US ECONOMICS

ECONOMY

FED. July 17, 2019. Beige Book

Summary of Commentary on Current Economic Conditions by Federal Reserve District
Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

This report was prepared at the Federal Reserve Bank of San Francisco based on information collected on or before July 8, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Overall Economic Activity

Economic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period. In most Districts, sales of retail goods increased slightly overall, although vehicle sales were flat. Activity in the nonfinancial services sector rose further. Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector. Although some Districts continued to report healthy expansion in the transportation sector, others noted that activity declined modestly. On balance, home sales picked up somewhat, but residential construction activity was flat. Nonresidential construction activity increased or remained strong in most reporting Districts, and commercial rents rose. Manufacturing production was generally flat, but a few Districts noted a modest pickup in activity since the last reporting period. Agricultural output declined modestly following unusually heavy rainfall in some areas, and oil and gas production fell somewhat. Increased demand for loans was broad-based, with all but two Districts noting some growth in financing activity. The outlook generally was positive for the coming months, with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty.

Employment and Wages

On balance, employment grew at a modest pace, slightly slower than the previous reporting period. Labor markets remained tight, with contacts across the country experiencing difficulties filling open positions. The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care. However, some manufacturing and information technology firms in the Northeast reduced their number of workers. A few reports highlighted concerns about securing and renewing work visas, flagging this as a source of uncertainty for continued employment growth. Compensation grew at a modest-to-moderate pace, similar to the last reporting period, although some contacts emphasized significant increases in entry-level wages. Most District reports also noted that employers expanded benefit packages in response to the tight labor market conditions.

Prices

The reports indicated that the rate of price inflation was stable to down slightly from the prior reporting period. Districts generally saw some increases in input costs, stemming from higher tariffs and rising labor costs. However, firms' ability to pass on cost increases to final prices was restrained by brisk competition. Reduced supply boosted prices for some agricultural goods. Reports on transportation costs were mixed, with some Districts noting increased upward pricing pressures, while others highlighted price declines due to reduced demand for shipping services. Prices for professional and business services fell slightly, and steel and lumber prices softened due to lower demand.

FULL DOCUMENT: https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20190717.pdf

LATIN AMERICA

U.S. Department of State. 07/16/2019. Senior State Department Officials Previewing Secretary Pompeo’s Upcoming Trip to Buenos Aires, Argentina; Guayaquil, Ecuador; Mexico City, Mexico; and San Salvador, El Salvador

MODERATOR: Good afternoon. Thank you all for joining us. Welcome to this background call to preview the Secretary of State’s travel to Argentina, Ecuador, Mexico, and El Salvador. As a reminder, today’s call is on background, and you may refer to the three officials participating as Senior State Department Official One, Senior State Department Official Two, and Senior State Department Official Three. For your situational awareness and not for reporting, we are fortunate to have with us today [Senior State Department Official One], [Senior State Department Official Two], and [Senior State Department Official Three]. The contents of this background call is embargoed until the call’s conclusion, and with that, I will turn it over to [Senior State Department Official One].

SENIOR STATE DEPARTMENT OFFICIAL ONE: Thanks, [Moderator], and thanks to everybody for taking the time to join the call. It’s a pleasure to speak with you today to preview this week’s second Western Hemisphere Counterterrorism Ministerial in Buenos Aires. This is a follow-on to the ministerial that we hosted here at the State Department in Washington last December to focus our neighbors’ attention on the problem of terrorism here at home. Secretary Pompeo is going to be leading the U.S. delegation, and that underscores how seriously this administration takes the terrorist threat here in the Western Hemisphere that we face from a range of groups like Hizballah, ISIS, al-Qaida, and others.

We see this week’s ministerial as an important step in bolstering our collective efforts to address these threats and protect our hemisphere from the scourge of terrorism. As we’ll address with ministerial participants, terrorism is a global threat that affects us all. Here in the Western Hemisphere and in the U.S., terrorism may sometimes seem far away, a problem for the Middle East or a problem for Afghanistan, but it’s not. It’s a threat here too, and we can’t afford to be complacent.

The timing of this ministerial is not an accident, because this Thursday marks the 25th anniversary of the Hizballah attack on the AMIA Jewish community center in Buenos Aires, which serves as a stark reminder that we must remain vigilant of this ongoing threat here in the Western Hemisphere. The AMIA bombing was carried out by the Lebanese terrorist group Hizballah with Iranian support and direction. It’s been 25 years since the bombing, but the threat from Iran and Hizballah to this hemisphere remains undiminished.

So let me say a few words about what the United States is doing to address this threat. For the past two years, the administration has led unprecedented efforts to elevate focus on counterterrorism in the Western Hemisphere. We convened the first Western Hemisphere Counterterrorism Ministerial in December of last year, hosting 13 key partners here at the State Department.

And I’d like to give you a few quick examples of the concrete results we’re seeing as a result of this cooperation. Last year, Argentina froze the assets of 14 members of the Barakat Clan. This is an extended family with close ties to Hizballah. Brazil followed up by arresting Assad Ahmad Barakat, the leader of the family and a key Hizballah financier. He is now in jail awaiting extradition to Paraguay.

Last month, Paraguay extradited a Hizballah supporter to the United States to face money laundering charges in Florida, and Peru is trying a Hizballah operative on terrorism charges. In addition, a number of Latin American governments regularly participate in the U.S.-Europol-led Law Enforcement Coordination Group, or LECG. This is a 30-member body that focuses on countering Hizballah’s terrorist activities and other illicit activities.

This proactive counterterrorism work wouldn’t be possible without the help of our Latin American partners. As Secretary Pompeo highlighted in Brussels some time ago, this renewed engagement with our friends and partners is a top priority under this administration. As Secretary Pompeo said in Beirut in March, “The United States will continue to bring unprecedented pressure to bear on Iran until it ceases all malign behavior, including that which is carried out by Hizballah.”

I look forward to furthering that work at the ministerial later this week and look forward to your questions now. Thanks.

MODERATOR: Great. We’re going to turn it – thanks, [Senior State Department Official One]. [Senior State Department Official Two] now has some opening remarks.

SENIOR STATE DEPARTMENT OFFICIAL TWO: Thanks, everybody. It’s really nice to have a chance to talk about the Secretary’s travel, not just the ministerial that [Senior State Department Official One] was just talking about but also the bilateral parts of his visit in Argentina and in Ecuador, and then I’ll ask [Senior State Department Official Three] to talk about the Central America and Mexico parts of the trip.

So first a little overview. The Secretary in April went down to Chile, and he touched on, in his remarks there, really sort of our overarching view of this, and that despite the challenges we face in some parts of the hemisphere, this is really a good-news story. And like he said, this is an incredible opportunity that we have in the Americas, and it’s a chance to really cement a future of democracy and prosperity for all the people of this hemisphere.

And so not only will the Secretary be participating in the ministerial and in events commemorating those who died, who were murdered in the AMIA bombing, but he’ll also meet bilaterally with Argentine President Mauricio Macri to really emphasize and reiterate our commitment to partnering for Argentina, not only at combatting terrorism and transnational crime but also on economic reform and promoting democratic governance.

We recognize the Argentines and the Argentine Government as a respected and a valuable partner both regionally and globally. They did a great job with their presidency of the G20 last year, and we share with them a really positive vision on how they can develop their energy sector, and we’re very supportive and we admire how they have been working very hard to align their economy and their economic policies with OECD principles. And we can’t really leave aside either the incredibly strong role and admirable role they have played in the Lima Group process to bring – or to help Venezuelans restore democracy and – in their government and in their country.

Now, in Buenos Aires the Secretary is also going to be holding bilateral meetings with the new foreign minister of Chile, Foreign Minister Ribera, and with Bahamian Foreign Minister Henfield, and we’re also going to be discussing with them joint projects on regional security, economic prosperity, and on democratic governance.

Now, after the ministerial, Secretary Pompeo and his delegation will travel up to Guayaquil, Ecuador on the 20th, and this is his very first trip to Ecuador as Secretary of State, and it’s the first time that we’ve had a secretary travel to Ecuador in nine years. The president of Ecuador, Lenin Moreno, has really done a great job in guiding Ecuador on a new path. We’re eager to work with him to advance our shared interests with his government and with his country. We have a lot in common. We have a lot of shared goals with the Ecuadorans: working with them on democratic governance issues, expanding our economic ties and commercial ties with the country, expanding educational exchanges. And we’re working together very much on a lot of regional public safety and public security initiatives and – in fighting transnational crime, narcotrafficking. They are a good partner on maritime interdictions, for example.

And again, with the Ecuadorans I think it’s really important to emphasize the very impressive role they have played in the Quito process and in working to help restore democratic institutions, helping Venezuelans restore democratic institutions in their country. They have been taking a heavy pressure of inbound migration from the people expelled by Mr. Maduro’s chaos in Venezuela, and they have been doing great work on dealing with the – regionally with the public health and migration and refugee challenges, and they’ve been doing really admirable work and calling out what’s going on in Venezuela.

