Despite Biden’s election, the future of the nuclear deal (JCPOA) remains uncertain due to hardliner resistance in Iran and a divided US Congress. Failure to renegotiate the deal would likely keep the economy fragile. On the other hand, Iran’s economic potential is high if U.S. sanctions are lifted. 

Our outlook for Ukraine has steadily worsened over the last twelve months. Pressure on the NBU and unwinding of anti-corruption reforms are to blame. However, Ukraine will likely manage to muddle through in the coming months. Only when macro-policies become untenable, a return to the IMF will occur.

Foreign reserves have recovered faster under COVID-19 than during the GFC. Import compression, dollar bond issuance, and XR adjustment have helped several countries strengthen their positions. Despite demanding funding needs in 2021, robust external liquidity should help avoid market dislocations. 

Global debt has piled up at an unprecedented pace since 2016, increasing by over $52tn vs a $6tn rise over 2012-16; Less bang for the buck: the capacity of debt to generate growth is diminishing, and investment remains subdued; EM governments face increasing interest burdens, notably in Turkey, India, South Africa, and the Philippines; Small businesses have seen a much bigger increase in debt-to-revenue ratios than have larger firms.  

Global debt has surged by over $15 trillion since 2019, hitting a new record of over $272 trillion in Q3 2020. As the fiscal response to the pandemic continues, we expect global debt to hit $277 trillion (365% of GDP) by end-2020

External and domestic imbalances will require meaningful policy changes. Fiscal consolidation is critical to eliminate monetary financing of deficits. This should reduce inflationary pressures and limit Kwacha depreciation. A multi-year IMF program will likely be needed to implement such changes.

China’s surveyed UR provides more reliable labor data than before. Its survey method is consistent with global norms, and its coverage is reasonably comprehensive. An aging population, expanding services sector, and lower labor force participation help explain the stable unemployment rate.

As we near the end of the year, we want to reflect on some of the key themes and priorities coming out of our 2020 Annual Membership Meeting. We have attached a summary of what we feel are the key takeaways from the meeting.

The November U.S. Regulatory Update covers the U.S. elections, President-elect Biden’s financial regulatory agenda, climate risk updates from the CFTC and NYDFS, Fed stress tests, regulator testimonies on Capitol Hill, and more.

Kazakhstan’s flexible exchange rate and use of ample policy buffers have limited the effect of COVID-19 on the economy. Vulnerabilities remain high due to low oil prices and structural weaknesses. Key reforms need to be implemented to reduce dependency on oil and promote private sector growth.

Rising temperatures could hit global growth, especially with a big rise; 2.5°C warming could trigger a 1.3% income loss; “Business as usual,” with no emissions mitigation efforts, could cause at least a 7% decline in global GDP/capita by 2100; Both cold/rich and hot/poor countries could see incomes fall, with big but avoidable losses for Canada, Russia, U.S., India; Multiple impact channels between the climate and the economy; climate confirmed as credit-relevant for sovereign issuers