Fulcrum Perspectives

An interactive blog sharing the Fulcrum team's policy updates and analysis.

Francis Kelly Francis Kelly

Global Calendar: May 9 - 15, 2022

It is going to be a particularly busy week both politically and economically. We are closely watching the Victory Day parade in Moscow on Monday which may give us some further indications of President Putin’s intentions toward Ukraine - and the West. We are also keenly paying attention to the elections in the Philippines which could have a significant impact on overall Indo-Pacific affairs going forward.

Political/Social Events –

 

Economic Reports/Events –

  • US Wholesale inventories (Mar), consumer inflation (Mar)

  • Japan’s Central Bank monetary Policy Meeting Minutes; FX reserves (Apr), Jibun Bank Services PMIs (Apr), Household Spending figures (Mar)

  • China’s balance of trade, exports/imports (Apr)

  • South Korea's current account (Mar)

  • India GDP growth rate (Apr), inflation rate figures (Apr), GDP growth rate Q1

  • Saudi Arabia S&P Global PMI (Apr)

  • South Africa FX reserves (Apr), SACCI Business Confidence (Apr)

  • France's balance of trade (Mar), current account (Mar), Exports/Imports (Mar)

  • UK BBA mortgage rate (Apr), BRC Retail Sales Monitor (Apr)

  • Mexico inflation rate figures (Apr)

  • Brazil Central Bank Focus Market Readout

  • Canada building permits (Mar)

 

Tuesday, May 10, 2022

Political/Social Events –

 

Economic Reports/Events –

  • US NFIB Business Optimism Index (Apr), Redbook (May), API Curide Oil Stock Change (May)

  • South Korean Unemployment Rate (Apr)

  • Brazil Central Bank Copom Meeting Meetings, Retail Sales (Mar), Current Account (Mar), Foreign Direct Investment (Mar), Bank Lending (Mar)

  • Australia NAB Business Confidence (Apr), Retail Sales (Mar)

  • Saudi Arabia GDP Growth Rate Q1, Industrial Production (Mar)

  • Turkey Unemployment Rate (Mar)

  • Italy Industrial Production Mar(

  • Eurozone ZEW Economic Sentiment (May)

  • Germany ZEW Economic Sentiment (May), ZEW Current Conditions (May)

 

Wednesday, May 11, 2022

Political/Social Events –

Economic Reports/Events –

  • US Inflation Rate figures (Apr), MBA Purchase Index (May), MBA Mortgage Application (May), MBA 30-year Mortgage Rate (May), MBA Market Index (May), MBA Mortgage Refinance Index (May), EIA Crude/Distillate Stocks Change (May), EIA Refinery Crude (May)

  • Brazil Inflation Rate (Apr)

  • Russia Monetary Policy Report, FX reserves (Apr)

  • Australia Westpac Consumer Confidence Index (May)

  • China Inflation figures (Apr), PPI (Apr)

  • India Consumer Confidence (Apr)

  • Japan Coincident Index (Mar), Leading Economic Index (Mar)

  • Germany Inflation rate (Apr), Harmonized Inflation Rate (Apr)

  • Turkey Treasury Cash Balance (Apr)

  • Organization Economic  (OECD) presents Sovereign Borrowing Outlook 2022

 

Thursday, May 12, 2022

Political/Social Events –

 

Economic Reports/Events –

  • US PPIs (Apr), Jobless Claims (May), EIA Natural Gas Stocks (May), WASDE Report

  • China New Yuan Loans (Apr), Outstanding Loan Growth (Apr), Vehicle Scores (Apr)

  • Russia Balance of Trade (Feb & Mar)

  • Australia Building Permits (Mar), Private House Approvals (Mar)

  • India Retail Sales (Mar), Inflation Rate figures (Apr), Manufacturing Production (Mar)

  • Japan Eco Watcher Survey Current (Apr), Central Bank presents “Summary of Opinions” on Monetary Policy Meeting

  • UK GDP figures Q1, GDP 3-month avg, Industrial Production (Mar), Manufacturing Production (Mar), Balance of Trade (Mar), Manufacturing Production (Mar), Construction Orders (Q1), Business Investment (Q1)

  • Germany Current Account (Mar)

  • France IEA Oil Market Report

  • Mexico Central Bank interest rate decision, Industrial Production (Mar)

  • South Africa Mining Production (Mar), Gold Production (Mar), Manufacturing Production (Mar)

  • Turkey FX Reserves (May)

  • Argentina Inflation figures (Apr)

  • South Korea Export/Import figures (Apr)

  • Saudi Arabia OPEC Monthly Report

 

Friday, May 13, 2022

Political/Social Events –

 

Economic Reports/Events –

  • US Import Prices/Export Prices (Apr), Michigan Consumer Sentiment (Prel. May), Michigan Current Conditions (May), Michigan Inflation Expectations (Prel. May), Baker Hughes Total Rig Count (May)

  • China Foreign Direct Investment (Apr)

  • Russia Inflation Rate figures (Apr)

  • France Inflation Rate figures (Apr)

  • Spain Inflation Rate figures (Apr)

  • Eurozone Industrial Production (Mar)

  • Turkey Industrial Production (Mar), Retail Sales (Mar)

  • India Imports/Exports (Apr), Balance of Trade (Apr), FX Reserves (Apr)

  • Brazil IBC-BR Economic Activity (Mar), FX reserves (May)

Saturday, May 14, 2022

Political/Social Events –

 

Economic Reports/Events –

  • No significant reports/events.