And I’ll like to turn it over now to [Senior State Department Official Three] to have a chance to talk a little bit about the rest of the trip after he’s wheels-up from Guayaquil.

SENIOR STATE DEPARTMENT OFFICIAL THREE: Great. Thank you, [Senior State Department Official Two]. So from Guayaquil, the Secretary will head to Mexico City, where he’ll meet with Foreign Secretary Ebrard to cover a broad agenda, from our shared efforts to transform our commercial ties to the USMCA, to our joint commitment to promote opportunity and economic prosperity in southern Mexico, and of course our efforts to stem the flow of illegal migration before it reaches our shared border with Mexico.

Secretary Pompeo will then head to San Salvador, El Salvador, the first visit by the Secretary of State to that country in 10 years. Again, this is an opportunity for us to transform our bilateral relationship, as we’re doing in Brazil and Ecuador and Paraguay.

The Secretary looks forward to meeting President Bukele and welcomes his vision to build a stronger, more transparent, and self-reliant El Salvador, which we believe will lead to a bright future for the country.

While in San Salvador, the Secretary will reinforce our bilateral security cooperation, and to that end he’ll extend a lease for the U.S. use of facilities at the Comalapa Airport, which has played an important role for the United States in the region in support of counter-narcotics operations.

Joint efforts to combat drug trafficking, transnational crime, and gangs show our strong record of collaboration on security issues and a commitment to strengthening the rule of law. We’ll also work closely with El Salvador to promote good governance and transparency practices in foreign investment screening.

MODERATOR: Great. With that we can now open it up for questions. Apologies in advance, [Senior State Department Official One] has a previous commitment and he is not able to stay for the duration of the call. So let’s open it up for questions, please. Anna, thank you.

OPERATOR: Okay. And our first question comes from Shaun Tandon with AFP. Please, go ahead.

QUESTION: Hi there. Thanks for doing this call. Can I follow up with Senior Official Number Three? Security and migration – the administration of course has recently talked about reducing eligibility for migrants as they enter. What is the Secretary looking for in Mexico? Is he expecting Mexico to agree with this? And with El Salvador, the President earlier this year talked about cutting off aid to El Salvador. Is that consistent with what the Secretary is going to promoting in El Salvador? Thanks.

SENIOR STATE DEPARTMENT OFFICIAL THREE: Sure. So I’m confident – I’ll take your second question first – I’m confident that the Secretary and President Bukele will discuss the full range of ways that we can work together to counter illegal migration as well as the commitments that the Salvadorans have already made to work both towards economic prosperity as well as some migration interdiction.

On Mexico, I anticipate that there will be some discussion, but the Mexicans have already made it clear that the interim final rule that came out today is not going to impact Mexico or Mexicans, and so I don’t think that is going to be an issue. Mexico has made a number of major commitments, including increased enforcement through the deployment of their national guard throughout Mexico, and support for the expansion of the Migration Protection Protocols, the MPPs, across the entire southern border. And this will allow the United States to return many more people a day to Mexico. Those are going to continue in force as we move forward.

MODERATOR: Next question, please.

OPERATOR: Our next question comes from Courtney McBride with Wall Street Journal. Please, go ahead.

QUESTION: Thank you. Just to follow up on Shaun’s question, what does the – sorry. How does the collapse of the potential deal with Guatemala affect the Secretary’s plans on immigration? And then additionally, what deliverable are you hoping to get from the meetings? Certainly on immigration, but also on counterterrorism, security cooperation, and economic development.

SENIOR STATE DEPARTMENT OFFICIAL THREE: Could I ask you to reiterate the second part of the question? I’m not sure what you were getting at.

QUESTION: So just if you’re – if you anticipate any formal agreements coming out of certainly the ministerial, but also on the – out of the bilateral talks on immigration, on security cooperation, and economic development.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Hey Courtney, this is Senior Official One. Let me take that part before handing the baton over.

What’s going to – what do we hope to accomplish; what are the deliverables coming out of the ministerial? Well, we want to adopt a communique, the details of which will include things like a call for domestic designations regimes throughout the regime so that countries have the same capabilities the United States does to impose sanctions on terrorist organizations and their financiers. So over the short run we would like to see more countries adopt those laws, and over the longer run we would like to work with countries in the region to do joint designations of terrorists. The model we have in mind is the TFTC in the Gulf, in which the United States has worked with Gulf partners to release a number of joint designations targeting groups like Hizballah, ISIS, and so on.

SENIOR STATE DEPARTMENT OFFICIAL THREE: Great. And this is Number Three again. And what I would say on Guatemala is that we continue to work with the Guatemalans to achieve the shared goal of reducing illegal migration. We’re considering all options that will help us do so. We are still in active communications with them, so we can’t discuss internal or interagency deliberations.

I think in terms of your second – the second part of your question, the Secretary’s going to sort of reinforce and underline what we’re trying to accomplish in the region, as far as a regional approach. I don’t think he’s looking for new commitments, just a deepening of the existing commitments that both Mexico and Salvador have made.

MODERATOR: Next question, please.

OPERATOR: Our next question comes from Jennifer Hansler with CNN. Please, go ahead.

QUESTION: Hi there. Thanks for doing the call. To follow up on some of my colleagues’ questions, I was wondering if you could elaborate a little bit more on if there’s anything, specifically in El Salvador, that the Secretary or the State Department is looking for to renew the funding to the Northern Triangle.

And then the Guatemalan Government has said it’s reached a verbal agreement with the U.S. on a safe third country agreement. Is that something you can speak to? Thank you.

SENIOR STATE DEPARTMENT OFFICIAL THREE: Second part first. So the – with the Guatemalans, as I just mentioned, we are still in discussions on a full range of options to reduce illegal migration. And I can’t really talk about any of those ongoing talks.

On the first part of the question about Salvador – so you’re – repeat the question for me. Let me make sure I get it right.

QUESTION: Are there any firm commitments that you’re looking for that would guarantee that some of this funding that’s been revoked would then be restored to these Northern Triangle countries?

SENIOR STATE DEPARTMENT OFFICIAL THREE: Look, I think the President made it clear and the Secretary confirmed that the U.S. is seeking to see more progress from the Central American countries to combat the flows of illegal migration. So I think to that extent, the Secretary will be talking about the things that Salvador is doing and that President Bukele plans to do to continue to decrease those flows. We really can’t talk about those other things until we can get this migration crisis under control.

MODERATOR: Next question, please.

OPERATOR: Our next question comes from Meghan Gordon with S&P Global. Please, go ahead.

QUESTION: Yeah, hi. Do you expect any energy issues to be on the agenda when you talk about economic cooperation? And specifically the Mexican administration is effectively blocking the startup of a major national gas pipeline from Texas. Does the Secretary plan to engage the Mexican Government on that issue?

SENIOR STATE DEPARTMENT OFFICIAL TWO: Why don’t we – we can share a little bit of this. Look, well, I’ll start with Argentina, where the Secretary’s starting his visit. This is a country with huge potential in – huge energy potential. And we’ve been impressed with the policies that the government of – the administration of Mauricio Macri has adopted in order to create new opportunities for investment, to create – to develop those resources. A lot of American firms are working in that area, and we’re very pleased that they’ve created the preconditions so that can take place. And we’re very optimistic about the prospects for future development of those opportunities. And I’m sure that the general topic would come up in the discussions.

We’ve worked along the Pacific Rim with a number of governments under our America Crece initiative as well to find ways to develop – to cooperate as – with the firms and sort of create the framework with these governments so that American firms and firms that are interested in free and fair and sort of open market principles can work in those countries and develop those opportunities.

In terms of regulatory issues regarding pipelines, I think we can just refer that back to the people who are responsible for those.

MODERATOR: Final question, please.

OPERATOR: And our next question comes from Nora Gamez with Miami Herald. Please, go ahead.

QUESTION: Hi. Thank you for doing this. USCIS director stated that he would not designate Venezuela for TPS. Does State Department agree with that decision, and do you foresee this could be a cause of friction with partners such as Ecuador, for example, that are receiving a huge number of Venezuelan refugees?

SENIOR STATE DEPARTMENT OFFICIAL TWO: I’m not going to – I’m going to disappoint you and I’m not going to go into the details of internal discussions within the administration regarding the first issue. We really admire the efforts of not just the Ecuadorans but of other governments in the Andean Ridge, and this will be a topic of discussion, I am sure, when the Secretary meets with his counterpart and with the president of Ecuador, the huge commitments that they’ve taken on in dealing with the chaos that Maduro administration has meted out in effectively expelling these many people. And we will certainly be talking with them about how to help them not only mitigate the problems and the challenges they’re facing right now, but also to continue to work with them so that together we help the Venezuelan people overcome this Maduro-imposed chaos.

