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Chinese creditors’ restructuring terms could materially change recoveries on Sri Lanka’s external bonds. Sergi Lanau and Jonathan Fortun compare scenarios consistent with the country’s debt targets in February 2023. Limited payment moratoria imply lower bond recoveries than broader alignment with Paris Club treatment, illustrating how creditor coordination shapes the outcome for bondholders.
Read the workSeparating the effects of the G7 oil price cap from the EU embargo was essential to judging sanctions in February 2023. Robin Brooks, Jonathan Fortun and Jonathan Pingle argue that the embargo had already widened the discount on Russian crude, leaving the cap nonbinding. They examine the representativeness of tanker traffic data and the limits of conclusions available at that early stage.
Read the workGhana’s external debt restructuring is evaluated through recovery scenarios consistent with its targets and conservative macroeconomic assumptions. The January 2023 baseline combines an 8% principal reduction with substantial coupon cuts, producing a value of 38 cents per dollar at a 12% exit yield. A much stronger macroeconomic scenario raises recovery to 47 cents; these are conditional valuations, not a completed exchange outcome.
Read the workFalling natural gas prices did not mean Europe’s energy shock had ended. Robin Brooks, Jonathan Fortun and Jonathan Pingle point to prices still above historical norms and weaker production in industries that use large amounts of gas. Their January 2023 analysis links lower energy demand to economic damage, while emphasizing the continuing loss of purchasing power through the terms of trade.
Read the workAn assessment of forecasting mistakes in 2022 acknowledges the failure to warn ahead of Russia’s invasion of Ukraine. The authors also revisit an overly pessimistic European recession forecast and the unexpectedly broad frontier market selloff. The retrospective treats these misses as lessons for economic analysis and risk assessment rather than presenting only successful calls.
Read the workNarrowing inflation across US consumer price components had signaled disinflation before the turn in core inflation, according to this December 2022 analysis by Jonathan Pingle, Jonathan Fortun and Robin Brooks. They identified early signs of a similar pattern in the euro area as their monthly inflation breadth index fell and price increases slowed in components sensitive to energy costs. The authors anticipated a turn in euro area inflation and argued for a less restrictive ECB stance.
Read the workCongressional reductions to Lula’s proposed spending package did not resolve Brazil’s fiscal uncertainty heading into 2023. The December 2022 assessment saw limited scope for a large near term decline in risk premia and called for substantial adjustment to stabilize debt. It contrasted reversing tax cuts and retaining the spending cap with a major relaxation of fiscal rules that it considered unsustainable.
Read the workPortfolio investment into emerging markets reached $37.4 billion in November 2022, led by $23.0 billion in equity inflows compared with $14.4 billion in debt. Chinese equities attracted $8.5 billion. The December release separates these asset allocations to show where the month’s capital entered emerging markets.
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