Sunday, May 15, 2022

Political/Social Events –

Economic Reports/Events –

  • Saudi Arabia inflation rates (Apr), Wholesale Prices (Apr)

 

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Francis Kelly Francis Kelly

Global Calendar of Events May 1 - 8, 2022

Sunday, May 1, 2022

Political/Social Events –

Economic Reports/Events –

  • Malaysia increases its national minimum wage by 25%.

  • Indonesia begins value-added tax on crypto transactions and capital gains tax on crypto investments.

Monday, May 2, 2022

Political/Social Events –

Economic Reports/Events –

  • Early May Bank holiday in UK

  • US S&P manufacturing PMI, ISM manufacturing, construction spending, S&P Global manufacturing (Apr)

  • South Korea export/import/balance of trade figures (Apr)

  • Japan Jibun Bank manufacturing PMI (Apr), consumer confidence (Apr)

  • Germany retail sales figures (Mar)

  • UK nationwide housing prices (Apr)

  • Italy unemployment figures (Mar)

  • Germany S&P manufacturing PMI (Apr)

  • Spain S&P manufacturing PMI (Apr)

  • France S&P manufacturing PMI (Apr)

  • Eurozone economic sentiment (Apr), industrial sentiment (Apr), Consumer confidence, (Apr), consumer confidence and inflation expectations (Apr), S&P manufacturing PMI (Apr)

  • Australia S&P manufacturing PMI (Apr)

  • South Africa ABSA manufacturing PMI (Apr)

  • Mexico FX reserves (Mar)

  • Brazil Central Bank market readout, S&P manufacturing PMI (Apr), balance of trade (Apr)

  • India exports/imports/balance of trade figures (Apr),  S&P manufacturing PMI (Apr) Markit manufacturing PMI (Apr)

  • Philippines Markit PMI manufacturing (Apr)

  

Tuesday, May 3, 2022

Political/Social Events –

Economic Reports/Events –

  • Federal Reserve Board begins two days of monetary policy meetings; rate decision comes Wednesday.

  • Eurogroup Meeting held virtually

  • US factory orders (Mar), crude oil stock changes (Apr)

  • Germany unemployment rate figures (Mar)

  • France Budget balance (Mar)

  • Brazil IPC-Fipe inflation (Mar), industrial production (Mar)

  • UK S&P global manufacturing PMI (Apr)

  • Eurozone unemployment figures (Mar), PPIs (Mar)

  • Mexico business confident (Apr)

  • South Korea FX reserves (Apr), CPIs (Apr)

  • Thailand Markit manufacturing PMI (Apr)

  • Taiwan Markit manufacturing PMI (Apr)

  • Hong Kong GDP (Q1)

  • Australia Central Bank decision,  construction index, S&P global services PMI (Apr)

 

Wednesday, May 4, 2022

Political/Social Events –

  • 2nd Annual India-Nordic Conference (Iceland, Finland, Norway, Sweden, Denmark) to be held in Copenhagen.

  • EU President Charles Michel visits Moldova to meet with President Maia Sandu in wake of recent threats made by Russia.

  • The US Senate Judiciary Committee’s Subcommittee on Privacy, Technology, and the Law holds a hearing on social media’s impacts and platform transparency (expected to heavily focus on Elon Musk’s recently announced acquisition of Twitter).

  • Israel’s Memorial Day commemorating fallen soldiers. 

Economic Reports/Events –

  • US Federal Reserve Board rate decision, US imports/exports/balance of trade figures (Mar), S&P Global services PMIs (Apr), ISM non-manufacturing PMIs (Apr), MBA purchase index (Apr), MBA mortgage applications/30-year mortgage rates/refinance index figures (Apr), EIA crude oil stocks, EIA gasoline stocks, distillate stocks (All Apr)

  • Russia faces deadline to pay two sovereign bonds in dollars or face being rated in sovereign default.

  • European Central Bank holds non-Monetary Policy Meeting, Frankfurt, Germany

  • India S&P global manufacturing PMI (Apr)

  • Australia home loans, retail sales (Apr)

  • Germany export/import/balance of trade figures (Mar), S&P global services/global composite PMIs (Apr)

  • Eurozone S&P global services/global composite PMIs (Apr), retail sales (Mar)

  • France retail sales (Mar), S&P global services/global composite PMIs (Apr)

  • Brazil central bank interest rate decision, S&P global services PMIs (Mar)

  • Mexico consumer confidence (Mar)

  • Russia S&P global manufacturing PMI (Apr)

  • Spain unemployment figures (Apr), S&P global services/global composite PMIs (Apr)

  • Italy S&P global services/global composite PMIs (Apr)

  • Canada imports/exports/balance of trade (Mar)

  • Indonesia Markit manufacturing PMI (Apr)

  • Singapore SIPMM PMIs (Apr)

  • Vietnam Markit manufacturing PMI (Apr)

 

Thursday, May 5, 2022

Political/Social Events –

Economic Reports/Events –

  • OPEC and non-OPEC members meet virtually

  • US jobless claims, Challenger job cuts (Apr), nonfarm productivity (Q1), natural gas stocks change

  • Australia imports/exports/balance of trade figures (Mar)