MODERATOR: And with that, our – today’s background call is concluded. The embargo is now lifted. Thank you again to [Senior State Department Official One], [Senior State Department Official Two], and [Senior State Department Official Three] for their help with today’s matters and look forward to seeing you soon. Thank you.

U.S. Department of State. July 16, 2019. Department Press Briefing

MS ORTAGUS: Good afternoon, everyone. Several things to start off with today. Okay, first an announcement. On Thursday, Secretary Pompeo will depart on a trip to Latin America to further strengthen our partnerships with likeminded countries and to keep all of our citizens safe and prosperous. Following on the Secretary’s trip to the region in April, a frequent high-level engagement by the deputy secretary, under secretary for political affairs, and other U.S. Government officials in the last few months, this trip highlights the priority the Trump administration places on strengthening our ties in the Western Hemisphere.

From July 19th to the 21st, the Secretary will visit Buenos Aires, Argentina; Ecuador, Mexico City, San Salvador, where he will expand cooperation on security issues; reinforce U.S. commitment to human rights and democracy, particularly support for the people of Cuba, Nicaragua, and Venezuela, and their struggle for freedom; and to enhance economic partnerships and to expand economic opportunities for our citizens.

Before heading to the region, the Secretary will travel to San Juan, Puerto Rico on July 18th, where he will meet with the State Department staff to express his appreciation for all of their hard work. The Secretary will then travel to Buenos Aires, Argentina, where he will join regional leaders for the second Western Hemisphere Counterterrorism Ministerial to deepen cooperation in the fight against terrorism and transnational crime on July 19th. This ministerial will also commemorate the 25th anniversary of the deadly Iran-backed attack on the Argentine Jewish Mutual Aid Society community center in Buenos Aires. While also in Buenos Aires, the Secretary will meet individually with Argentine President Macri, Chilean Foreign Minister Ribera, and Bahamian Foreign Minister Henfield.

In Ecuador on July 20th, the Secretary will meet with President Moreno and Foreign Minister Valencia as we reinvigorate bilateral cooperation in areas of mutual interest, including strengthening democratic and transparent governance, expanding commercial ties, and increasing cultural and educational exchanges.

The Secretary’s visit – his first visit to Ecuador and the first secretary of state to visit Ecuador since 2010 – indicates that the relationship between the United States and Ecuador is stronger than ever.

On July 21st, Secretary Pompeo will head to Mexico City, where he will meet with Foreign Minister Ebrard to continue ongoing conversations with the Mexican Government on illegal migration, the U.S.-Mexico-Canada agreement, and promoting opportunity and prosperity in southern Mexico.

He will then travel to San Salvador, El Salvador, where he will mark the first visit by a secretary of state to that country in 10 years. Secretary Pompeo will meet with the president to discuss our shared interest in reducing illegal migration and support the president’s efforts to create economic opportunity, combat corruption, and to build a strong, self-reliant El Salvador. The Secretary will also reinforce our bilateral security cooperation by signing a lease extension for U.S. use of facilities at the airport, which has played an important role for the U.S. in the region in support of counternarcotics operations.

Before heading back to D.C., Secretary Pompeo will stop in Orlando, Florida on July 22nd, where he will speak with the Veterans of Foreign Wars president, deliver a speech at the VFW, and meet with the VFW Kansas delegation.

QUESTION: Just on that, would you --

MS ORTAGUS: I’m not ready for questions yet, but I’ll get back. Thanks.

QUESTION: I know, but on that you said something that I think you might want to clarify.

MS ORTAGUS: Okay.

QUESTION: And that would be about the Puerto Rico part of it. Do you want to explain as the statement that – which State Department staff in Puerto Rico he’s going to be meeting with? Because I think that people might be confused into thinking that – Puerto Rico is part of the United States, so it doesn’t have a U.S. embassy or consulate in it, right? So these people work for what part of the State Department?

MS ORTAGUS: I don’t know.

QUESTION: They work for the --

MS ORTAGUS: Commemorating five years since MH17: We remember the victims who lost their lives in the downing of Malaysian Airlines Flight MH17 over Ukraine tomorrow on July 17th, 2014. It’s been five years since 298 innocent civilians lost their lives. We extend our deepest sympathies to the families and friends of the victims. As we said in our June statement, we call on Russia to ensure that individuals currently in Russia who were indicted by Dutch prosecutors in June will face justice. We fully support the ongoing work of the Dutch authorities and the joint investigation team to bring those responsible to justice.

Next on Tunisia: The Secretary today met with Tunisian foreign minister as a part of the third U.S.-Tunisian Strategic Dialogue to reinforce the strong relationship between our two countries. In support of this engagement, officials from our governments reviewed Tunisia’s political, economic, and security situation, and welcome upcoming parliamentary and presidential elections as important milestones for Tunisian democracy. The Strategic Dialogue capped off a series of high-level bilateral engagements. The Defense Department hosted the 33rd Joint Military Commission in April, and the United States Trade Representative organized the eighth Trade and Investment Council in May, and the Departments of State and Commerce held the second Joint Economic Commission in June. The United States strongly supports Tunisia, and we recognize the importance of a successful and secure Tunisia to the entire region.

The Secretary today also met with Colombian foreign minister in Washington, D.C. The two leaders discussed the ongoing political and man-made humanitarian crisis in Venezuela. The Secretary expressed gratitude for Colombia’s continued leadership and extraordinary generosity in hosting displaced Venezuelans.

The Secretary and the foreign minister also discussed recent progress on combatting narcotics and the need to do more to meet the shared goal of reducing coca cultivation and cocaine production by half by the end of 2023.

Matt.

QUESTION: Can I just ask you what is going on in terms of discussions, deliberations about Turkey and its purchase of the S-400s? I saw that the President said at the top or during the cabinet meeting today that the F-35s are no longer a go.

MS ORTAGUS: He did say that.

QUESTION: But we had all been – that had been previewed well in – even if the final, final decision had been made. But there are other things that could be triggered under CAATSA, and I’m just wondering where things stand in the discussion.

MS ORTAGUS: Right. So the Secretary and the President are examining all of the options that are in the CAATSA legislation. I think that we’ve been pretty clear from this podium what the ramifications could be, and I think that you saw those ramifications today when the President talked about the inability of Turkey now to have the F-35.

As it relates to which sanctions options will be chosen, we don’t preview those sanctions in advance, but know that the Secretary is obviously reviewing and working on this with the President.

QUESTION: Right. But if you had – if you could, where are we in the process? Are they close? Are they far away? Are they middle distance? When do you --

MS ORTAGUS: They’re in the process. As soon as we have an announcement to make, I’ll let you know.

QUESTION: Okay.

MS ORTAGUS: Yeah.

QUESTION: On that topic, you said you’re not going to preview which sanctions they’re going to use. Does that mean that they won’t – the prevailing wisdom is they are going to go ahead with sanctions? There’s not an effort to try to maybe do a workaround or waive those sanctions, or is that part of the discussion at all?

MS ORTAGUS: I don’t know what workaround you’re referring to. I mean, I think we could all go to google.com and look at the CAATSA sanctions and see the 12 options that are available there and what can be done in that legislation. And I think that the Secretary and the President will make a decision based off what they’re required to do according to U.S. law, and once they have that decision, we’ll certainly inform all of you.

QUESTION: Follow-up?

MS ORTAGUS: Mm-hmm.

QUESTION: The EU also – it imposed some sanctions for Turkish drilling in Cyprus economic zone, and Turkey strongly rejected that. What’s your position on the issue?

MS ORTAGUS: We’ve talked about – I think we’ve talked about this before here. We certainly have expressed similar – similarly to the Europeans, we’ve expressed deep concerns over Turkey’s assertions that it is going to continue to drill in these waters off of Cyprus. And I think that I’m pretty sure that I released a statement on this back on July 9th, and so I refer you back to that statement. I could read it, but you could probably easily get a copy. But again, we similarly share the concern that the Europeans have displayed today.

Yes, hi.

QUESTION: Yes, hi. As you know, there was a report that Imran Khan, Pakistan prime minister, will visit Washington next week.

MS ORTAGUS: Yes.

QUESTION: Regarding Pakistan, there are human rights violation happening in Quetta, Balochistan and other part of Pakistan and some Afghan Hazara people living in Quetta. Do you think that the U.S. administration will discuss about this important issue?

MS ORTAGUS: So we have actually talked about this quite a bit here from the State Department. Number one, you could always go to our Human Rights Report. But secondly, I think that’s a timely question because we have the religious freedom ministerial that’s going on right now. I think many of you have probably attended some of the sessions. I will be there tomorrow, so I encourage you to attend tomorrow.

And as it relates to the report that Ambassador Brownback puts out that he spoke about at the podium last week, he is actually – they talked about this issue as it relates to Pakistan.

So the visit, of course, between Khan and President Trump will be at the White House, and that’s, of course, their – I’ll leave it to the White House to talk more about what will happen in that visit. But here from the State Department regarding the issue that we referred to, we have, I think, at least two instances where we have talked about this in our public reports.

