Key Economic Updates – Remittance Receiving Countries

India's RBI raises CRR, repo rate

On 29 July, 2008 India's central bank, the Reserve Bank of India (RBI) in its First Quarter Review of Annual Statement on Monetary Policy for the Year 2008-09, increased the short-term indicative rate (REPO rate) by 50 basis points to 9.0% with immediate effect. It also increased the Cash Reserve Ratio (CRR) by 25 basis points to 9.0%, with effect from 30 August, 2008. The increase in CRR is expected to drain out excess liquidity from the banking system to the tune of INR90 billion ($2.25 billion). The policy actions would aim to bring down inflation from the current level of about 11.0- 12.0% to a level close to 7.0% by 31 March, 2009.

BSP says inflation may peak at 12% in 4Q

On 01 August, 2008 the central bank of Philippines, Bangko Sentral ng Pilipinas (BSP) warned that inflationary risks from food and fuel prices will remain high and the year-over-year increase in consumer prices are likely to be a little more than 12% in the fourth quarter before tapering off next year. BSP managing director for research, Cyd Tuano-Amador said “The pass-through from global prices is not yet over, and the global non-oil commodity price hikes appear prolonged and are expected to take longer to unwind.

Mexico jobless rate rises to 3.55% in June

On 18 July, 2008 the national statistics agency reported that Mexico's jobless rate in June was 3.55%, marginally hi ghe r than tha t expe c t ed. The unemployment rate was 3.24% and 3.26% in the months of May and June 2007, respectively.

China's unemployment rate down to 4% in 1H

On 01 August, 2008 the Ministry of Human Resources and Social Security reported that China's registered urban and township unemployment rate was 4.0% in the first half of the year, down 0.2% from the same period last year. According to the ministry, a total of 8.35 million people were registered unemployed across the country's urban areas and townships in the first half of the year. The nation had created 6.4 million jobs opportunities in the first half, accounting for 64% of the annual 10 million goal set by the ministry.

Brazil posts wider than expected current account deficit in June

According to the data released by the central bank of Brazil on 28 July, 2008, the country posted a wider-than-expected current account deficit in June, as companies nearly doubled profit remittances abroad because of a strong domestic currency. The bank mentioned that the deficit reached $2.6 billion in June, compared to a $539 million surplus in the same month of 2007. The bank added that MNC's in the country sent $3.4 billion in profit and dividends abroad, compared to $1.75 billion in June 2007, as gains in Brazil's currency made it cheaper to buy dollars.

Chile's 1H fiscal surplus 4.0% of GDP

On 30 July, 2008 the Government of Chile mentioned that the country's public sector posted a fiscal surplus in the first half of 2008 of 4.0% of gross domestic product (GDP) and a second-quarter surplus of 1.0% of GDP. The Government Budget Director, Alberto Arenas said “The accumulated surplus during the first half is in line with the 6.7 percent of GDP forecast for the year," Arenas told reporters.

Peru central bank raises benchmark rate to 6%

On 10 July, 2008 Peru's central bank raised its benchmark interest rate to 6% from 5.75%, after a monthly monetary policy meeting. The central bank said “ This decision - along with previous measures taken this year - aims to prevent high international food and fuel prices from affecting inflation expectations, against a backdrop of fast growth in public and private spending.