  • China Caixin services and composite PMIs (Apr)

  • India S&P global composite PMI and services PMI (Apr)

  • Germany factory orders (Mar)

  • Turkey inflation rates (Apr), PPIs (Apr), Istanbul Chamber of Industry Manufacturing PMI (Apr)

  • South Africa S&P Global PMIs (Apr)

  • Eurozone S&P Global Construction PMIs (Apr)

  • France S&P Global Construction PMIs (Apr)

  • Germany S&P Global Construction PMIs (Apr)

  • UK  Bank of England interest rate decision, monetary poicy report, meeting minutes

  • Turkey FX reserves (Apr)

  • Argentina industrial production (Apr)

  • Japan core CPIs (Apr)

  • Malaysia Markit manufacturing PMI (Apr)

  • Singapore Markit manufacturing PMI (Apr), retail sales (Mar)

  • Hong Kong Markit manufacturing PMI (Apr), retail sales (Mar)

  • Philippines CPI (Apr)

  • Thailand CPI (Apr)

  

Friday, May 6, 2022

Political/Social Events –

Economic Reports/Events –

  • US non-farm payrolls (Apr), unemployment rate (Apr), manufacturing payrolls (Apr), oil rig count (May), consumer credit change (Mar)

  • US Securities and Exchange Commission Annual Conference on financial market regulation

  • Spain industrial production (Mar)

  • UK S&P Global Construction PMIs (Apr), house price indexes (Apr), S&P global construction (Apr)

  • Italy S&P Global Construction PMIs (Apr)

  • Australia central bank rate decision

  • Germany industrial production (Mar)

  • Russia S&P global composite serves PMIs (Apr), inflation rate (Apr)

  • France FX reserves (Apr), private non-farm payrolls (Q1)

  • Spain industrial production (Mar)

  • Italy retail sales (Mar)

  • India FX reserves (Apr), imports/exports/trade balance (Mar)

  • Brazil retail sales (Mar), car production (Apr)

  • Canada unemployment rate (Apr)

  • Philippines imports/exports/trade balance (Mar)

  • Taiwan CPI (Apr)

  

Saturday, May 7, 2022

Political/Social Events –

  • Nothing significant to report.

Economic Reports/Events –

  • China FX reserves (Apr)

  

Sunday, May 8, 2022

Political/Social Events –

Economic Reports/Events –

  • Nothing significant to report

 

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Francis Kelly Francis Kelly

Read Around the World in a Weekend April

April 29, 2022

RUSSIA

  • Microsoft Blog “The hybrid war in Ukraine”

    Microsoft released a report detailing the relentless and destructive Russian cyberattacks they have observed in a hybrid war against Ukraine, and what we’ve done to help protect Ukrainian people and organizations. Starting just before the invasion, we have seen at least six separate Russia-aligned nation-state actors launch more than 237 operations against Ukraine – including destructive attacks that are ongoing and threaten civilian welfare. The destructive attacks have also been accompanied by broad espionage and intelligence activities. 

  • Rand Corporation “Russia’s Tragic Failure to Reform Its Economy”

    Russia's invasion of Ukraine and resulting sanctions will likely devastate Russia's economy. If the country had taken a more productive economic course over the past two decades, it might be looking toward a different future—one in which economic reforms had more tightly integrated Russia with the economically advanced countries, enhanced Russian influence and power, and built global trust. Instead, Russia has cast the West as its enemy, and its influence, power, trust, and reputation are shattered.

     

  • Foreign Affairs “What Does the West Want in Ukraine?”

    Council on Foreign Relations President Richard Haass asks the question of how success in Ukraine will be defined and argues it needs to be done now – before it is too late.

China

  • Carnegie Endowment for International Peace “US-China Technological ‘Decoupling’: A Strategy and Policy Framework”

    Washington has awakened to find the United States deeply technologically enmeshed with its chief long-term rival. America built those technology ties over many years and for lots of good reasons. China’s tech sector continues to benefit American businesses, universities, and citizens in myriad ways—providing critical skilled labor and revenue to sustain U.S. R&D, for example. But that same Chinese tech sector also powers Beijing’s military build-up, unfair trade practices, and repressive social control. What should we do about this? 

  • Rhodium Group “Chinese FDI in Europe: 2021 Update”

    Chinese outbound investment to the rest of the world stalled in 2021. While overall global FDI rebounded strongly, Chinese outbound FDI edged up by just 3 percent to USD 114 billion (EUR 96 billion). Meanwhile, China’s global outbound M&A activity slipped in 2021 to a 14-year low, with completed M&A transactions totaling just EUR 20 billion, down 22 percent from an already weak 2020.

 

India

  • Carnegie Endowment for International Peace “What is in Our Interest”: India and the Ukraine War”

    As Russia’s war in Ukraine unfolds, India’s national interests have so far dictated a position of formal neutrality. Here are the factors New Delhi faces in balancing its foreign policy priorities.

  • Brookings Institution Podcast “Why globalization is shifting in favor of India, not China”

    Arvind Subramanian, senior fellow at Brown University’s Watson Institute and Center for Contemporary South Asia, and former chief economic advisor to the Government of India, talks with host David Dollar about a range of trade and foreign relations issues India faces. In particular, he explains why globalization is shifting in India’s favor rather than China’s, how India views trade relations with China, Russia, and the West, and prospects for continued good relations with the United States, especially as India takes a more neutral stance on Russia’s war against Ukraine.