Hi, Shaun.

QUESTION: Can we stay on that – can we stay on the same topic?

MS ORTAGUS: Go ahead, Shaun.

QUESTION: A different topic, on North Korea.

MS ORTAGUS: Okay.

QUESTION: North Korea --

QUESTION: Can we stay on the same topic?

MS ORTAGUS: Did I call on you? I didn’t – no, I called on Shaun. Thanks.

QUESTION: Sure. On North Korea, the – North Korea has made a statement saying that talks that have been – had been agreed to by President Trump and by --

MS ORTAGUS: Yes.

QUESTION: -- Chairman Kim will not go forward if there are joint drills going ahead between the United States and the Republic of Korea. What is the U.S. response to that? Will drills be again either taken down to a smaller level or postponed? Do you expect talks to go ahead?

MS ORTAGUS: Right. So I’ll leave it up to the Department of Defense to speak to those because that’s under their purview. We saw, of course, overnight the press statements from a person within the foreign ministry. We would say from our perspective we would hope that no one would try to block – in their government or our own government – the ability for President Trump and Chairman Kim to get – to make progress on the commitments that they made to each other in Vietnam. We will look forward, of course, to resuming those negotiations, and we hope to talk about all ways that we can advance progress on these commitments.

And so I think that, as we’ve said here – we talk quite a bit about North Korea from the podium, because there’s always a report here and a report there, and I think our position – we talked about this actually pretty extensively last week – is going to remain the same, that the President feels very confident. The Secretary was there; Steve Biegun was there. They feel confident in the discussions and the meetings that they had with Chairman Kim at the DMZ, and we hope Steve Biegun and his team will quietly continue to make progress behind the scenes. Yes. Hi.

QUESTION: Your comment just there – are you suggesting that there are people in the U.S. Government who are trying to prevent talks from Chairman Kim and – or the talks that Chairman Kim and President Trump have agreed to from going on?

MS ORTAGUS: I’m not suggesting that anyone would ever undermine the President.

QUESTION: Or are you suggesting that there’s some kind of a – some kind of a --

MS ORTAGUS: Jennifer.

QUESTION: Thanks, Morgan. Just a bit ago in the Cabinet meeting Secretary Pompeo that Iran, for the first time, had agreed to negotiate on missiles. Can you say what comments he’s referring to? The Iranian foreign minister has pushed for – rather their UN mission has pushed back on the comments to Lester Holt, their characterization of that. Is – are those the comments he’s referring to?

MS ORTAGUS: The Iranian foreign ministry pushed back on which comments?

QUESTION: Sorry. The UN mission. The UN Iranian mission --

MS ORTAGUS: Oh, okay.

QUESTION: -- has pushed back on the characterization that those comments were at all about missiles.

MS ORTAGUS: I didn’t see what the mission said. I’ll definitely look that up and respond to that specifically. As far as the President and the Secretary’s comments in the meeting, I’ll certainly – I think they should speak for themselves. I think it goes to show, though, what we have talked about consistently from this podium. Our messaging has been that we are willing to talk to the Iranians. The President and the Secretary has said several times that they will talk without preconditions. The Iranians just need to show that they’re ready to talk.

This, of course – I think one of the more frustrating things about this is that the Iranian regime – and Brian Hook talks about this quite a bit – often meets our diplomacy with continued aggressive behavior in the region. We saw, of course, when President Abe was in Iran, the attacks on the Japanese tankers. We’ve seen the regime attacking Emirati, Norwegian tankers. We also saw – what was it, two weeks ago now? My days start to run together – we saw the IRGC navy harassed a British vessel. I think that was two weeks ago.

So despite some of the rhetoric I think that has been inflamed in Washington over the past two months that this administration was somehow rushing to war, we think it was – this was quite the opposite, and we think that this is just a continuation of what we said, that we will meet and talk and negotiate with the Iranians without preconditions. But they should know that the 12 steps that the Secretary lined out over a year ago will be on the table, and that is the destabilizing behavior that they’re going to have to address beyond just their – the purported program.

QUESTION: But can you say was he talking about a different – what comments was he referring to when he said they would be talking without – without conditions?

MS ORTAGUS: Yeah, I think he was responding to the media report.

QUESTION: Okay.

MS ORTAGUS: Yeah.

QUESTION: On Iraq?

MS ORTAGUS: Yeah.

QUESTION: Morgan, just real quick on North Korea.

MS ORTAGUS: Okay.

QUESTION: When you got – you said that Special Representative Biegun continues to make – and his team continue to make quiet progress with the North Koreans, has he had much success since the impromptu meeting at the demilitarized zone in communicating with his North Korean counterparts? What has the contact been like?

MS ORTAGUS: So that’s – and I know – I certainly understand why you have to ask that. But when and where and how the U.S. has talks, whether it’s through Biegun or Pompeo or the President or anyone else, is not going to be announced here from the podium. We’re going to give this team space to do the work. I think the Secretary laid it out best. He said that he hopes these working-level negotiations with the North Koreans – he said this in an interview yesterday with someone from your network – will come to the table with ideas that they didn’t have the first time, and we hope that they can be a little more creative too. So, again, we’re going to give them the time and space to make this happen. And I understand why you have to ask that, but I think as it gets into the tick-tock of who’s meeting when and how. We’re just not going to get into that here.

QUESTION: And you can’t say if they have met yet?

MS ORTAGUS: No.

QUESTION: Morgan?

QUESTION: More on North Korea.

MS ORTAGUS: Yeah.

QUESTION: Thank you, Morgan. On the sanctions against North Korea, do you think South Korea is doing well in implementing UN sanctions against North Korea? Or do you have anything – evidence for North and South Korea has any (inaudible) sanctions against North Korea?

MS ORTAGUS: I don't have a specific update about South Korea, per se, but we would continue to encourage every country in the world to abide by U.S. sanctions, to abide by comprehensive UN sanctions of course as well. And we would hope especially that all of our friends and allies would continue to do so.

Anybody else have anything on North Korea?

QUESTION: Yes.

MS ORTAGUS: North Korea? Okay.

QUESTION: I just want to clarify your stance on the joint military drill? Do you think it’s --

MS ORTAGUS: You’re going to have to talk to DOD about that. Yeah, I’m not going to comment on that.

QUESTION: But do you think it’s – is there daylight between State Department and the DOD?

MS ORTAGUS: No, it’s just – we don’t do military drills at the State Department.

QUESTION: Do you think it’s --

MS ORTAGUS: That’s in my reserve duty.

QUESTION: But isn’t it counterproductive?

MS ORTAGUS: Go ahead, Said.

QUESTION: Thank you, Morgan. I have two quick questions on the Palestinian issue.

MS ORTAGUS: Okay.

QUESTION: Last week, it was said that the Palestinian official and Mr. Majid Faraj – he is the head of the Palestinian intelligence, someone who garnered closely – a close relationship with Secretary of State Pompeo when he was at CIA. Can you share with us if he was here, if he met with anyone and so on?

MS ORTAGUS: No.

QUESTION: What was the nature of his visit?

MS ORTAGUS: I don’t have anything on that. Thank you, Said. Sorry.

QUESTION: Okay. And just to follow up, if I may, on the Palestinian issue. Yesterday, the Israeli army shot a boy, a ten-year-old boy in the head. It was a sniper, target a child, and so on. Do you have any comment on that?

MS ORTAGUS: We are --

QUESTION: They were demonstrating in Kafr Qaddum. It’s a small village that was closed by the Israeli army.

MS ORTAGUS: Yeah. We’re certainly aware of these reports. I don’t have complete details yet regarding the incident, and of course, I think the Government of Israel would be happy to answer this question as well. I would say as a general matter at the State Department we continue to encourage both sides to take appropriate actions to ease tensions and to build an environment that is conducive for peace.

QUESTION: Right. But these are villagers that are protesting against the occupying force. I mean the people (inaudible).

MS ORTAGUS: Yeah. I’m that sure that the embassy --

QUESTION: There are no both sides.

MS ORTAGUS: -- here in the U.S. or the Government of Israel, their foreign ministry, would be happy to continue along the questions, but that’s all I have for that today.

QUESTION: Can I ask a quick question on Iran?

MS ORTAGUS: Sure.

QUESTION: Really, a quick follow-up. It seems that the foreign minister, Javad Zarif, is restricted to three places in New York: the mission, the UN, and the ambassador’s house.

MS ORTAGUS: Yes.

QUESTION: Is that – isn’t that in violation about protocol between the host country and the United Nations because they have a 25-mile radius? Can you share with us something?

MS ORTAGUS: No, it’s not a violation.

QUESTION: Thank you.

MS ORTAGUS: Carol?

QUESTION: I just wanted to follow on Janne’s question about Iran.

MS ORTAGUS: Okay.

QUESTION: Could you shine any light at all on how you communicate with Tehran? This may have been an issue – say it came from a media report – that the Secretary had this impression. But when you need to get a message to Tehran or – on say a potential breakthrough on negotiations, what kind of back channels do you have available?

