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Articles by ocanuto

Brazil’s Economic Crossroads: Which Path Will It Choose?

11 days ago

First appeared at Americas QuarterlyAs the pandemic unfolds, Brazil is paying a huge human cost, with the number of victims rising quickly. The scar of COVID-19 will take a long time to heal. And the country will also have to battle on the economic side, where the impact will be deep and long-lasting.Starting from a jump in the already high level of debt in relation to its GDP, coming from both sides of the equation: spending has skyrocketed while a steep decline in its gross domestic product is expected for this year. The trajectory for the country’s economy over the next decade, it is clear, will be lower than what was expected prior to COVID-19.Current projections illustrate Brazil’s coming fiscal crossroads: The country can choose either stagnation and insolvency or a gradual fiscal

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The Impact of Coronavirus on the Global Economy

14 days ago

First appeared at the Policy Center for the New SouthCOVID-19 brought the global economy to a sudden stop, causing shocks to supply and demand. Starting in January 2020, country after country suffered outbreaks of the new coronavirus, with each facing epidemiological shocks that led to economic and financial shocks as a consequence.How quickly and to what extent will national economies recover after the pandemic has passed? This will depend on success in containing the coronavirus and on exit strategies, as well as on the effectiveness of policies designed to deal with the negative economic effects of the coronavirus.The impact of coronavirus on the global economy will extend beyond 2020. According to forecasts from the International Monetary Fund and World Bank, GDP per capita at the end

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Higher Debt, Deeper Digitization, and Less Globalization Will be Coronavirus Legacies

June 11, 2020

Three features of the post-pandemic global economy can already be anticipated: the worldwide rise in public and private debt levels, accelerated digitization, and a partial reversal of globalization. The first arises from the public sector’s role as the ultimate insurer against catastrophes, government policies to smooth pandemic curves and the coronavirus recession. These will leave a legacy of massive public-sector debt worldwide (as discussed in a previous post. Lower tax revenues and higher social and health expenditures reflect the choice of trying to avoid widespread destruction of people’s productive and livelihood capacity during the pandemic. On the private-sector side, indebtedness will be the way to survive the sudden stop, if the result is not to be bankruptcy or closure.The

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What shape will the coronavirus recovery be ?

May 12, 2020

First appeared at the Policy Center for the New SouthData recently released on the first-quarter global domestic product (GDP) performance of major economies have showed how significant the impact of COVID-19 has been on economic activity and jobs, with large contractions across the board. The ongoing global recession is poised to be worse than the “great recession” after the 2008-09 global financial crisis, especially from the standpoint of emerging market and developing economies. The depth and speed of the GDP decline will rival that of the Great Depression of the 1930s.But how swiftly will national economies recover once the pandemic has passed? And when will that happen? That will depend on how successful the containment of coronavirus and exit strategies will be, as well as on how

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Channels of transmission of coronavirus to developing economies from abroad

April 29, 2020

In a previous article, we highlighted how developing economies have faced simultaneous shocks from their external environment, as pandemic and recession curves have unfolded abroad (Canuto, 2020a). In addition to financial shocks, there have been declines in remittances, tourism receipts, and commodity prices (Canuto, 2020b). The combination of these shocks with the hardships related to flattening domestic infection curves has configured what we have called a ‘perfect storm’ for developing countries, brought by COVID-19 (Canuto, 2020c).Recent World Bank and United Nations World Tourism Organization reports have given us a view of how serious these shocks have been. We assess here the falls in remittances, tourism receipts, and commodity prices, particularly in oil markets.Remittances,

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More than one coronavirus curve to manage: infection, recession and ext. finance

April 6, 2020

First appeared at thePolicy Center for the New SouthThe global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad.Flattening pandemic curves saves livesThe coronavirus crisis is primarily a public health issue, demanding containment policies that inevitably lead to shocks to economic activity. A major reason for containment is the widespread perception that, given the dynamics of infection—and corresponding numbers of people in need of clinical care—local clinical care capacities risk being swamped,

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More than one coronavirus curve to manage: infection, recession and ext. finance

April 6, 2020

First appeared at thePolicy Center for the New SouthThe global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad.Flattening pandemic curves saves livesThe coronavirus crisis is primarily a public health issue, demanding containment policies that inevitably lead to shocks to economic activity. A major reason for containment is the widespread perception that, given the dynamics of infection—and corresponding numbers of people in need of clinical care—local clinical care capacities risk being swamped,

Read More »

More than one coronavirus curve to manage: infection, recession and ext. finance

April 6, 2020

First appeared at thePolicy Center for the New SouthThe global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad.Flattening pandemic curves saves livesThe coronavirus crisis is primarily a public health issue, demanding containment policies that inevitably lead to shocks to economic activity. A major reason for containment is the widespread perception that, given the dynamics of infection—and corresponding numbers of people in need of clinical care—local clinical care capacities risk being swamped,