 

Pakistan

  • The Diplomat Podcast  “What’s Driving Pakistan’s Political Crisis?”

    Pakistan’s political arena is in turmoil. Prime Minister Imran Khan, facing a no-confidence vote, made a last-ditch attempt to avoid his fate by dissolving Parliament altogether, alleging a foreign plot headed by the U.S. to oust him. The Supreme Court intervened, allowing the vote to proceed, but Khan and his PTI are refusing to recognize the new government. Most PTI lawmakers resigned, leaving Pakistan’s National Assembly with 100 open seats. Meanwhile, the Pakistani military, the “hidden hand” behind national politics, has attempted to remain neutral – but its lack of support helped crown Khan’s replacement.

Lebanon

  • Carnegie Middle East Center “Resurrecting Arafat in Beirut?”

    Hamas, with Hezbollah’s help, is building up a military presence in Lebanon, whose ultimate consequences could be devastating.

 

Iran

  •  Carnegie Sada “The Geopolitics of the Iran-Qatar Electricity Grid Connection”

    Last February, during Iranian President Ibrahim Raisi’s visit to Qatar, the two countries agreed to connect electricity grids. Currently, Iran’s electricity network is connected to Iraq, Azerbaijan, Armenia, Turkmenistan, Afghanistan, and Pakistan. For Iran, this is a step towards strengthening energy diplomacy, but without a change in Iran’s foreign policy — that is, without the removal of sanctions and attracting foreign investment — it cannot use its full potential in the energy sector and, ultimately, will not be able to increase its influence on the international stage.  

 

Africa

 

  • Foreign Affairs “Rebels Without a Cause: The New Face of African Warfare”

    In the past, most armed groups on the continent were focused on seeking to topple governments or secede and found new countries.  But the new face of many African conflicts today is one where those taking up arms are more likely to do so as a means of bargaining over resources.

Latin America/Caribbean

  • IMF Blog “Latin America Faces Unusually High Risks”

    The War in Ukraine, higher inflation, tighter financial conditions, economic decelerations of key trading partners, and social discontent may dim growth prospects.

  • Center for Strategic and International Studies “The Caribbean in the Crossfire”

    Between Covid-19, Narcotics, China, and Russia’s Invasion of Ukraine, the Caribbean is facing unprecedented challenges – all of which should be of maximum concern to the United States.

  • Americas Quarterly “Latin America Doesn’t Want a New Cold War”

    Regional governments should take steps to ensure they are “not once again a battleground for larger powers,” an Argentine scholar writes.

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Francis Kelly Francis Kelly

Global Calendar April 25 - May 1, 2022

This is Fulcrum Macro Advisors weekly calendar of key political and economic events we are watching in the coming week.  Please let us know if you have any questions.

Monday, April 25, 2022

Political/Social Events –

Economic Reports/Events –

  • US Chicago Fed national activity index (Mar), Dallas Fed manufacturing index (Apr)

  • South Korea GDP growth rate figures

  • Japan leading economic index (Feb), unemployment rate (Mar)

  • Spain PPIs

  • Turkey business confidence (Apr), capacity utilization (Apr)

  • Germany ifo Business Climate (Apr), ifo Current Conditions (Apr), ifo Expectations (Apr)

  • Eurozone construction output (Mar)

  • UK CBI industrial trends orders (Apr), CBI business optimism Index Q2

  • Brazil Central Bank focus market readout,  consumer confidence (Apr), current account (Feb, Mar), FDI (Feb, Mar), federal tax revenue (Mar)

  • Mexico's economic activity reports (Feb)

 

Tuesday, April 26, 2022

Political/Social Events –

Economic Reports/Events –

  • World Trade Organization Committee on Subsidies and Countervailing Duties

  • US durable goods (Mar), non-defense goods orders (Mar), S&P/Case-Shiller home prices (Feb), new home sales (Mar), Richmond Fed manufacturing index (Apr), Dallas Fed services index (Apr)

  • China industrial profits (Mar)

  • South Korea's consumer confidence (Apr)

  • Australia's inflation rate figures

  • Indonesia FDI (Q1)

  • South Africa's leading business cycle indicators (Feb)

  • Mexico retail sales (Feb)

  • Argentina retail sales (Feb)

 

Wednesday 27, 2022

Political/Social Events –

  • Pakistan’s new Prime Minister Shahbaz Sharif visits Saudi Arabia for his first state visit

  • Somalia to elect Speaker and Deputies of Senate.