MS ORTAGUS: I don’t think that that’s something that I could discuss from the podium.

Yeah, hi.

QUESTION: Just quick question on Iran, and with regard to the international coalition to safeguard shipping in the Hormuz Strait, specifically which country had the U.S. requested to join the coalition?

MS ORTAGUS: I don’t have a list on that. I mean, that’s something that I know, as we’ve traveled throughout the Middle East and Europe, I mean – for all parties that are – have an interest, including those in Asia as well, that’s something that we’ve been talking to a host of countries about. I don’t have the specific number. But as we continue to urge de-escalation in the region and continue to encourage Iran to stop their provocative actions, that’s a part of the larger conversations that we have with many friends and allies.

Yes, ma’am. Hi.

QUESTION: Just to follow-up --

MS ORTAGUS: No, that’s okay. Let’s go to the lady behind you, please.

QUESTION: The U.S. has already requested Japan to join the coalition, Japan – about Japan? The U.S. has already requested Japan to join?

MS ORTAGUS: Oh, have we asked Japan? I’d have to double check. I would assume we have, but I would have to double check.

Yes. Hi. Where are you from?

QUESTION: AWPS News. Kris Anderson.

MS ORTAGUS: Great.

QUESTION: Do you have anything on Algeria? There are ongoing reports of journalists that are within the civilian population and people being beaten up and arrested.

MS ORTAGUS: Well, I don’t have anything specific on Algeria. I would say that we talked about – just last week from the podium – about the journalism symposium that Phil Reeker attended. Forgive me for forgetting the specific name, but it was in London last week, and that was of course on media freedom. We talked about that quite extensively here from the podium last week. It’s something that we, of course, support.

And as you can tell, while the commission – excuse me – while the ministerial this week is on religious freedom, Ambassador Brownback had talked in an interview about how more religious freedom opens up to more freedoms, more of the ability for free speech, for journalistic freedoms. So that’s obviously something that we try – I personally try to talk about as often as possible from this podium, so thank you for asking.

Yes.

QUESTION: Thank you.

QUESTION: I have a follow-up and a question. The follow-up is that (inaudible). Imran Khan’s visit. Will he be visiting and meeting – have meetings in this building also?

MS ORTAGUS: So this is an official White House visit, so at the moment we’re going to let them speak to the details of the visit.

QUESTION: Okay. And the question is that: Are you satisfied with the recent visit of two USTR officials to Delhi about U.S.-India trade talks?

MS ORTAGUS: Right. Well, I was actually just in Delhi with the Secretary, where he met with his counterpart, and they were, of course, incredibly effective meetings. We talked there quite a bit, both in our meetings and to the media, and many – you probably know this already how India is – United States is India’s most important trading partner. I believe we’re their top market for exports.

And as it relates to our trade relationship – and the President has said this – excuse me, the Secretary has said this as well when we were in India – that we see a lot of opportunity for growth in our relationship. We see enormous potential. And he is confident – the Secretary is confident – he has reiterated this – that any sort of trade negotiations that we have, any issues can be worked through because of the friendship between our two countries.

QUESTION: Just a quick one. Do you have any comments on that Kartarpur Corridor that is being built between India and Pakistan for Sikh pilgrims?

MS ORTAGUS: Yeah, that was certainly a good news report, wasn’t it? We encourage it. Anything that increases people-to-people ties between India and Pakistan is something that we’re incredibly supportive of.

QUESTION: Thank you.

MS ORTAGUS: Ben.

QUESTION: Thank you, Morgan. This morning, Special Representative Brian Hook said that this Friday he was inviting members of the diplomatic corps to the State Department to present a maritime security initiative. Do you know who these diplomatic corps members are? And he also mentioned he was going to give a briefing. Do you know who’s invited?

MS ORTAGUS: Was his discussion off the record?

QUESTION: I’m sorry, I didn’t hear that.

MS ORTAGUS: Was his discussion off the record?

QUESTION: I don’t know.

MS ORTAGUS: Oh, you don’t know.

QUESTION: It was broadcast.

MS ORTAGUS: It was broadcast?

QUESTION: Yeah.

MS ORTAGUS: Oh. I have it confused with another one.

QUESTION: By Axios.

MS ORTAGUS: In terms of who he’s inviting, we’ll get that answer for you. I don’t have the invitee list with me, but we’ll be happy to share. I think you know Brian is – goes around the world, of course, working on his portfolio not only on Iran but in his advisory capacities to the Secretary as well.

QUESTION: Just a follow-up on that.

QUESTION: Just one more – sure.

QUESTION: Was that – the security initiative he was talking about, was that the Project Sentinel that was discussed on the Secretary’s trip to the Middle East a couple weeks ago?

MS ORTAGUS: I think it’s been called various names. We’ve been just – I’ve been informally referring it to the – as the maritime security initiative, but I will double-check with Brian if we – which name we’re going to officially call it.

QUESTION: But it’s the same – that’s what he was talking about, the same (inaudible).

QUESTION: Yes, one or two more on Iran?

MS ORTAGUS: Mm-hmm.

QUESTION: There’s a French-Iranian dual national, a professor at Sciences Po, who was arrested in Iran for --

MS ORTAGUS: What was the name?

QUESTION: Fariba Adelkhah.

MS ORTAGUS: I think I remember this.

QUESTION: I believe she’s a French-Iranian dual national. I was wondering if the State Department has anything to say about her detention and the nature of the charges against her.

MS ORTAGUS: I saw that report this morning. I think maybe I heard about that report on NPR, actually. And we do have information for you on that, Shaun, and I don’t think that I remembered to bring it with me, but we’ll get it to you, absolutely.

QUESTION: Can I ask about detainees? I want to go to Egypt, though.

MS ORTAGUS: Egypt?

QUESTION: So yeah, last month, this working group on Egypt – they call themselves the Carnegie Endowment – wrote a letter to the Secretary talking about Americans jailed unjustly in Egypt, and yesterday I think they said and published the Secretary’s response --

MS ORTAGUS: Yes.

QUESTION: -- in which he said yes, this is an issue of concern to us, and et cetera, et cetera. I wanted to ask about one specific – or two specific detainees who are not American citizens but whose families are American. That’s Ola al-Qaradawi and her husband Hosam Khalaf, and they’ve been in now for roughly two years each and the wife has just been – again today had her detention extended for another 15 days. What exactly are you telling the Egyptians about this, about what your concerns are in this specific case?

MS ORTAGUS: Yeah. Just so we don’t conflate the two issues, if I could just go back to the first issue that you were referring to, the letter from Carnegie, which, of course, you read the Secretary’s response. I just want to – the reason why I want to respond to that direct is because I think it’s important to note that we do take all allegations of abuse and torture extremely seriously, and that’s, of course, why we read and responded to that letter.

And then so, again, not to conflate the two, but the second issue on the case of this couple – al-Qaradawi and her husband, I believe, is Hosam Khalaf – we actually cited this case in our annual Human Rights Report on Egypt, so I would refer you to that. The State Department has met with the family members, which some of them are American citizens, to discuss this case. We actually did so again yesterday. Anything further in terms of – as it relates to their incarceration the Government of Egypt will have to answer, but we are – we’re meeting regularly as of yesterday.

QUESTION: Do you – was that here or there? Where – do you know where that meeting was?

MS ORTAGUS: We met with the family, so I’ll have to confirm. I don’t know if the family happened to be in Egypt or in the U.S., but I’ll confirm that for you.

QUESTION: Okay. And the other – and but have you gone as far as to call for their release or are you just saying that – you’re just expressing concern about the conditions of their detention?

MS ORTAGUS: We’re expressing concern about the conditions.

QUESTION: Thank you.

QUESTION: I have one question about Afghanistan, please.

MS ORTAGUS: Sure.

QUESTION: Any update about peace talks with the Taliban (inaudible) --

MS ORTAGUS: No. We did talk – I can’t remember the – which day I briefed last week, I think it was Thursday – but we talked a little bit about the – Ambassador Khalilzad’s travels. We just finished this seventh round of talks with the Taliban in which the ambassador indicated that he had made substantial progress. He was in Doha and I believe I indicated last week that he was in China. He had a previously – excuse me, scheduled meeting, trilateral meeting with China and Russia. Pakistan also joined the meeting. So we will certainly talk about what sort of specific update that we can give you, but I don’t think anything has changed in terms of public readouts since the seventh round of talks with the Taliban which happened last week.

QUESTION: Any update --

MS ORTAGUS: Let’s make that the last one, sure.

QUESTION: Excuse me.

QUESTION: Any update on the EAP Assistant Secretary Stilwell visit to South Korea?

MS ORTAGUS: I actually emailed with him this morning because I saw some of the media reports that you’re probably referring to, and the assistant secretary told me that his schedule has not at all changed. So I believe late last week, I gave all of you a readout – or excuse me, I previewed his travel schedule, and that hasn’t changed at all. And I did confirm that with him myself this morning.

