In Brazil, despite some improvement in consumer and business sentiment on the perception of less economic policy uncertainty going forward and following the impeachment of the previous president, it remains unclear whether the still-open corruption scandals and public governance issues would affect the new government or not. Besides, recent indications about the actual economy have not yet mirrored any of that optimism in the sentiment indices. GDP forecasts remain intact this month at -3.4% and 0.4% for 2016 and 2017, respectively.
In Russia, the notable ease in the rate of inflation holds encouraging prospects for household consumption, which suffered from the sharp increases in consumer prices and currency depreciation last year. The cautious steps towards lower interest rates should be received positively and prompt better expectations for spending, lending and investment. GDP is forecast to decelerate by only 0.6% this year, before returning to the growth territory at 0.7% in 2017.
India's economy is well placed to grow at a robust pace, due to strong domestic consumption and, to a lesser extent, government spending on infrastructure. A recent narrowing of India's current-account deficit (CAD) was due to a smaller merchandise trade deficit. India's inflation dynamics have altered considerably over the last few years. However, India has also adopted an official inflation target framework, under which the Reserve Bank of India (RBI) is responsible for lowering inflation towards the government’s 4% target. Indian’s trade deficit narrowed in August of 2016. Also, the Indian manufacturing industry lost momentum in September as growth of new orders eased from August’s 20-month high. In this month, and despite market expectation, RBI cut the interest rate by 0.25 bp to 6.25%, sending a signal of possible additional easing ahead.
Despite China’s real GDP growth of 6.7% y-o-y in 2Q16, there was a modest slowdown in 2H16, but it seems a fast pace of growth will remain reliant on continued fiscal and monetary easing to shore up domestic demand. Meanwhile, property has been one of the few bright spots in a slowing economy this year. The real estate industry contributed 0.37 pp to economic growth in 1H16. China's trade balance rose sequentially in 3Q16. China's utilized foreign direct investment (FDI) expanded by 0.5% in August, compared with 0.6% in the first seven months of the year. The stable rate of headline growth masks deeper contractions in investment into industry and construction, as well slower growth into agriculture. The positive news in terms of trade indicates that much of the August improvement is due to prices rather than volume changes.