  • Israel’s Holocaust Martyrs and Heroes Remembrance Day

  • Sierra Leon celebrates National Day

  • South Africa celebrates Freedom Day marking the date when Nelson Mandela was elected President in 1994

Economic Reports/Events –

  • World Trade Organization Dispute Settlement Body meets in Geneva

  • US MBA Purchase Index and other mortgage data including pending home sales,  Wholesale Inventories, Goods Trade Balance (Mar), Retail Inventories (Mar), EIA Gasoline Stocks Changes and other oil/distillates data

  • Russia GDP (Feb, Mar), Unemployment Rate (Mar), Retail Sales (Mar), Real Wage Growth (Feb), Industrial Production (Mar), Corporate Profits (Feb), Business Confidence (Apr)

  • Canada Employment Change (Feb)

  • Germany GfK Consumer Confidence (May)

  • France Consumer Confidence (Apr)

  • South Korea Business Confidence (Apr)

  • Japan Retail Sales (Mar), Industrial Production (Mar), Bank of Japan monetary policy meeting/Interest Rate Decision, Bank of Japan Quarterly Outlook Report

  • Mexico Balance of Trade (Mar)

  • Brazil IBC-Br Economic Activity (Feb), Bank Lending (Feb, Mar)

  • Zambia inflation (Apr), trade data (Mar)

 

 

Thursday, April 28, 2022

Political/Social Events –

Economic Reports/Events –

  • US GDP (Q1), Initial Jobless Claims (Apr), PCE Prices, Real Consumer Spending, Kansas Fed Manufacturing Index (Apr)

  • China Caixin Manufacturing PMI (Apr)

  • Canada CFIB Business Barometer (Apr)

  • Spain Business Confidence (Apr), Construction Orders (Mar), inflation rate (Apr), Unemployment Rate (Mar)

  • Italy Economic Confidence (Apr), Business Confidence (Apr), Consumer Confidence (Apr), Industrial Sales (Apr)

  • France Unemployment figures (Mar)

  • Germany's Inflation Rate figures

  • Eurozone Economic Sentiment (Apr), Consumer Sentiment (Apr), Consumer Inflation Expectations (Apr)

  • Japan Housing Starts (Mar), Construction Orders (Mar)

  • South Korea Industrial Production (Mar), Retail Sales (Mar), Manufacturing Production (Mar), Construction Output (Mar)

  • Australia PPIs

  • Brazil PPIs

  • Mexico Unemployment figures (Mar)

  • Turkey Inflation Report

  • South Africa PPIs

  • Botswana Central Bank rate decision

 

 

Friday, April 29, 2022

Political/Social Events –

  • Russian President Putin to hold meetings on Russia’s metallurgical industry which has been hit hard by global sanctions

  • Portugal’s parliament to vote on the working majority Socialist budget draft

Economic Reports/Events –

  • US Consumer spending (Mar)Personal Income (Mar), PCE Price Indexes, Chicago PMI (Apr), Michigan Consumer Expectations (Apr)

  • China NBS Manufacturing PMI (Apr), Non-Manufacturing PMI (Apr), General PMI (Apr)

  • France GDP, PPIs, Inflation figures (Q1), Household Consumption (Mar)

  • Germany GDP figures, Import Prices (Mar)

  • Italy GDP (Q1), PPIs (Mar), Inflation Rate figures (Apr)

  • Spain GDP (Q1), Retail Sales (Mar), Current Account (Feb)

  • Turkey Balance of Trade (Mar)

  • Eurozone Loans to Households, Loans to Companies (Mar)

  • Russia Central Bank interest rate decision

  • Mexico GDP

  • India Infrastructure Output (Mar), FX Reserves (Mar)

  • Brazil Unemployment Rate (Mar), Nominal Budget Balance (Feb)

  • Canada GDP (Feb), Raw Materials Prices (Mar), Budget Balance (Feb)

  • Argentina Consumer Confidence (Apr)

  • Kenya inflation numbers (Apr)

  • Uganda inflation numbers (Apr)

  

Saturday, April 30, 2022

Political/Social Events –

  • Vietnam celebrates Liberation Day – the anniversary of the fall of Saigon to Communists.

Economic Reports/Events –

  • South Korea Exports/Imports/Balance of Trade (Apr)

 

Sunday, May 1, 2022

Political/Social Events –

  • US takes over rotating Presidency of the UN Security Council from the UK

  • 2nd round of US-UK Trade Dialogue to be held in Aberdeen, Scotland

  • China starts five-day May Day holiday

  • May Day celebrated in various countries

Economic Reports/Events –

  • No major reports/events to report.

 

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Francis Kelly Francis Kelly

CSIS’ “Critical Questions” - The Next Wave is Not a Covid-19 Wave: Debt Sustainability in Developing Countries

I am pleased to be a co-author with my CSIS colleagues of this new “Critical Questions” analysis published by the Center for Strategic & International Studies (CSIS). You can also access the piece directly on the CSIS website HERE.

Q2: What's new about the current global indebtedness challenge? 

A2: Since 2010, the structure and characteristics of sovereign debt have transformed with new creditors and loan instruments coming into the mix. As a result, the composition of debt has become more diffused among creditors, with a riskier profile.

According to a recent article published in the Journal of International Economics, starting in 2000, China became the largest official lender to developing countries, surpassing the IMF and World Bank. China has led the way in terms of providing critical infrastructure needs to developing countries under its Belt and Road Initiative (BRI). However, the terms of these loans remain opaque, and they can burden countries with unsustainable debt. According to some analysts, 50 percent of Chinese lending is not recorded in international debt statistics. With China becoming a large official creditor through the BRI, there is not a clear picture on the characteristics of this debt, such as the amounts or the terms of the loans. Furthermore, there is a lack of clarity on which loans within the BRI are owed to government institutions, and which are owed to private firms. In April 2021, China announced that it would work to promote debt sustainability in developing countries, but there is still no clear demonstration of this.