I will see some of you if you’re covering the religious freedom ministerial tomorrow. I’ll see you there. And some of you are going with us on the trip that we referenced at the beginning to WHA, so if you’re not on the trip with me and you’re not at the ministerial tomorrow, I will see you next week. Thank you.

ARGENTINA

U.S. Department of State. 07/16/2019. Assistant Secretary Kimberly Breier Travel to Argentina

Assistant Secretary of State for Western Hemisphere Affairs Kimberly Breier will travel to Buenos Aires, Argentina, July 17-20 and then join Secretary of State Michael R. Pompeo on his visit to Guayaquil, Ecuador, July 20; Mexico City, Mexico, July 21; and San Salvador, El Salvador, July 21.

On July 17, Assistant Secretary Breier will meet with Venezuelan Ambassador to Argentina Elisa Trotta and members of the Venezuelan migrant community in Argentina. On July 18, she will participate in a ceremony to commemorate the 25th anniversary of the Iran-backed attack on the Argentine Jewish Mutual Aid Society (AMIA) community center in Buenos Aires, which killed 85 people and injured more than 300. While in Argentina, she will also join Secretary Pompeo in his meeting with Argentine President Mauricio Macri and join regional leaders for the Second Western Hemisphere Counterterrorism Ministerial to deepen cooperation in the fight against terrorism and transnational crime.

COLOMBIA

U.S. Department of State. 07/16/2019. Secretary Pompeo’s Meeting with Colombian Foreign Minister Carlos Holmes Trujillo

The below is attributable to Spokesperson Morgan Ortagus:‎

Secretary Michael R. Pompeo met with Colombian Foreign Minister Carlos Holmes Trujillo today in Washington, D.C. The two leaders discussed the ongoing political and man-made humanitarian crisis in Venezuela. The Secretary expressed gratitude for Colombia’s continued leadership and extraordinary generosity in hosting displaced Venezuelans. The Secretary and the Foreign Minister also discussed recent progress on combatting narcotics and the need to do more to meet the shared goal of reducing coca cultivation and cocaine production by half by the end of 2023.

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ORGANISMS

GLOBAL ECONOMY

IMF. JULY 17, 2019. Rebalancing the Global Economy: Some Progress but Challenges Ahead
By Gita Gopinath

VIDEO: https://blogs.imf.org/2019/07/17/rebalancing-the-global-economy-some-progress-but-challenges-ahead/?utm_medium=email&utm_source=govdelivery

Following the global financial crisis, overall current account surpluses and deficits fell sharply from about 6 percent of global GDP in 2007 to about 3.5 percent in 2013. Since then, as shown in our new External Sector Report, global current account imbalances have declined only slightly to 3 percent of world GDP in 2018, while rotating toward advanced economies and away from emerging economies, including China whose current account is now broadly in line with fundamentals.

Trade actions and tensions have so far not significantly affected global current account imbalances, as trade has been diverted to other countries with lower or no tariffs. Instead, as highlighted in an earlier blog, these trade tensions and related uncertainties are weighing on global investment and growth, especially in sectors most integrated into global supply chains (where production is carried out across multiple countries).

Despite the narrowing of global current account imbalances, stock imbalances (measured as the sum of countries’ net foreign assets and liabilities) have continued to increase, as creditor countries have run surpluses and debtor countries have run deficits for the most part. At 40 percent of GDP, stock imbalances have reached a historical peak and are four times larger than in the early 1990s. Moreover, gross external debt liabilities of sovereigns and corporates have risen sharply in some economies in recent years, supported by benign global financing conditions. This entails financial stability risks not only for borrowers in deficit countries but also savers in surplus countries.

Trade actions and tensions have so far not significantly affected global current account imbalances.

Having a proper understanding of countries’ external positions—current accounts, stock positions, and currencies—is critical to highlight policymakers’ shared responsibility to tackle external imbalances before they become too risky.

Risks from external imbalances

External imbalances are not necessarily a cause for concern, as there are good reasons for countries to run deficits and surpluses at certain points in time. For example, it is natural for young, fast growing economies to run deficits and borrow from aging advanced economies with weaker growth potential. But just as over-indebted households may lose access to credit if their earnings become insufficient to repay their debts, economies that borrow too much and too quickly from abroad may become vulnerable to sudden stops in capital flows. This would, in turn, negatively affect creditor economies as they would suffer losses on their external assets. Therefore, the challenge lies in determining when they are excessive or pose a risk.

Using a combination of numerical tools and country-specific insights, we estimate that about 35–45 percent of overall current account surpluses and deficits were excessive in 2018. Excessive current account surpluses remained centered in the euro area (driven largely by Germany and the Netherlands) and in other smaller advanced Asian economies (Korea and Singapore), while excessive current account deficits remained concentrated in the United Kingdom, the United States, and some emerging market economies (Argentina and Indonesia).

After many years of excess current account surpluses, China’s external position moved to become more broadly in line with fundamentals in 2018. This decline reflected a combination of structural factors and expansionary credit and fiscal policies, but also greater exchange rate flexibility and the associated real appreciation over the last decade.

Risks from the current configuration of external imbalances are generally contained, at least in the near term as current account deficits and debtor positions are largely concentrated in advanced economies that issue reserve currencies. That said, not everyone is immune. An intensification of trade or geopolitical tensions—with negative repercussions for global growth and risk appetite—could affect economies that are highly dependent on foreign demand or external financing.

Over the medium term, in the absence of corrective policies to reduce imbalances, trade tensions could become entrenched. Moreover, a further increase in countries’ external debts in key countries could trigger costly disruptive adjustments that could spill over to the rest of the world.

That’s why both surplus and deficit countries must work together to reduce excess global imbalances in a manner supportive of global growth and stability.

How to tackle imbalances

Many countries are now near full employment and have limited room to maneuver in their public budgets. So, governments need to carefully calibrate their policies to achieve domestic and external objectives. Countries with excess current account deficits, like the United Kingdom and the United States, should adopt or continue with growth-friendly fiscal consolidation, while those with excess current account surpluses, like Germany and Korea, should use fiscal space to boost public infrastructure investment and potential growth.

Moreover, carefully tailored and sequenced structural policies should play a more prominent role in tackling external imbalances, while boosting domestic potential growth. Reforms that encourage investment and discourage excessive saving—for example through the removal of entry barriers or stronger social safety nets—would support external rebalancing in excess current account surplus countries. Reforms that improve productivity and workers’ skill base are appropriate to promote exports in countries with excess current account deficits. Even economies with external positions that we assess to be broadly in line with fundamentals, like China and Japan, need to adopt policies that address domestic imbalances and prevent a resurgence of external imbalances; this requires structural reforms that facilitate competition in sectors like services.

Exchange rate flexibility remains key to facilitating external adjustment. As highlighted in this year’s analytical chapter, varying features of international trade, including the extent of integration into global value chains and trade invoicing in a dominant currency like the US dollar, can weaken some mechanisms of external adjustment and limit the benefits of exchange rate flexibility in the short term. So, exchange rate flexibility may need to be supported with other policies that bolster the export response, including through improved access to credit and transportation infrastructure. Allowing exchange rates to play their role, however, remains key to deliver durable medium-term rebalancing.

More generally, all countries should avoid policies that distort trade, as they tend to come at the expense of global trade, investment, and growth. Instead, surplus and deficit countries should work toward reviving international trade and strengthening the rules of the multilateral trading system that have served the global economy well over the past 75 years.

FULL DOCUMENT: https://blogs.imf.org/2019/07/17/rebalancing-the-global-economy-some-progress-but-challenges-ahead/?utm_medium=email&utm_source=govdelivery

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ECONOMIA BRASILEIRA / BRAZIL ECONOMICS

PIB

FGV. IBRE. 17/07/19. Monitor do PIB. Monitor do PIB aponta crescimento de 0,5% da economia em maio
 
O Monitor do PIB aponta, nas séries dessazonalizadas, crescimento de 0,5% do PIB em maio, na comparação com abril; e retração de 0,8% no trimestre móvel findo em maio (mar-abril-mai), em comparação ao trimestre findo em fevereiro (dez/18-jan-fev/19). Na comparação interanual, a economia cresceu 4,3% em maio e 0,5% no trimestre móvel findo em maio.

“O crescimento de 0,5% da economia em maio, segundo o Monitor do PIB-FGV, interrompe uma sequência de três quedas do PIB. Entre os três grandes setores, destacam-se a agropecuária e a indústria. Na comparação contra o mesmo período do ano passado, o forte crescimento de 4,3% da economia tem grande influência dos efeitos da greve dos caminhoneiros de maio de 2018, em que a base de comparação é muito baixa. Esses efeitos foram mais evidentes nas atividades de transformação, de comércio e de transporte”, afirma Claudio Considera, coordenador do Monitor do PIB-FGV.

