Strategy Note / Global

Frontier-Emerging Equity Monthly, November: LatAm focus – protest dominoes

As well as our review of the month to date in frontier and emerging markets, we focus on Latin America, where protests have proliferated this year (eg Argentina, Bolivia, Chile, Colombia, Ecuador, Haiti, Peru, Venezuela). 

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Macro Analysis / Global

Latin America after COVID-19: A conversation with OAS Secretary General Luis Almagro

15 June 2020

Latin America finds itself at the epicenter of the COVID-19 pandemic that has claimed more than 430,000 lives around the world and 75,000 in the region, where the virus is now spreading most rapidly. While most countries have taken measures to protect their citizens and contain the spread of the virus, they also face the looming threat of large-scale economic depression, mass unemployment, food insecurity, and political turmoil. The World Bank recently estimated that the region’s GDP will contract by 7.2 percent in 2020, putting between 70 million and 100 million people at risk of sliding into extreme poverty. The health and economic crises are compounded by Latin America’s deep structural fault lines: extreme inequality, weak safety nets, high levels of urbanization and labor informality, fragile fiscal positions, and relatively weak democracies. The pandemic is likely to aggravate existing inequalities and vulnerabilities further.

On June 22, the Global Economy and Development program at Brookings will host a virtual conversation with the Secretary-General of the Organization of American States (OAS), H.E. Luis Almagro, to discuss the challenges and opportunities facing Latin America as well as Mr. Almagro’s vision and priorities for his second term as OAS Secretary General.

Viewers can submit questions by emailing or on Twitter using #LatinAmericaCOVID.

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Macro Analysis / Global

Outlook for Latin America and the Caribbean: An Intensifying Pandemic

International Monetary Fund
26 June 2020

By Alejandro Werner


Latin America and the Caribbean have become the new COVID-19 global epicenter. The human cost has been tragic, with over 100,000 lives lost. The economic toll has also been steep. The World Economic Outlook Update now estimates the region to shrink by 9.4 percent in 2020, four percentage points worse than the April projection and the worst recession on record. A mild recovery to +3.7 percent is projected in 2021.

Latin American countries should be cautious in reopening their economies and allow science and data to guide the process.

The pandemic

The rates of COVID-19 infections and deaths per capita are approaching those in Europe and the United States, with the total number of cases accounting for about 25 percent of the worldwide total.


Against this backdrop, countries should be very cautious when considering reopening their economies and allow science and data to guide the process. Indeed, many countries in the region have high levels of informality and low preparedness to handle new outbreaks, like a high occupancy of intensive care unit beds and low testing and tracing capacity.

Recent economic developments

Weaker economic data and more protracted COVID-19 outbreaks explain the significant downward revisions compared to our April forecasts. First quarter growth was worse than expected for most countries, while high frequency indicators – like industrial production, electricity consumption, retail sales, and employment – suggest that the decline in the second quarter will be deeper than projected in April. The pandemic’s still rapid spread indicates that social distancing measures will need to remain in place for a longer time, depressing economic activity in the second half of 2020 and leaving more scarring going forward.


Despite the difficult outlook, external financial conditions have eased in recent weeks, largely reflecting strong actions by advanced economies’ central banks, which have allowed some countries to issue debt abroad. However, financial conditions are still tighter than before the pandemic and are expected to remain volatile going forward.

Risks remain elevated. The pandemic could worsen and last longer, depressing economic activity, stressing corporate balance sheets, raising poverty and inequality, and rekindling social tensions across the region. Upside surprises could also happen. Some recent high frequency indicators for advanced economies have been better than expected. Global growth could be stronger than expected, supporting exports, commodity prices, and tourism.

Policy priorities

The immediate priority for fiscal policy is to continue protecting lives and livelihoods, which given the limited fiscal space in the region, will require reprioritizing expenditure and increasing its efficiency. Policymakers will need to find creative ways to reach different segments of society, especially where informality is high. The fallout from the pandemic and associated policy response will also raise medium-term debt sustainability concerns in several countries. Commitment to a medium-term plan of fiscal consolidation and growth-enhancing structural reforms will be key to mitigate these concerns.

Monetary policy should remain accommodative given the subdued inflation outlook, negative output gaps, and elevated unemployment. Additional policy rate cuts and measures targeted to specific markets should be considered where necessary and possible, to support economic activity and ensure proper functioning of financial markets.