At the same time, the debt profile of developing countries has become riskier. Low-income countries increased borrowing in global capital markets, which has resulted in a diffused creditor base. Some of these bonds were issued with collective action clauses, which “allows bondholders to agree on debt restructuring even when some bondholders are against restructuring as long as majority agrees.” This essentially facilitates debt restructuring, should it be needed. However, not all bonds have the collective action clause, which makes restructuring difficult to coordinate.

Moreover, the prospect of interest hikes in advanced economies complicates matters for developing countries. Before the Covid-19 pandemic, the world went through a long period of low interest rates and high levels of liquidity, which prompted many countries to increase external borrowing. Low-income and middle-income countries were able to access commercial financing, including from non-Paris Club official creditors. However, higher debt held by the private sector further increases developing countries’ exposure to external shocks and capital flow reversals. With higher interest rates, the cost of servicing future debt will rise. Higher interest rates also incentivize investors to divest from riskier assets in developing countries toward safer assets in advanced economies.

Q3: Do external conditions favor developing countries?

A3: Global macroeconomic conditions and Russia’s unprovoked war in Ukraine add another layer of complexity to the high indebtedness profile and will likely impact countries’ ability to service debt.

Inflationary pressures in advanced economies will prompt central banks to raise interest rates in the near future. Rising global interest rates are going to make it harder for developing countries to refinance foreign currency–denominated debt.

At the same time, Russia’s war in Ukraine is disrupting supply chains and commodity markets. The Inter-American Development Bank has recently conducted several scenarios modeling the magnitude of the fiscal impact on the Latin America and the Caribbean region. High prices of energy and staple foods will impact the fiscal health of commodity-importing countries. This can also affect commodity-exporting countries since they will need to provide relief to vulnerable populations in terms of fuel subsidies to provide relief for higher energy prices.

As a result of the war, economic sanctions placed on Russia have resulted in an impending default of its economy, further raising questions on whether it will be effectively isolated from the global market and be able to meet payments to foreign investors. Additionally, the G20 may be facing an existential crisis, impeding effective multilateral solutions in the short term and possibly in the long term.

Q4: What are current global tools to address high indebtedness and debt distress? 

A4: Currently, there is no single framework to bring all debtors and creditors at the table to facilitate the restructuring of debt.

In the past, there has been a series of large debt-restructuring programs that granted developing countries substantial debt relief, starting with the Paris Club in 1956, to programs such as the Brady Plan for Latin America in the late 1980s, the Heavily Indebted Poor Countries (HIPC) Initiative in the 1990s, and the Multilateral Debt Relief Initiative (MDRI) in the 2000s.

Recent initiatives include the G20 Debt Service Suspension Initiative (DSSI) and the G20 Common Framework for Debt Treatments to help 73 low-income countries address official bilateral creditors.

In 2020 and 2021, the G20 established the DSSI, which allowed for deferrals on official debt services for 73 low-income countries, particularly those dealing with continued financial fallout caused by the Covid-19 pandemic, among other issues. DSSI provided immediate liquidity support to help decrease the overall debt distress of vulnerable countries and assuage creditor demands. In 2020 and 2021, $6 billion and $7 billion in relief was administered, respectively, for 48 participating countries.  

Overall, international financial institutions, multilateral banks, and private lending entities significantly scaled up their capacities to provide financial assistance and new lending pathways. Part of the initiative also included the foundation of the Common Framework for Debt Treatments , which seeks to improve global debt sustainability and address insolvency and other liquidity issues in DSSI-eligible countries. The framework also aims to bring other creditors outside of the Organization for Economic Cooperation and Development (OECD), such as China and private entities, under a single structure. The framework, however, has encountered numerous challenges, particularly with its overall processes, enforcement, and completion of promises to borrowing countries dependent on its support. As a result, the framework's implementation or lack thereof has  frustrated participating countries and disincentivized other severely debt-distressed countries from participating. Looking ahead at the future of the framework given the geopolitical tensions with China and Russia, it is unclear whether there will be a functioning G20 to shepherd it. which seeks to improve global debt sustainability and address insolvency and other liquidity issues in DSSI-eligible countries. The framework also aims to bring other creditors outside of the Organization for Economic Cooperation and Development (OECD), such as China and private entities, under a single structure. The framework, however, has encountered numerous challenges, particularly with its overall processes, enforcement, and completion of promises to borrowing countries dependent on its support. As a result, the framework's implementation or lack thereof has  frustrated participating countries and disincentivized other severely debt-distressed countries from participating. Looking ahead at the future of the framework given the geopolitical tensions with China and Russia, it is unclear whether there will be a functioning G20 to shepherd it.

Q5: What’s next? 

A5: Institutions of the current multilateral debt architecture, including the World Bank and IMF, the G20, G7, OECD, and the Paris Club, are committed to helping countries through debt service relief, concessional financing, and debt restructuring. The United States will need to lead and incentivize borrowers to work within the multilateral structure. China will need to be brought to the table with a vision to manage this restructuring. China will not allow for debt haircuts, but it might be open about rescheduling payments. The solution is multistep rather than single step (like Brady Bonds), especially if global interest rates create time pressure.

This is an opportunity for developing countries to restructure debts where necessary and embark on a more sustainable fiscal path. In one or two years, several African countries will hit a major debt wall, and this will require restructuring and renegotiation. Low-income countries will need to raise revenues, in addition to committing to deeper economic reforms. In the current global economic landscape, developing countries will need to offer more concessions when requesting debt relief and restructuring.