O crescimento de 0,5% observado em maio, em comparação a abril é explicado, principalmente, pelo desempenho da agropecuária (1,3%) e da indústria (0,6%), com crescimento em todos os seus componentes. O setor de serviços ficou estagnado, embora todas as atividades tenham crescido, à exceção de outros serviços. Na comparação contra o mesmo mês do ano anterior, o crescimento de 4,3% da economia foi influenciado pela baixa base de comparação em decorrência da greve dos caminhoneiros de maio de 2018. Nesta comparação, as únicas atividades que apresentaram retração foram a intermediação financeira (-0,1%) e a extrativa mineral (-7,0%), esta devido aos efeitos da tragédia de Brumadinho. Pela ótica da demanda, na comparação da série com ajuste sazonal, apenas a formação bruta de capital fixo cresceu (1,5%). No entanto, na comparação interanual, todos os componentes cresceram.

ANÁLISE DESAGREGADA DOS COMPONENTES DA DEMANDA

A análise gráfica desagregada dos componentes da demanda foi feita usando a série trimestral interanual por apresentar menor volatilidade do que as taxas mensais e aquelas ajustadas sazonalmente permitindo melhor compreensão da trajetória de seus componentes.

Consumo das famílias

O consumo das famílias cresceu 1,5% no trimestre móvel findo em maio, em comparação ao mesmo trimestre de 2018. Desde setembro de 2018 o consumo de serviços tem sido o principal responsável pelo crescimento deste componente (contribuição de 1,1 p.p. no trimestre móvel findo em maio), seguido pelo consumo de duráveis (contribuição de 0,4 p.p. no trimestre móvel findo em maio). O consumo de não duráveis e de semiduráveis, em contrapartida, tem apresentado fraco desempenho. Na comparação na série livre de efeitos sazonais, a taxa de variação mensal de maio, contra abril, ficou estagnada. A exceção de consumo de duráveis (-1,8%) todas as demais categorias de consumo cresceram.

Formação bruta de capital fixo

A FBCF, cresceu 3,1% no trimestre móvel findo em maio, em comparação ao mesmo trimestre de 2018. Mais uma vez, máquinas e equipamentos foi o componente que mais contribuiu para este crescimento (2,4 p.p.). No entanto, chama atenção o crescimento de 1,0% da construção, o maior desde o trimestre móvel findo em abril de 2014. Na comparação na série livre de efeitos sazonais, a taxa de variação mensal de maio, contra abril, foi positiva em 1,5% com crescimento apenas do componente de máquinas e equipamentos.

Exportação

A exportação apresentou crescimento de 2,3% no trimestre móvel findo em maio, na comparação com o mesmo trimestre de 2018. Apenas os bens intermediários manufaturados (13,4%), os produtos da extrativa mineral (10,2%) e os bens de consumo não duráveis (1,9%) cresceram. Os destaques negativos são a exportação dos bens de consumo duráveis (-27,7%), em quedas significativas há um ano e, dos bens de capital (-12,1%).

Importação

A importação cresceu 4,1% no trimestre móvel findo em maio, comparativamente ao mesmo trimestre de 2018. Os destaques positivos foram o desempenho dos bens de capital e dos produtos da extrativa mineral, ambos com crescimento de 17,0%. Os destaques negativos são a importação dos bens de consumo duráveis (-16,3%) e dos bens de consumo semiduráveis (-13,8%).

MONITOR DO PIB-FGV EM VALORES

Em termos monetários, o PIB em valores correntes alcançou a cifra de aproximadamente 2 trilhões, 856 bilhões, 614 milhões de Reais no acumulado até maio do corrente ano.

A taxa de investimento (FBCF/PIB) foi de 16,9%, em maio, na série a valores de 1995.

APÊNDICE – NOTA EXPLICATIVA

O Monitor do PIB-FGV estima mensalmente o PIB brasileiro em volume e em valor. O objetivo de sua criação foi prover a sociedade de um indicador mensal do PIB, tendo como base a mesma metodologia das Contas Nacionais do IBGE. Sua série inicia-se em 2000 e incorpora todas as informações disponíveis das Contas Nacionais (Tabelas de Recursos e Usos, até 2016, último ano de divulgação) bem como as informações das Contas Nacionais Trimestrais, até o último trimestre divulgado (primeiro trimestre de 2019).

O indicador é ajustado as Contas Nacionais Trimestrais sempre que há mudanças metodológicas e a cada trimestre divulgado. Ou seja, nos trimestres calendários, as médias trimestrais dos índices de volume do Monitor do PIB-FGV serão iguais aos indicadores trimestrais, sem ajuste sazonal, das Contas Nacionais Trimestrais. Nos trimestres calendário, são utilizados os mesmos modelos do IBGE para calcular todas as séries desagregadas com ajuste sazonal, tanto pela ótica da oferta, como da demanda. Para o ajuste sazonal mensal é utilizado o modelo mensal do IBC-Br, do Banco Central; para os trimestres móveis utiliza-se uma média desses ajustes mensais.

Assim, as estimativas do Monitor do PIB-FGV antecedem os resultados das Contas Nacionais Trimestrais nos meses em que este é divulgado. E, nos meses em que não há divulgação, o Monitor representa uma excelente antecipação para as tendências do PIB e seus componentes.

O Monitor do PIB-FGV compõe-se de um relatório descrevendo os principais resultados com ilustrações gráficas e de uma tabela Excel com informações de volume, em valores correntes, e a preços de 1995 das 12 atividades econômicas que agrupadas formam os 3 setores de atividade (agropecuária, indústria e serviços). Apresenta, ainda, o Valor Adicionado a preços básicos, os impostos sobre os produtos e o PIB e também os componentes do PIB pela ótica da demanda. Outro ponto a ser destacado é que o Monitor torna disponíveis desagregações que não são divulgadas pelo IBGE, mas que são relevantes para um melhor entendimento da absorção doméstica e da demanda externa. As desagregações disponibilizadas pelo Monitor são:

• Consumo das Famílias: bens de consumo duráveis, semiduráveis, não duráveis e serviços. Adicionalmente eles são classificados em nacionais e importados;
• Formação Bruta de Capital Fixo: em máquinas e equipamentos, construção e outros. Para máquinas e equipamentos e outros, há a desagregação entre nacionais e importados;
• Exportações e Importações: em produtos agropecuários, produtos da extrativa mineral, produtos industrializados de consumo (duráveis, semiduráveis e não duráveis), produtos industrializados de uso intermediário, bens de capitais e serviços.

São divulgadas as séries de base móvel, séries encadeadas, séries encadeadas dessazonalizadas, as taxas mensais, trimestrais e anuais comparadas a igual período do ano anterior e as taxas mensais e trimestrais comparadas a período imediatamente anterior, e os valores nominais correntes e a preços de 1995.

DOCUMENTO: https://portalibre.fgv.br/navegacao-superior/noticias/monitor-do-pib-aponta-crescimento-de-0-5-da-economia-em-maio.htm

COMÉRCIO EXTERIOR BRASILEIRO

FGV. IBRE. 17/07/19. ICOMEX: valor das exportações recuou 10,4% e das importações 9,1% entre junho de 2018 e 2019

O saldo da balança comercial de junho foi de US$ 5 bilhões, o que levou a um superávit acumulado no ano de US$ 26 bilhões. Em valor as exportações recuaram 10,4% e as importações 9,1%, na comparação entre os meses de junho de 2018 e 2019. Na comparação do acumulado do ano até junho entre 2018 e 2019, as exportações caíram em 3,5% e as importações ficaram estagnadas. O superávit no primeiro semestre de 2019 foi de US$ 26 bilhões, quatro bilhões menor do que o de 2018, e a corrente de comércio caiu 2% na comparação dos semestres de 2018 e 2019.

A queda nos valores exportados e importados na comparação mensal foi explicada pelo recuo nos índices de preços e volume desses fluxos. Na comparação entre os primeiros semestres de 2018 e 2019, porém, o volume exportado cresceu (2%) liderado pelas commodities (7,5%), enquanto a variação nos preços foi negativa para as commodities. A análise por setor mostra que a liderança no crescimento do volume exportado seja na comparação mensal ou semestral coube à indústria extrativa.

No caso das importações, a comparação entre os primeiros semestres, registrou aumento no volume de 2,5% e queda nos preços com igual percentual, o que explica o valor não ter variado entre os semestres. A análise por setor registrou recuo nos volumes na comparação mensal o que pode estar associado a uma desaceleração no ritmo de atividade. Na comparação dos semestres, os volumes importados por todos os setores aumentam, sendo a liderança da indústria extrativa.

O desempenho desfavorável em junho das exportações se repetiu nos principais mercados de destino das exportações brasileiras. A queda no mercado argentino tem sido uma constante explicada pela crise econômica do país. Na China, a queda em junho repete o comportamento do mês anterior e os Estados Unidos, após o aumento de maio liderado pelas exportações de óleo bruto de petróleo e semimanufaturados, registrou recuo de 12%.