Measures to maintain employment relationships, such as payroll support and financing of working capital will be important to avoid the closure of otherwise viable businesses, reduce long-term unemployment, support the recovery, minimize scarring and increase potential growth . Containment and mitigation policies should be appropriately calibrated to avoid a second pandemic wave and manage localized outbreaks.


In Argentina, GDP is expected to decline by about 10 percent in 2020, with heightened risks. Growth was revised down as the longer quarantine in the Buenos Aires metropolitan area, a sharply weaker external demand and worse commodity prices should more than offset the fiscal support package, which remains constrained by limited financing options. Uncertainties related to the debt restructuring process continue to weigh on confidence.

Brazil’s , real GDP is projected to fall by 9 percent in 2020 amid high uncertainty, followed by a rebound of 3.6 percent in 2021. The authorities have responded strongly to the pandemic with decisive interest rate cuts, and significant fiscal and liquidity packages, including direct cash transfers targeted to vulnerable groups. The withdrawal of this stimulus however will weigh on growth in 2021 amid a domestic economy that was still shrugging off the 2015/16 recession. In this context, accommodative monetary policy will be essential to support the cyclical recovery while resuming the government’s fiscal and structural reform agenda is key to preserving fiscal sustainability and boosting potential growth and investor confidence.

In Chile, real GDP is projected to decline by 7.5 percent in 2020 and rebound by 5.0 percent in 2021. Following a resilient performance in the first quarter, economic activity is expected to contract sharply in the second quarter owing to the strict social distancing measures, and to a lesser extent, weaker external demand from trading partners. A rebound in activity is expected to start in the third quarter and continue into 2021, supported by unprecedented fiscal, monetary and financial sector measures.

Colombia took early actions to limit the spread of the virus, but economic disruptions associated with the pandemic (including lower oil prices) are expected to generate the first recession in two decades. Following a weak first quarter, GDP is expected to contract by 7.8 percent in 2020, but growth should rebound to 4.0 percent in 2021 as the health situation stabilizes at home and elsewhere. In response, the central bank has cut policy rates and supported market liquidity, while the fiscal rule was suspended for two years to provide sufficient flexibility to respond to the health and economic crises.

The outbreak fallout for Mexico is compounded by the fall in oil prices, international financial markets volatility, disruptions to global value chains, and weakening business confidence as also reflected in declining investment pre-Covid. Real GDP is expected to fall by 10.5 percent in 2020 with growth in 2021 expected to recover a modest portion of the lost output. Monetary policy is expected to loosen further to accommodate the demand shock element of the crisis and preserve the functioning of financial markets. However, the fiscal response is the smallest among G20 countries, risking a deeper contraction and slower recovery with significant economic scarring. Mexico should ramp up spending now to protect lives and livelihoods and craft a credible medium-term fiscal reform that provides more short-term policy space and close fiscal gaps.

In Peru, the growth projection for 2020 has been revised down markedly to -14 percent, as weaker external demand and a longer than expected lockdown period have so far more than offset the government’s significant economic support and translated into large employment losses. With the lockdown restrictions lifted in the second semester, economic activity is expected to gradually recover, reaching a 6½ percent expansion in 2021. Downside risks remain prominent, however, and are particularly linked to domestic and global challenges in bringing the Covid-19 pandemic under control.

Central America, Panama, and the Dominican Republic (CAPDR) will experience a deep recession in 2020 and a gradual recovery starting in 2021. Growth is being affected by domestic lockdowns and global spillovers through trade, tourism, and remittances. The contraction in trade will have a particularly strong impact in Panama, El Salvador and Nicaragua, the collapse in tourism in the Dominican Republic and Costa Rica, and weaker remittances in the Northern Triangle and Nicaragua. Idiosyncratic factors are also at play, notably natural disasters in El Salvador. A palliative is that falling oil prices are improving the terms of trade.

Countries in CAPDR have mitigated the pandemic by increasing health and social spending for unemployed and vulnerable households. Where feasible, monetary policy easing and credit guarantees are supporting financing for business, and tax deferrals and specific sectoral support through the budget are aiming at relaxing liquidity constraints in some countries.

The Caribbean economies have managed to flatten the COVID-19 curve, but their key lifelines have collapsed. With tourism coming to a virtual standstill and key source markets in advanced economies plunging into deeper recession, the region is likely to experience a very sharp and protracted contraction in economic activity. Despite the reopening of borders starting in June for some Caribbean countries, international tourist arrivals are expected to return to pre-crisis levels only gradually over the next three years. In addition, the steep drop in oil prices is hurting commodity exporters through a loss in exports and fiscal revenues. The ongoing hurricane season poses additional risks.


