Author: Oxford Analytica
  • Publication Date: 12-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The quarter-point increase in the fed funds rate announced at the November 16 Federal Open Market Committee (FOMC) meeting was accompanied by the adoption of a neutral directive for the inter-meeting period, in place of the bias towards tightening in force since early October. The directive indicates that the Fed intends the rise to be the last of this year. However, the OECD, in its recent Economic Outlook, predicted that another one percentage point increase in the fed funds rate will be needed to restore demand and supply to equilibrium. While the economy will probably not slow sufficiently of its own accord, the incentives to defer action into 2000 mean that rates are likely to remain as they are during 1999, though probably associated with an announced bias towards tightening.
  • Topic: Economics
  • Political Geography: United States, Europe
  • Author: Oxford Analytica
  • Publication Date: 10-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: Pessimism surrounding the Japanese economy has lessened as, against most expectations, recovery continues to take hold. Analysts who predicted further contraction in Japan's GDP during fiscal 1999 have altered to a more optimistic outlook. The reason for this turnaround is a general change in perception of the recession. Rather than the downturn being part of a decade-long stagnation persisting since the collapse of the bubble economy in 1991, the recession was in fact of more recent origin and, therefore, of a less intractable nature than commonly supposed.
  • Topic: Economics
  • Political Geography: Japan, East Asia
  • Publication Date: 11-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The outright victory of the Alliance candidate, Fernando de la Rua, on the first round of voting in the presidential elections on October 24, reflects the desire for a change of political style. De la Rua's approach to government will be less personalist and more consensual than that of the outgoing president, Carlos Menem. While economic policy is unlikely to change in any fundamental way, the new government will be under pressure to root out corruption. It will be the first time since the return to civilian rule in 1983 that a government lacks a majority in either chamber of Congress, which may strengthen democratic institutions.
  • Topic: Corruption, Economics, Government
  • Political Geography: Argentina
  • Author: Oxford Analytica
  • Publication Date: 09-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: The attractions of the single european currency are likely to draw the Scandinavian countries into the euro-area by around 2003. However, the outlook for United Kingdom accession is complicated by differences in its economic profile compared with the rest of the euro-area, combined with its enduringly euro-sceptical public opinion. These factors are likely to postpone its accession until later in the decade.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United Kingdom, Europe
  • Author: Oxford Analytica
  • Publication Date: 08-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: On July 28, the IMF's Board of Directors announced their approval of a 4.5 billion dollar loan to Russia. Rather than representing a breakthrough deal, the agreement is merely the latest chapter in the cycle of non–compliance and renegotiation that has characterised the Fund's relationship with Moscow. With presidential and parliamentary polls scheduled during the next twelve months, electoral pressures will almost certainly prevent the latest macroeconomic programme being implemented. Moreover, unless the root cause of Russia's economic problems—its dire GDP growth rate—is rectified, a further round of comprehensive renegotiations will be required.
  • Topic: Debt, Economics, Government, International Trade and Finance, Political Economy, Politics
  • Political Geography: Russia, Moscow
  • Author: Oxford Analytica
  • Publication Date: 07-1999
  • Content Type: Policy Brief
  • Institution: Oxford Analytica
  • Abstract: In recent weeks, economic data has produced conflicting signals about the strength of domestic demand within the US economy. A majority within the Federal Open Market Committee (FOMC) believes that growth will decelerate and that only a small tightening of monetary policy will be necessary in the short term. However, the Federal Reserve has consistently underestimated domestic demand, and there are signs that the economy is still buoyant. Moreover, with improving economic prospects in Europe and Asia, the external forces encouraging lower US interest rates are likely to be reversed. The combination of these factors could put pressure on the Fed to tighten further.
  • Topic: Economics
  • Political Geography: United States, Europe, Asia