Com o objetivo de esclarecer esses resultados, o ICOMEX passará a divulgar os índices de preços e volume das exportações e importações para os principais parceiros comerciais do Brasil. Na seção “Destaque do mês”, após a análise dos índices, é apresentado os resultados para a China e os Estados Unidos. No próximo ICOMEX iremos divulgar os índices para a União Europeia. O anúncio do término das negociações do Acordo Mercosul-União Europeia, em 28 de junho, levou a que priorizássemos esse mercado antes da análise do mercado argentino.

Análise dos índices agregados

Os volumes exportados e importados caíram 5,8% e 3,7% entre junho de 2018 e 2019. Na comparação do acumulado até junho, porém, os volumes crescem em 2% para as exportações e 2,5% para as importações. No caso dos preços, seja na comparação mensal ou do acumulado do ano, os preços recuam para as exportações e para as importações.

Dada a influência das commodities que explicam cerca de 60% das exportações brasileiras. Na comparação mensal caiu o volume das commodities (0,1%) e das não commodities em 14,2%. Entre os primeiros semestres de 2018 e 2019, porém, o volume exportado das commodities aumentou (7,5%) e o das não commodities recuou (5,8%). Como nos anos anteriores, o comportamento das exportações continua dependente do desempenho das commodities.

No caso dos preços, o resultado seja na comparação mensal ou no acumulado até junho registrou queda. Observa-se que na comparação mensal, a queda nos preços foi puxada pelos produtos agrícolas e petróleo, pois o minério de ferro (segundo principal produto exportado) registrou aumento de 53%. Igual resultado é verificado na comparação dos primeiros semestres.

Os termos de troca apresentaram uma tendência de queda ao logo de 2018 que foi revertida a partir de fevereiro de 2019, com o aumento nos preços de exportações até maio. Em junho, o preço das exportações (-1,3%) caiu, porém menos do que o das importações (-2,7%), o que levou a uma melhora nos termos de troca (1,4%). Na comparação entre os meses de junho de 2018 e 2019, os termos de troca registraram aumento de apenas 0,4% e na comparação dos semestres caiu em 2,7%. Não há, portanto, variações acentuadas de ganhos ou perdas com os termos de troca.

Os índices de preços e volume agregados e por tipo de indústria

Após registrar aumento no volume exportado e importado em abril e maio em relação a igual período do ano anterior, as exportações e as importações da indústria de transformação recuaram 7,4% e 4,2%, respectivamente, no mês de junho. As exportações da agropecuária caem desde março e da extrativa só recuou no mês de maio.

Ressalta-se, porém, que nos dois primeiros meses do ano, tanto a agropecuária como a extrativa registraram variações acima de 2 dígitos em relação a períodos iguais de 2018. O volume exportado da agropecuária cresceu 61% entre os meses de fevereiro e o da extrativa, 36%, nesse mesmo período. Há, portanto uma desaceleração no ritmo das exportações que se associa a um menor crescimento da China e do comércio mundial em 2019.

No acumulado do ano até junho, todos os volumes aumentam em relação a igual período de 2018, exceto as exportações da indústria de transformação, queda de 1,8%. Além disso, a variação de 15,1% do volume exportado pela indústria extrativa em relação a agropecuária (3,5%) confirma a liderança da primeira, graças as vendas de petróleo bruto e, em segundo lugar, minério de ferro.

O mercado interno aponta para um crescimento abaixo de 2%, o que não ajuda a indústria de transformação. Além disso, o mercado externo das manufaturas brasileiras está associado a uma Argentina em crise ou sofre com a concorrência dos países asiáticos nos setores de baixa a média tecnologia.

Os índices de volume por categoria de uso da indústria de transformação mostram queda na comparação mensal e semestral, exceto para bens de consumo não duráveis, bens de consumo semiduráveis (semestre) e bens intermediários (semestre). Chama atenção a queda nas exportações de bens de capital e bens de consumo não duráveis (automóveis). Em junho os bens de capital decresceram 35,9% e os duráveis de consumo, 10,6%. Na comparação dos semestres, porém, a maior queda são a dos bens duráveis, 27,7% em relação aos bens de capital, 15,5%. Esses resultados confirmam que as exportações brasileiras não apresentam bom desempenho em produtos de maior valor agregado, como bens de capital e bens duráveis de consumo.

Ressalta-se que no mês de junho não foi registrada exportações de plataformas de petróleo.

No mês de junho há uma diferença de 1 ponto percentual se considerarmos as importações de bens de capital com (15,8%) e sem plataforma de petróleo (14,8%). No entanto, dado o tamanho dessa diferença ser pequeno, quando calculamos a variação no volume importado da indústria de transformação como um todo, a queda fica igual em 4,2%, com ou sem plataforma. No entanto, na comparação dos primeiros semestres de 2018 e 2019 a inclusão ou não da plataforma faz diferença: 2,3% (com) e 3,3% (sem).

As importações de bens de consumo duráveis, não duráveis e semiduráveis recuam na comparação mensal e do acumulado até junho. Variações positivas, em ambos os períodos de comparação, apenas ocorrem nos volumes importados de bens de capital. As compras de bens intermediários recuaram em junho (3,6%) o que reflete possível desaceleração da indústria e crescem 2,8% na comparação dos semestres, o que sugere fraca recuperação da indústria.

Por último, a taxa de câmbio real efetiva mostrou uma leve reversão na tendência à desvalorização no mês de junho. Se antes a desvalorização era, em parte, explicada pelas incertezas quanto ao encaminhamento das reformas, o resultado de junho reflete mudança dessa percepção.

Destaque do mês

Apresentamos os índices de comércio exterior para a China e os Estados Unidos. No próximo ICOMEX iremos apresentar os dados para a União Europeia.

Observa-se que o aumento da participação da China nas exportações brasileiras (passou de 4,2% para 26,6% entre 2002 e 2018) é explicado principalmente pela expansão do volume de comércio, pois apenas entre 2002/08, o crescimento dos preços superou o do volume, mesmo assim com uma diferença ao redor de 4 pontos de percentagem. Já os Estados Unidos, registrou uma queda de 25,4% para 12% e experimentou quedas no volume exportado, exceto na comparação entre os primeiros semestres de 2018 e 2019. Nesse último período, as exportações para o mercado estadunidense cresceram 22,2% enquanto da China, 2,1%. Exportações do mercado aeronáutico (aviões, peças para aviões), petróleo e produtos siderúrgicos explicam o desempenho favorável nos Estados Unidos.

Na comparação dos meses de junho, chamamos atenção que o valor exportado caiu 4,1% para a China e 12,2% para os Estados Unidos. No caso da China, a queda foi maior no volume (3,7%) do que nos preços (1,9%). Nos Estados Unidos, o recuo no valor está principalmente associado ao decréscimo nos preços (10,6%) do que no volume que caiu 1,6%.

Na pauta de importações, a participação da China passou de 3,3% para 19,2% e a dos Estados Unidos de 21,8% para 16% entre 2002 e 2018. O crescimento médio anual das importações, oriundas da China superaram em todos os períodos as provenientes dos Estados Unidos. Em termos de preços, as diferenças foram favoráveis para a China (menor preço que os Estados Unidos) a partir de 2012, o que sugere pesquisas mais detalhadas sobre a concorrência chinesa via preços.

Na comparação mensal, o volume importado da China aumentou (2,5%) e dos Estados Unidos recuou (8,3%) e os preços caem na China (4,8%) e aumentam nos Estados Unidos (2,7%).

A pauta bilateral com a China dominada pelas exportações de commodities explica a maior volatilidade nos termos de troca que se elevaram até dezembro de 2011 e chegam ao seu menor valor em abril de 2016, quando voltam a se recuperar, mas muito distante dos valores de pico do boom das commodities. Em contraste, os termos de troca com os Estados Unidos tendem a uma relativa estabilidade ao longo de todo o período.

DOCUMENTO: https://portalibre.fgv.br/navegacao-superior/noticias/icomex-valor-as-exportacoes-recuaram-10-4-e-as-importacoes-9-1-entre-junho-de-2018-e-2019.htm

INFLAÇÃO

FGV. IBRE. 17/07/19. Índices Gerais de Preços. IPC-S Capitais. Inflação pelo IPC-S avança em seis das sete capitais pesquisadas

O IPC-S de 15 de julho de 2019 registrou variação de 0,14%,ficando 0,09 ponto percentual (p.p.) acima da taxa divulgada na última apuração. Seis das sete capitais pesquisadas registraram acréscimo em suas taxas de variação.

A tabela a seguir, apresenta as variações percentuais dos municípios das sete capitais componentes do índice, nesta e nas apurações anteriores.

DOCUMENTO: https://portalibre.fgv.br/navegacao-superior/noticias/inflacao-pelo-ipc-s-avanca-em-seis-das-sete-capitais-pesquisadas-2.htm

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LGCJ.: