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The US-China Trade War Is Accelerating China’s Rebalancing

Otaviano Canuto | Posted : November 08, 2019

 

The Trump government has been imposing restrictions on access to technologies by Chinese telecommunications firms. Why and what are the consequences?

The Federal Communications Commission is about to ban carriers from using government funds to buy equipment from Huawei and ZTE. Other government agencies are expected to take similar measures.

Latin America Is Not Benefiting from the U.S.-China Trade War

Otaviano Canuto | Posted : September 30, 2019

 

Despite some short-term benefits, trade deviation to the region shouldn’t be expected to last.
Has the U.S. trade war with China been good for Latin America?
An increase in Chinese demand for primary products from the region, as well as recent news of production transfers from China to Mexico, might give the impression that it has.
But any positive short-term effects of the confrontation should also take into account its negative medium- and long-term impacts on the region and on global growth. And the fact is that the overall trade and GDP destruction effects of trade wars tend to outweigh gains from shifts in trade activity.

Fed Monetary Policy, Inverted Yield Curve and Outlook for US and Global Economy

Satyandra Nayak | Posted : August 27, 2019

 

Since the Fed’s July meeting, when the Fed Funds Rate had a 0.25% cut, fears about the impact of the US-China trade war on the global economy have escalated. The US yield curve inversion received much attention as a harbinger of a slowdown in the global and US economic outlooks. We approach here whether lights on next monetary policy events can be obtained from reading the minutes of the Fed’s meeting – and of the July meeting of the ECB governing council – released this week.

Argentina’s Half-Baked Adjustment Has Not Worked

Otaviano Canuto | Posted : August 19, 2019

 

Argentina’s peso tumbled and stocks plunged after last Sunday’s primary elections. The perception of a likely victory of President Macri’s opponents – Alberto Fernandez, and running mate, Christina Fernandez de Kirchner - has sparked a new shift in investor preferences away from peso assets, pressures on the exchange rate, and hikes on sovereign spreads.

Brazil must hold to structural reforms while undergoing slow economic recovery

Otaviano Canuto | Posted : August 08, 2019

 

Brazil's economic recovery after the deep 2015-16 recession has been the slowest on record, with GDP per capita last year remaining more than 9% below its pre-crisis peak (Chart 1, right side). The IMF's annual report on the country's economy, released two weeks ago, estimated current GDP to be nearly 4% below its potential level, which suggests insufficiency of aggregate demand (Chart 1, left side). On the other hand, as the slow recovery reflects structural factors, it is necessary to avoid the use of measures to reinforce such demand that might run against the confrontation of such problems.

Mercosur-EU trade agreement: Better Late than Never...

Otaviano Canuto | Posted : July 03, 2019

 

Twenty years after negotiations began between Mercosur and the European Union (EU), a trade agreement between ministers was reached last Friday in Brussels. Its first phase, from 1999 to 2014, had among the motivations on the European side not to be left behind while the US then pursued a Free Trade Agreement for Latin America (FTAA). Symptomatically, such enthusiasm cooled after FTAA negotiations came to a halt and the United States embarked on bilateral agreements with some countries in the region. This time, the US bilateralism of the Trump era has been answered by the EU with the search for agreements with Canada, Japan, Mexico and Mercosur. On the Mercosur side, in the recent period, there has been an unprecedented alignment favorable to the conclusion of an agreement.

From ‘Rule of Law’ to ‘Law of the Jungle’: Global Trade seen through Twitter

Otaviano Canuto | Posted : June 10, 2019

This article was originally published on Center for Macroeconomics and development's website

Friday night, US President Donald Trump announced by Twitter that he would suspend the implementation of tariffs on Mexican imports, which would start with 5% on Monday, June 10, to reach 25% in October. A signed agreement between the two countries, also confirmed by Twitter by Mexico’s foreign minister Marcelo Ebrard, would have included Mexican government’s commitments to take “strong measures” to “reduce – or eliminate – illegal immigration to the United States,” in Trump’s words.

Poverty reduction in Brazil… partially gone with the cycle

Otaviano Canuto | Posted : May 21, 2019

Throughout my last 15 years working in multilateral institutions, many times around the world I was asked to speak about the success of poverty reduction in Brazil during the new millennium. Last week, someone who was on such an occasion in October 2013 in Nairobi asked me what my numbers had become after these recent years of precarious macroeconomic performance and high unemployment in the country. I replied that they have changed ... in part!

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