The United States should work on building capacity and exporting knowledge and expertise on renegotiating transactions to other countries or companies. Specifically, it should ensure that new loans are consistent with fiscal spending and deficit plans, and guarantee that countries' debt remains sustainable. The U.S. government could also assist countries in developing a comprehensive approach to a cost-benefit analysis for accumulating debt and in improving debt reporting and debt statistics.

Also on the table is the development of the local currency capital markets so that countries can borrow on their own terms more regularly than in foreign currency. Most importantly, ensuring debt transparency will be critical. In order to accurately analyze debt sustainability in a country, all types of debt and creditors should be assessed, instead of being upheld to narrowly defined concepts of public debt. This assessment will help to better understand debt that poses a risk to a nation's public finances.

Multilateral institutions will need to play a role in assisting countries in building a comprehensive financing plan that is aligned with their development objectives and types of expenditures. Debt resolution can include instruments like sovereign guarantees, debt for policy swaps, and creative thinking that allows for official sectors to step in and speed up recovery. Working with multilateral institutions, the United States can lead a more incremental and adaptive solution, from both the private sector and local government perspective, and create a debt structure that brings all stakeholders, including large creditors such as China, to the table.

Daniel F. Runde is senior vice president, director of the Project on Prosperity and Development and holds the William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Romina Bandura is a senior fellow with the CSIS Project on Prosperity and Development. Frank Kelly is a non-resident senior associate with the CSIS Americas program. 

The authors would like to thank Elena Méndez Leal, Isabel Vander Molen, Sarthak Sharma, and reviewers for their support in producing this analysis. The authors would also like to thank the participants of a recent private roundtable on the issue for helping identify key discussion topics surrounding debt sustainability. 

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

© 2022 by the Center for Strategic and International Studies. All rights reserved.

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Francis Kelly Francis Kelly

A Great New Podcast: “Vying for Talent”

My friend, Ryan Hass (Senior Fellow, Foreign Policy Center and Michael H. Armacost Chair at the Brookings Institution) and Jude Blanchette (Freeman Chair in China Studies at the Center for Strategic Studies (CSIS), have just launched a superb new podcast. Called “Vying for Talent”, the pair explore the role human talent plays in the sprawling competition between China and the United States. They are tackling an issue that is defining the competition of our age. Sign up and listen close - it really is great and highly informative.

You can sign up and listen via Apple, Spotify, or wherever you listen to podcasts. Send feedback email to podcasts@brookings.edu, and follow and tweet at @policypodcasts on Twitter.

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Francis Kelly Francis Kelly

Global Events this Week April 17 - 23, 2022:

This is Fulcrum Macro Advisors weekly calendar of key political and economic events we are watching in the coming week.  Please let us know if you have any questions.

___________________________ 

Sunday, April 17, 2022:

Political/Social Events:

Economic Reports/Events:

  • Nothing significant to report.

Monday April 18, 2022:

Political/Social Events – 

Economic Reports/Events –

  • Markets closed in most of Europe, Singapore, Australia, New Zealand, South Africa for Easter holiday

  • World Bank/International Monetary Fund (IMF) Spring Meetings commence (until April 23rd).

  • US National Association of Home Builders April Index

  • Russia expected to soften cash operations restrictions and allow banks to sell hard currency.

  • China GDP for Q1, March growth data, retail sales, fixed assets, property investment, residential property sales

  • Canada March housing starts

  • Spain trade balance figures

  • German Buba Monthly report

  • Brazil inflation index

  • Tesla plans to resume production at its Gigafactory in Shanghai after 3 weeks of COVID lockdown.

Tuesday April 19, 2022:

Political/Social Events – 

  • Sri Lanka’s main opposition party is expected to submit a no-confidence motion again the government and impeachment motion against the President as a result of the ongoing economic crisis.

  • NATO begins annual cybersecurity wargames – Operation Locked Shields – in Tallinn, Estonia

  • Armenia’s President Nikol Pashinian to travel to Moscow.

  • The UN Security Council holds consultations on its mission in Libya.

  • African Union holds an expert session on migration, refugees, and internal displaced people.

  •  Timor Leste holds second round of presidential elections.

Economic Reports/Events –

  • IMF releases April 2022 World Economic Outlook

  • US building permits (Mar.), housing starts

  • China’s People’s Bank of China loan prime rate

  • Japan exports/import figures, trade balances, industrial production, capacity utilization figures

  • Canada existing home sales (Mar.)

Wednesday 20, 2022: 

Political/Social Events – 

  • G-7 Finance Ministers meet in Washington DC to discuss global financial issues including a coordinated response to rising inflation (they are all in Washington for World Bank/IMF Spring Meetings).

  • G-20 Finance Ministers meet in Washington DC to discuss global financial issues.

  • China holds Boao Forum in Hainan, China.

  • Honduras’s former President Juan Orlando Hernandez to be extradited to the US to face trial for drug trafficking charges.

  • Democratic Republic of the Congo’s parliament debates proposed electoral reform law.

