Balance of payments: no crisis for an extended period despite outflows
► The f nanc al account d dn’t bode well though, at least on the face of t, but I th nk th s s temporary. Synd cat ons were rolled over recently, wh ch sn’t n the data. Currency and depos ts of banks, w th the r correspondents abroad, rose by about $10 b ll on, and banks were net payers of debt n August.
► Remember that August wasn’t a part cularly good month, a month when portfol o nvestments dr ed up w th a $1.8 b ll on outflow. ► As I have ment oned a couple of t mes before, th s sn’t a balance of payments cr s s. Moreover, the current account def c t s fall ng at a h gher pace than I had prev ously env saged. Th s s good news, maybe, but t also tells us that the economy s journey ng towards the ‘near-recess on/at least def n tely stagnat on’ zone faster than prev ously thought.
► The IMF and the OECD project ons look real st c: e ther very low growth rates – zero to 1.5 percent - awa t us n 2019 or an outr ght contract on.
► Core balance s mprov ng, and t s due to the core surplus that the current account tself reverses course. As the graph c dep cts, the core balance s n surplus $5.1 b ll on. Seasonally adjusted core balance s n surplus as well, and t s becom ng pers stent w th $2.8 b ll on. ► Well, the current account def c t w ll narrow sharply and we may end up w th sl ghtly over $40 b ll on th s year, unless of course o l pr ces r se sharply n the com ng months. Th s trend w ll cont nue n 2019, obv ously. Th s sn’t a class c IMF case: t sn’t a balance of payments cr s s. It s rather a heavy corporate debt burden and a corporate short pos t on problem plus a household debt and household real earn ngs eros on – because of h gh nflat on - ssue. The same reasons that cause domest c demand to drast cally weaken also cause the external balance to mprove.