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Hello, Credit Repair Hotline? It's Australia

Australia’s AAA credit rating was under pressure even before the election and is now looking decidedly shaky. Ratings agency Standard & Poor’s has moved Australia’s rating outlook from “stable” to “negative”, due to debt and a poor chance of budget repair.

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Can South Africa Avoid 'Junk Debt' Status?

In early June, the international debt-rating agency Standard & Poor’s granted a stay of execution by not downgrading the South African government’s IOU certificate to a “junk debt” status.  This preserved the country’s credit worthiness as investment grade. South Africa should therefore be able to keep on sourcing external finance at a relatively affordable cost.

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Getting Creative in Vietnam to Sustain Economic Growth

The biggest macroeconomic challenge facing Vietnam today is sustaining growth. Most doi moi-era growth has resulted either from efficiency gains associated with the introduction of a market economy (opening domestic markets and trade, relaxing restrictions on labour movement and land transactions) or from expanded endowments of low-skill labour and capital. GDP continues to grow at a very respectable rate, albeit lower than that projected in national planning documents.

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Services Closing in on Being Two-Thirds of the Philippine Economy

The services sector dominates the Philippine economy. In 2015, it accounted for 59 percent of GDP and 54.5 percent of employment. In recent years the industry sector — which includes manufacturing and construction — has started to recover, growing faster than services. However, given its size, the services sector remains the key driver of the economy contributing more to GDP growth than all other sectors combined.

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Homophobia Still Front and Center in South Korean Politics

A notable element of South Korea’s general elections in April 2016 was the hypervisibility of anti-gay political rhetoric, promulgated especially by the fledgling Christian Liberal Party (CLP). An ultra-conservative Protestant political party established in March 2016, the CLP ultimately failed to gain a seat in the National Assembly — but it came close, earning 2.6 percent of votes nationwide, just shy of the 3 percent required for a proportional representation seat.

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From Political Disarray Comes the BOE's Carney as the Voice of Reason

Sterling is continuing to move lower.  It has tested the $1.3050 area in the North American morning, having been under pressure through the Asian session and the European morning.  That the UK economy is slowing down, materially, as BOE Governor Carney said, is not really new news. Nor is the fact that the BOE reversed its previous decision to force banks to boost their capital buffers.  This was anticipated last week.

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Emerging Markets Stage Nice Recovery

EM and risk recovered nicely from the Brexit turmoil last week.  Yet we think markets are being too carried away with the "low rates forever" theme and are likely underestimating the capability of the Fed to tighten before 2018.  This Friday, the June jobs data could spark a shift in sentiment with a strong reading.  Consensus is currently 175k jobs created, up from 38k in May.

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Hong Kong's Economy at a Crossroad

Today, Hong Kong faces great economic uncertainty and unprecedented market volatility. Recently, Hong Kong’s financial secretary John Tsang Chun-wah warned that the city’s economy is facing its “worst time in 20 years.” In the past half a decade, growth has more than halved close to 2.5 percent. With Brexit chills, analysts expect a contraction.

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How will the EU Referendum Result Hit Africa?

Whatever its final impact, in the short-term the UK’s EU referendum will increase global economic uncertainty, market volatility and economic risk. In Africa, most scenarios will prove costly, particularly among those economies highly exposed to UK trade, investment, banking and remittances.

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Indonesia, Czech Republic, and Brazil Lead the EM Headlines

Indonesia’s parliament approved a tax amnesty bill, Korea announced KRW20 trln ($17 bln) in fiscal stimulus, Czech President Zeman said a referendum on EU and NATO membership should be held, Russia ended its tourism ban to Turkey, Brazil’s central bank is sending hawkish signals, Banxico hiked rates by a larger than expected 50 bp to 4.25%

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Australia may Migrate to European-style Investment Treaty Drafting

Public debate over how best to manage the interests of foreign investors and host states has resurfaced in Australia. Most of Australia’s free trade agreements (FTAs), like those of many other Asia-Pacific economies, follow a US approach to drafting substantive provisions that liberalise and protect cross-border investment. This includes increasingly detailed provisions for investor–state dispute settlement (ISDS), whereby investors and host states appoint arbitrators on a case-by-case basis.

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