Read More »

How Latin America Can Make Fintech a Priority

February 27, 2020

First appeared at Americas Quarterly
New technology has the power to drastically improve the financial landscape for underserved populations throughout Latin America and the Caribbean. But for “fintech’s” potential in the region to be fully realized, national governments will need to adapt regulatory environments to keep up with the times. The good news is that some policymakers are starting to pick up the pace. The bad news is that there is much work left to be done.
A recent IMF working paper (*) points to the region’s numerous deficiencies when it comes to financial access, the depth of financial tools available to customers and the efficiency of financial markets. Despite some variation across countries, low credit-to-GDP ratios, high service fees, heavy reliance on nontraditional

Read More »

How Latin America Can Make Fintech a Priority

February 27, 2020

First appeared at Americas Quarterly
New technology has the power to drastically improve the financial landscape for underserved populations throughout Latin America and the Caribbean. But for “fintech’s” potential in the region to be fully realized, national governments will need to adapt regulatory environments to keep up with the times. The good news is that some policymakers are starting to pick up the pace. The bad news is that there is much work left to be done.
A recent IMF working paper (*) points to the region’s numerous deficiencies when it comes to financial access, the depth of financial tools available to customers and the efficiency of financial markets. Despite some variation across countries, low credit-to-GDP ratios, high service fees, heavy reliance on nontraditional

Read More »

How Latin America Can Make Fintech a Priority

February 27, 2020

​First appeared at Americas QuarterlyNew technology has the power to drastically improve the financial landscape for underserved populations throughout Latin America and the Caribbean. But for “fintech’s” potential in the region to be fully realized, national governments will need to adapt regulatory environments to keep up with the times. The good news is that some policymakers are starting to pick up the pace. The bad news is that there is much work left to be done.A recent IMF working paper (*) points to the region’s numerous deficiencies when it comes to financial access, the depth of financial tools available to customers and the efficiency of financial markets. Despite some variation across countries, low credit-to-GDP ratios, high service fees, heavy reliance on nontraditional

Read More »

How Coronavirus Poses New Risks to Latin America’s Sputtering Economies

February 21, 2020

First appeared at Americas Quarterly
The outbreak in China has already affected economic sectors in Latin America. Is there more to come?
China’s economy has come to a sudden stop. Large parts of the country remain in shutdown mode after the end of the Lunar New Year holiday, with national passenger traffic declining by 85% on the Wednesday after the break compared to 2019.
Outside of China, the impact of the slowdown has already been felt, with companies like Apple and Land Rover warning of lower production, as parts for their products simply fail to arrive on time. For Latin America, which counts China as its largest trade partner overall, the risks are also piling up.
There are four main channels through which the shock to China’s economy may be felt in Latin America. Here’s a detailed

Read More »

How Coronavirus Poses New Risks to Latin America’s Sputtering Economies

February 21, 2020

First appeared at Americas Quarterly
The outbreak in China has already affected economic sectors in Latin America. Is there more to come?
China’s economy has come to a sudden stop. Large parts of the country remain in shutdown mode after the end of the Lunar New Year holiday, with national passenger traffic declining by 85% on the Wednesday after the break compared to 2019.
Outside of China, the impact of the slowdown has already been felt, with companies like Apple and Land Rover warning of lower production, as parts for their products simply fail to arrive on time. For Latin America, which counts China as its largest trade partner overall, the risks are also piling up.
There are four main channels through which the shock to China’s economy may be felt in Latin America. Here’s a detailed

Read More »

How Coronavirus Poses New Risks to Latin America’s Sputtering Economies

February 21, 2020

First appeared at Americas QuarterlyThe outbreak in China has already affected economic sectors in Latin America. Is there more to come?China’s economy has come to a sudden stop. Large parts of the country remain in shutdown mode after the end of the Lunar New Year holiday, with national passenger traffic declining by 85% on Wednesday after the break compared to 2019.Outside of China, the impact of the slowdown has already been felt, with companies like Apple and Land Rover warning of lower production, as parts for their products simply fail to arrive on time. For Latin America, which counts China as its largest trade partner overall, the risks are also piling up.There are four main channels through which the shock to China’s economy may be felt in Latin America. Here’s a detailed look at

Read More »

Central Banks and Climate Change: from Black to Green Swans

February 7, 2020

· There are three possible justifications for the engagement by central banks with climate change issues: financial risks, macroeconomic impacts, and mitigation/adaptation policies.· Regardless of the extent to which individual central banks incorporate the three prongs of motivations, they can no longer ignore climate change.· Last month, a BIS book referred to a “green swan” …