Economic Reports/Events –

  • US March existing home sales, Fed’s Beige Book released, crude oil inventories, gasoline production, heating oil stockpiles

  • Japan March trade balance

  • Germany March PPI

  • Italy February trade balance

  •  Eurozone February industrial production, trade balance

  •  Canada March CPI

  • Russian government expected to submit proposals for raising wages, pensions, and minimum wage; PPIs scheduled to be reported

  •  South Africa inflation (Mar)

  • Ghana GDP (Q4 and all of 2021)

Thursday, April 21, 2022:

Political/Social Events – 

Economic Reports/Events –

Friday, April 22, 2022:

Political/Social Events – 

Economic Reports/Events –

  •  Federal Reserve “Black-Out Period” begins in advance of next Open Meeting

  • US PMIs, retail sales figures

  •  France PMIs

  • Germany PMIs

  • Eurozone PMIs

  • Hong Kong PMIs

  •  Japan PMI (Mar.), Jibun Bank PMIs

  • UK GfK Consumer Confidence (Apr.), retail sales (Mar.)

  • Canada industrial production price (Mar.), retail sales (Feb.)

  • Mozambique gets S&P Global Ratings assessment

Saturday, April 23, 2022: 

Political/Social Events – 

  •  France holds second round of Presidential Elections

  •  Slovenia holds National Assembly elections

Economic Reports/Events –

  • World Bank/IMF Meetings conclude in Washington DC

 

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Francis Kelly Francis Kelly

Global Calendar April 11 - 17, 2022

Monday, April 11, 2022

Political/Social Events –

Economic Report/Events –

  • China consumer price index (CPI), producer price index (PPI) data (Mar)

  • Czech Republic CPI data (Mar)

  • Japan PPI figures (Mar), machine tool orders Bank of Japan holds its quarterly branch managers’ meeting with opening remarks delivered by governor Haruhiko Kuroda

  • UK GDP (Mar) estimate, trade figures, construction output data

  • South Africa manufacturing production (Feb)

  • Malaysia industrial production (Feb), manufacturing sales (Feb)

Tuesday, April 12, 2022

Political/Social Events –

  • EU Affairs ministers meet in Luxembourg

  • United Nations Security Council to discuss Colombia as Colombian President Duque addresses the body

  • Ukrainian President Zelensky to address the Lithuanian parliament

Economic Reports/Events –

  • European CentralBank’s Q1 euro area bank lending survey

  • France trade figures(Feb)

  • Germany CPI data(Mar)

  • Eurozone ZEW economic sentiment survey

  • India industrial production figures (Feb), March CPI data (Mar)

  • OPEC’s monthly oil market report

  • UK labor market statistics

  • US CPI data (Mar)

Wednesday, April 13, 2022

Political/Social Events –

  • Mexico’s lower House of Congress expected to vote on electricity sector reform

  • The US Senate Armed Services Committee is scheduled to hold a hearing on ballistic missile defense strategy and needs

Economic Reports/Events –

  • China trade balance (Mar)

  • Bank of Canada interest rate announcement

  • Eurozone industrial production data (Feb)

  • Italy industrial production figures (Feb)

  • Reserve Bank of New Zealand monetary policy meeting

  • UK CPI (Mar) and retail price index (RPI) data

  • US PPI (Mar)

  • South Africa retail sales (Feb)

  • Namibia’s Central Bank interest rate decision

  • Ghana inflation (Mar)

 

Thursday, April 14, 2022

Political/Social Events –

  • Russian President Putin expected to meet with the lower house of Parliament (Duma)

  • Kenyan United Democratic Alliance to hold primary before Kenya’s August 2022 general election

  • The Sikh festival of Vaisakhi is celebrated, marking the Sikh New Year

  • North Korea observes the birth of the late North Korean Leader Kim Il Sung, father of current North Korean leader Kim Jun-Un

Economic Reports/Events –

  • European Central Bank’s monetary policy meeting/rate decision in Frankfurt

  • India trade statistics

  • Israel Q4 GDP figures

  • UK Q1 credit conditions and bank liabilities surveys

  • US March retail sales figures, Michigan Consumer Sentiment (Apr)

  • South Africa mining production (Feb), Trade conditions survey (Feb & Mar), Bloomberg Economic survey (Apr)

  • Nigeria inflation numbers (Mar)

  • Namibia inflation numbers (Mar)

  • Uganda Central Bank interest rate decision

  • Turkey Central Bank interest rate decision

  • Philippines overseas remittances (Feb)

  • Brazil current account (Feb)

Friday, April 15, 2022

Political/Social Events –

  • Passover observed

  • Good Friday observed

  • China expected to sell 500,000 tons of soybeans from national reserves

  • US deadline for individuals to file their tax returns

  • 110th anniversary of the sinking of the Titanic

Economic Reports/Events –

  • People’s Bank of China meeting

  • France CPI figures (Mar)

  • Italy CPI figures (Mar)

  • Poland CPI figures (Mar)

  • US, March industrial production figures, US Empire manufacturing index (Apr)

  • India trade balances (Mar)

  • China's new home prices (Mar)

  • European Central Bank Survey of Professional Forecasters 

Saturday, April 16, 2022

Political/Social Events –

Economic Reports/Events –

  • Nothing of significance

Sunday, April 17

Political/Social Events –

  • Easter Sunday Observed in Western Christian churches

Economic Reports/Events –

  • China’s GDP, retail sales (Mar), industrial production (Mar)

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Francis Kelly Francis Kelly

San Francisco is always beautiful…

After a long week on the West Coast that ended in San Francisco, I am still in awe of the beauty of the City by the Bay. It has tremendous social and political challenges but it will be back.

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