Teneo Macro

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Many factories remain closed in China. Constitutional amendments continue to progress through Russia’s parliament. Germany’s main governing party will have to look for a new leader. Meanwhile, India’s ruling party is bracing for yet another defeat, Romania’s new cabinet will be unveiled, an IMF team will arrive in Argentina, and the budget statement is expected to be released in Kenya.




Talks continue between Brussels and EU member states about the bloc’s next multiannual financial framework (MFF). The upcoming macro budget might end up being one of the lowest in terms of overall spending. At the same time, the comparison of the relative share of some key components over time shows how the EU’s policy focus has evolved. The upshot might be that if Europe wants to spend more on the Green transition, it will probably have to continue cutting elsewhere. This, however, raises the question of how compromise can be achieved in time for 2021, and how voters will react if less money is spent on everything from agricultural subsidies to regional cohesion policy.



Some Chinese businesses resumed work on 10 February, following eleven missed workdays as due to the coronavirus epidemic. But many factories remain closed due to restrictions imposed by local governments where the outbreak is most severe. Other factories re-opened but are operating at reduced capacity due to labor shortages or because they cannot obtain enough face masks for their workers. Many office workers have been instructed to work from home.


On 11 February, the lower house of parliament (State Duma) is expected to hold a second vote on the constitutional amendments outlined by president Vladimir Putin in this annual address on 15 January. Unless the vote is rescheduled to a later date, the second reading should reveal whether there were any changes to the initially adopted amendments in first reading on 23 January. The package of constitutional changes would still face the third (and final) vote in the State Duma and need approval from the upper chamber of parliament (Federation Council), before being sent for president’s signature.


The leader of Chancellor Angela Merkel’s Christian Democratic Union (CDU), Annegret Kramp-Karrenbauer (AKK) has declared her intention to step down. AKK will not run for chancellor and will hand over the party leadership to whoever is chosen to lead the CDU into the next election. But this does not raise the risk of Merkel not serving out her term or of Germany heading to elections before September 2021. As the CDU remains structurally divided between traditionalists and centrists, it will not want a quick return to the polls where it would risk getting split between the far-right Alternative for Germany (AfD) and the centrist Greens. The party is back to square one with its attempt to agree on the right way forward into its post-Merkel future.




Results for elections to the Delhi assembly will be announced on 11 February. Despite intensive campaigning, the Bharatiya Janata Party-led National Democratic Alliance (NDA) in power in the federal government is unlikely to win, yielding to Aam Admi Party (AAP) currently holding Delhi. This is the second straight loss for the NDA in provincial election in the last six months after elections to the Jharkhand assembly in November 2019.



This week Prime Minister-designate Ludovic Orban (National Liberal Party) – who also leads the current caretaker government – will present the composition of his new cabinet and the updated governing program for parliament’s consideration. While the parliament has to vote on the new government within 15 days, this period maybe extended by opposition Social Democratic Party’s plans to appeal the nomination of Orban to the constitutional court and/or boycott the upcoming vote of confidence. Considering that the approval of another Orban cabinet is unlikely, such delays may push the (likely) early general elections into the second part of summer.



An IMF technical team arrives in Buenos Aires on 12 February to evaluate economic measures taken so far under Alberto Fernandez’s presidency. On the same day, Finance Minister Martin Guzman is due to appear before Congress to explain the outlines of the government’s debt restructuring strategy. Guzman appears unlikely to produce a comprehensive economic plan with fiscal, growth, and inflation targets, despite creditors’ calls for policy specifics to be made public. In parallel, on 13 February, the monthly inflation figure for January will be published; the government will attribute anything under 3.7% – December 2019’s rate – as the result of its expanded price controls.



Finance minister Ukur Yatani is expected to release his first Budget Policy Statement (BPS) next week. Yatani had been appointed in July 2019 as his predecessor Henry Rotich had been ousted over corruption allegations. Against the background of an upward revision of the deficit target in November 2019, the BPS will give an update on the government’s actual revenue and expenditure situation. Furthermore, Yatani will also use the BPS to indicate the government’s spending priorities going forward, most notably investment under President Uhuru Kenyatta’s ‘Big Four’ national development agenda.