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Central Banks and Climate Change: from Black to Green Swans

February 7, 2020

· There are three possible justifications for the engagement by central banks with climate change issues: financial risks, macroeconomic impacts, and mitigation/adaptation policies. · Regardless of the extent to which individual central banks incorporate the three prongs of motivations, they can no longer ignore climate change. · Last month, a BIS book referred to a …

Read More »

Central Banks and Climate Change: from Black to Green Swans

February 7, 2020

Financial risks, macroeconomic impacts, and mitigation/adaptation policies bring climate change issues to central banks
· There are three possible justifications for the engagement by central banks with climate change issues: financial risks, macroeconomic impacts, and mitigation/adaptation policies.
· Regardless of the extent to which individual central banks incorporate the three prongs of motivations, they can no longer ignore climate change.
· Last month, a BIS book referred to a “green swan” as an adaptation of the concept of a “black swan” used in finance.
Last year, extreme weather events – floods, violent storms, droughts and forest fires – associated with climate change occurred on all inhabited continents on the planet. At least 7 of them with damages estimated at more than US$

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Brazil is in dire need of more and better infrastructure investments

January 10, 2020

A recent Ipsos survey found the Brazilian population to be the most dissatisfied with infrastructure services (transportation, energy, water and telecommunications) among the 28 countries covered by the work. Not surprising if we observe the lack of infrastructure investments in Brazil since the 1980s.
According to estimates by the economist Cláudio Frischtak, from Inter B., while Brazil’s Gross Domestic Product (GDP) doubled in real terms between 1990 and 2016, the stock of infrastructure capacity grew by just 27 %. Chart 1 displays the downfall of Brazil’s infrastructure capital stock as a proportion to GDP.


Figures from World Bank report (Raiser et al, 2017) point to infrastructure investments averaging over 5% of GDP between the 1920s and 1980s, a period in which per capita income

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Brazil is in dire need of more and better infrastructure investments

January 10, 2020

A recent Ipsos survey found the Brazilian population to be the most dissatisfied with infrastructure services (transportation, energy, water and telecommunications) among the 28 countries covered by the work. Not surprising if we observe the lack of infrastructure investments in Brazil since the 1980s.According to estimates by the economist Cláudio Frischtak, from Inter B., while Brazil’s Gross Domestic Product (GDP) doubled in real terms between 1990 and 2016, the stock of infrastructure capacity grew by just 27 %. Chart 1 displays the downfall of Brazil’s infrastructure capital stock as a proportion to GDP.​​Figures from World Bank report (Raiser et al, 2017) point to infrastructure investments averaging over 5% of GDP between the 1920s and 1980s, a period in which per capita income grew

Read More »

Brazil is in dire need of more and better infrastructure investments

January 10, 2020

Brazilian prosperity will depend on more and better investment in infrastructure, in a context of fiscal austerity.
A recent Ipsos survey found the Brazilian population to be the most dissatisfied with infrastructure services (transportation, energy, water and telecommunications) among the 28 countries covered by the work. Not surprising if we observe the lack of infrastructure investments in Brazil since the 1980s.
According to estimates by the economist Cláudio Frischtak, from Inter B., while Brazil’s Gross Domestic Product (GDP) doubled in real terms between 1990 and 2016, the stock of infrastructure capacity grew by just 27 %. Chart 1 displays the downfall of Brazil’s infrastructure capital stock as a proportion to GDP.


Figures from World Bank report (Raiser et al, 2017) point to

Read More »

Trump Tariffs Have Hurt U.S. Manufacturing Jobs

January 4, 2020

The hike in tariffs imposed by the United States against its major trading partners since early 2018 has been unprecedented in recent history. President Trump alluded to, among others, the goal of revitalizing jobs in the country’s manufacturing industry by protecting it from unfair trade practices of other countries, particularly China. However, according to a study by two Federal Reserve Bank staff – Aaron Flaaen and Justin Pierce – released last December 23, the effect so far has been just the opposite, i.e. a reduction in U.S. manufacturing employment!
Tariff escalation – and retaliation from those affected – from 2018 onwards took place in three stages. In February of that year, surcharges were imposed on imports of washing machines and solar panels, followed in March by others

Read More »

Trump Tariffs Have Hurt U.S. Manufacturing Jobs

January 4, 2020

According to a Fed study, the effects so far of the U.S. tariff escalation have been a fall in U.S. manufacturing jobs
The hike in tariffs imposed by the United States against its major trading partners since early 2018 has been unprecedented in recent history. President Trump alluded to, among others, the goal of revitalizing jobs in the country’s manufacturing industry by protecting it from unfair trade practices of other countries, particularly China. However, according to a study by two Federal Reserve Bank staff – Aaron Flaaen and Justin Pierce – released last December 23, the effect so far has been just the opposite, i.e. a reduction in U.S. manufacturing employment!
Tariff escalation – and retaliation from those affected – from 2018 onwards took place in three stages. In February