The IMF’s support

The Fund has acted swiftly to support its membership with quick and significant injections of emergency financing. Of the 70 loans approved since the pandemic began, totaling US$ 25 billion, 17 were for countries in the region, for a total of US$ 5.2 billion. Additionally, access to the Flexible Credit Line was approved for Chile and Peru and renewed for Colombia. Together with Mexico, the total backstop provided to the region through the Flexible Credit Line amounts to US$ 107 billion.

We stand ready to use the IMF’s financial clout, policy advice and capacity development resources to help Latin America and the Caribbean achieve a stronger recovery.

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Macro Analysis / Vietnam

Vietnam: Comparing government intervention policies

  • In this special report, we focus on government intervention policies implemented by Vietnam in response to Covid-19...
  • ...and compare it to policies during the global financial crisis as well current polices in neighbouring countries
  • Vietnam’s current policies are supportive of a remarkable rebound in H2 20
Tu Vu @
Rong Viet
12 May 2020

In this special report, we focus on government intervention policies implemented by Vietnam in response to the Covid-19 outbreak and compare it to policies during the global financial crisis as well as to current polices in place in other regional Asian countries. 

We examine the Vietnamese government’s point of view, the benefit-takers and the room for more upcoming intervention. In our opinion, the government has played an active role in flattening the curve and has meticulously designed its intervention policies. At end-April, the scale of the fiscal stimulus is estimated at VND266tn, equivalent to 4.1% of GDP, and tax deferral at 2.8% of GDP. Currently, the government has also delivered indirect support to corporates such as contribution to social security and pension funds in order to minimise unemployment. The government does not prefer to offer direct support to corporates. 

Meanwhile, low-income households or informal labour that have been hit by the pandemic, are qualified to receive cash aids, which should boost aggregate demand. In addition, the government is keen to accelerate public investment disbursement via transforming the PPP parts of the North-South expressway into public investment projects and extending the timeline of 2019 disbursements. We believe that those stimulus policies will significantly cover the losses of FDI and exports. 

In general, the size and approach of the intervention policies are parallel to Vietnam’s economic and coronavirus outbreak conditions. In the base case scenario that Western countries start reopening in May, Vietnam’s current policies are supportive of a remarkable rebound in H2 20.

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Macro Analysis / Global

Financial crime in Sub-Saharan Africa

Refinitiv Perspectives
13 May 2020

As financial criminals around the world employ ever more sophisticated techniques, and regulators increasingly push back, how are compliance practitioners in Sub-Saharan Africa (SSA) managing the growing pressure? A Refinitiv survey reveals significant challenges facing compliance professionals in Sub-Saharan Africa and the remedial steps they are taking through the adoption of new technology.

  1. A Refinitiv survey has tracked financial crime trends in SSA, including the standards and attitudes around compliance and the approach to data and new technology.
  2. To combat financial crime, compliance officers are investing heavily in more sophisticated technology, with 90 percent expecting significant change to their technology over the next two years, and are gleaning more information from the data that this technology provides them. However, there are weaknesses.
  3. The survey reveals that compliance practitioners in SSA are embracing digital identity. Meanwhile, there is also a high uptake for compliance programs focusing on anti-money laundering (73 percent), and anti-bribery and corruption (70 percent).

The risk posed by financial crime in Sub-Saharan Africa is one that the region’s compliance professionals are acutely aware of. Two-thirds of respondents to Refinitiv’s first financial crime in SSA survey reported that their organization had been the victim of some type of financial crime over the past five years.

The risk of financial crime has been a priority long before compliance became such a business-critical task. However, in a climate where new and multifarious risks appear almost daily, the Refinitiv survey particularly concentrated on how SSA-based compliance practitioners are managing the increased focus and pressure on their function.

Download the report: Fighting Financial Crime In Sub-Saharan Africa 2020

The impact of COVID-19

Such issues have become even more important during this time of the COVID-19 pandemic. Many businesses around the world have gone into crisis mode, and a great number have raced to increase their online presence as quickly as possible.

During such turbulence, it is easy to overlook certain security issues. However, it is especially important to act cautiously in the midst of a crisis.

COVID-19 Phil Cotter Quote

Rapidly evolving global regulation has forced criminals to innovate, and seek new avenues to move illicit cash around the world. Accordingly, they will be actively searching for weaknesses in the global system.

Countries that are perceived to have a weak rule of law, or to appear to be far removed from the scrutiny of global authorities, are potential targets. Now is therefore not the time to overlook policy requirements.

The growth of compliance obligations

For many, such stringent regulatory compliance obligations will be new.

For so long the forgotten continent, indications of deepening economic integration continue to grow.

The African Union, formed in 2002, has created a power bloc of 55 countries and comprises more than one billion people. In 2011, one of the continent’s leading economies, South Africa, entered into a relationship with the BRIC countries — Brazil, Russia, India and China — opening access to many other African economies.

More recently, the formation of the African Continental Free Trade Area in 2018 has created the largest free trade area in the world in terms of participating countries, and is estimated to represent a market of 1.2 billion people.

This intensifying integration offers many exciting opportunities for ambitious organizations, but for compliance officers, the workload and pressure build exponentially.

66% of respondents have experienced financial crime in the past five years. Financial crime in Sub-Saharan Africa

Investment in technology

Every opportunity represents risk, and to pursue these opportunities to fight financial crime in Sub-Saharan Africa will require a robust response and alignment with the standards of the international financial system. Failure to do so risks the very real possibility of financial exclusion.

To ease this growing pressure, SSA-based compliance professionals are investing in increasingly sophisticated technology and are demanding more from their data to help them uncover risk.

Refinitiv’s survey of SSA-based compliance professionals revealed that:

  • 90 percent expect their financial crime prevention technology to develop over the next two years.
  • 62 percent said better data management and analytical capabilities is the main reason they would invest in a technology upgrade.
  • 66 percent have embraced innovative technology to help them meet their compliance obligations.

Better data management and analytical capabilities

Digital identity

One of these innovations is digital identity. Twenty-five percent of respondents said that they have a digital ID program, which we think is a relatively high number for such a new technology.

This development looks promising. Digital ID can provide credible, accurate and up-to-date information that can instantly verify identity. It is an example of the kind of innovative technology that uses data very effectively.

However, it is not without its challenges. Digital ID requires the digitization of a series of documents, and across the continent there is a distinct lack of standardization and ease of access to documentation.

Innovation in compliance

SSA-based executives may have been at a disadvantage, being situated so far from global financial centers and kept out of the global economy for so long, but these responses reveal an impetus to get ahead.

They show that most compliance departments will likely update their technology solutions within two years. In the past, a lack of telecommunication infrastructure may have been a hindrance, but given the proliferation of mobile technology, this may prove to be one of SSA’s biggest gifts.

With no infrastructure to maintain, upgrade or replace, it is easier to employ innovative and fast-developing technology that allows SSA compliance functions to move ahead of competitors situated elsewhere.

Adoption of compliance programs

Apart from the focus on technology, SSA-based compliance professionals appear to have similar concerns to their global peers. There is a high uptake of specific compliance programs that reveal a focus on certain financial crimes. For example, 73 percent have an anti-money laundering (AML) program, and 70 percent have an anti-bribery and corruption (ABC) program.

There are vulnerabilities, however. Only 43 percent have a sanctions program, and just 32 percent of respondents say they have an ultimate beneficial ownership (UBO) program. The regulatory focus is growing on both of these issues, and this exposes Africa-based organizations to heightened risk.

‘Green crime’

One particular vulnerability for SSA-based organizations is the problem of ‘green crime’. The growing focus of media and global regulatory bodies on emotive issues such as wildlife trafficking — an increasing challenge for some Sub-Saharan countries — should be a concern for local compliance departments.

As regulators grow increasingly determined to tackle green crime and illicit financial flow, issues such as knowing beneficial ownership details in business relationships will become even more critical, especially with such a fluid and fast-moving sanctions situation. Africa-based businesses cannot afford to fall behind.

Financial crime in Sub-Saharan Africa report

The post Financial crime in Sub-Saharan Africa appeared first on Refinitiv Perspectives.

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Macro Analysis / Global

Christina Segal-Knowles: Payments after the COVID crisis - emerging issues and challenges

Bank for International Settlements
15 June 2020

Thanks Erik and thanks very much for inviting me to this webinar.

I'll talk through very briefly how payments were changing well before COVID-19 and the impact we've seen during the global health crisis. And then I'll begin to cover what central banks can and are doing in response.

Even before the current crisis, people were changing the way they pay.

For many if not all of you- the fact that the way we pay has been changing significantly won't be a surprise. You've experienced this. In London, where I live and work, contactless payments have become ubiquitous - from small coffee shops, to farmer's markets, to stalls at sporting and music events, the need to rush to the cash machine is gone - you can tap your card, phone or watch. We've become accustomed to online baskets and clicks; to summoning and paying for services on our phone.

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