Read More »

Trump Tariffs Have Hurt U.S. Manufacturing Jobs

January 4, 2020

The hike in tariffs imposed by the United States against its major trading partners since early 2018 has been unprecedented in recent history. President Trump alluded to, among others, the goal of revitalizing jobs in the country’s manufacturing industry by protecting it from unfair trade practices of other countries, particularly China. However, according to a study by two Federal Reserve Bank staff – Aaron Flaaen and Justin Pierce – released last December 23, the effect so far has been just the opposite, i.e. a reduction in U.S. manufacturing employment!Tariff escalation – and retaliation from those affected – from 2018 onwards took place in three stages. In February of that year, surcharges were imposed on imports of washing machines and solar panels, followed in March by others

Read More »

Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

December 5, 2019

We started the week with President Trump accusing, via Twitter, Brazil and Argentina of currency manipulation and unfair competition with farmers in his country. In response, he would reestablish full tariffs on steel and aluminum exported from both countries to the US market.​​At the time of this writing, nothing concrete has yet been issued by the US government bodies, and in this case, details matter a great deal to assess potential impacts. However, the event is significant enough to try to understand what the Twitter broadcaster wants.Let us remember that in May of last year, Argentina and Brazil were able to mitigate the specific impact in their cases of the measures President Trump established on steel and aluminum imports. Argentina announced that it would apply a voluntary cap on

Read More »

Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

December 5, 2019

Accusation of exchange rate manipulation doesn’t make sense. Neither suspending the agreement at play.
We started the week with President Trump accusing, via Twitter, Brazil and Argentina of currency manipulation and unfair competition with farmers in his country. In response, he would reestablish full tariffs on steel and aluminum exported from both countries to the US market.


At the time of this writing, nothing concrete has yet been issued by the US government bodies, and in this case, details matter a great deal to assess potential impacts. However, the event is significant enough to try to understand what the Twitter broadcaster wants.
Let us remember that in May of last year, Argentina and Brazil were able to mitigate the specific impact in their cases of the measures

Read More »

Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

December 5, 2019

Accusation of exchange rate manipulation doesn’t make sense. Neither suspending the agreement at play.
We started the week with President Trump accusing, via Twitter, Brazil and Argentina of currency manipulation and unfair competition with farmers in his country. In response, he would reestablish full tariffs on steel and aluminum exported from both countries to the US market.


At the time of this writing, nothing concrete has yet been issued by the US government bodies, and in this case, details matter a great deal to assess potential impacts. However, the event is significant enough to try to understand what the Twitter broadcaster wants.
Let us remember that in May of last year, Argentina and Brazil were able to mitigate the specific impact in their cases of the measures

Read More »

Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

December 5, 2019

We started the week with President Trump accusing, via Twitter, Brazil and Argentina of currency manipulation and unfair competition with farmers in his country. In response, he would reestablish full tariffs on steel and aluminum exported from both countries to the US market.


At the time of this writing, nothing concrete has yet been issued by the US government bodies, and in this case, details matter a great deal to assess potential impacts. However, the event is significant enough to try to understand what the Twitter broadcaster wants.
Let us remember that in May of last year, Argentina and Brazil were able to mitigate the specific impact in their cases of the measures President Trump established on steel and aluminum imports. Argentina announced that it would apply a voluntary

Read More »

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

November 8, 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.
This is just the latest episode of a gradual squeeze that the Trump government has been giving over China’s telecommunications giant Huawei, today the world’s largest telecommunications equipment provider and the second largest phone maker. They only lose to Samsung and even win over Apple.
Over the past four years, parts of the US government, including the executive branch and Congress, have ramped up policy actions against Chinese tech firms on a

Read More »

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

November 8, 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.This is just the latest episode of a gradual squeeze that the Trump government has been giving over China’s telecommunications giant Huawei, today the world’s largest telecommunications equipment provider and the second largest phone maker. They only lose to Samsung and even win over Apple.Over the past four years, parts of the US government, including the executive branch and Congress, have ramped up policy actions against Chinese tech firms on a

Read More »

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

November 8, 2019

The leap to the top of the technology ladder is what seems to be required long before China’s expected time

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.
This is just the latest episode of a gradual squeeze that the Trump government has been giving over China’s telecommunications giant Huawei, today the world’s largest telecommunications equipment provider and the second largest phone maker. They only lose to Samsung and even win over Apple.
Over the past four years, parts of the US government,

Read More »