OGResearch Blog

Highlights of our expertise in structural modeling and macroeconomic forecasting

Kazakhstan’s Unsurprising Rebound Led More by Oil Price Recovery, Less By Competitiveness Improvements


February 28, 2018

After the sharp drop in oil prices in 2014–2015, Kazakhstan faced similar problems as other oil exporters. Although it avoided an outright recession, its real GDP growth slowed from around 6% YoY in 2013 to about 1% YoY in 2016. Last year brought a sharp recovery, with growth of almost 4%. However, the story remained the same as before: the rebound in GDP was driven primarily by an oil price recovery and to a much smaller extent by improved competitiveness of the non-oil sector after a sharp, more than 35% real depreciation of the tenge.

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Macroeconomic Insight: Mozambique - A Defaulter with Potential


January 30, 2018

Mozambique defaulted on its debt in January 2017. A final deal has yet to be reached with creditors. The chances of the IMF ultimately stepping in might be relatively high, but this outcome is far from certain. Leaving aside this deadlock, the economy has solid potential for future growth.

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Macroeconomic Insight: We See Short-term Macro Risk Outlook For Ecuador As 'Negative', Steep Yield Curve


January 24, 2018

We have revised our Macro Risk assumption about Ecuador's potential economic imbalances to ‚Negative'. This will need to be addressed in the future through increased competitiveness. As Ecuador is a fully dollarized economy, the current macroeconomic imbalances cannot be adjusted by currency depreciation. We, therefore, expect a period of low growth and declining wages and prices, necessitating fiscal consolidation in 2018 and beyond. The new yield curve published by OGResearch for Ecuadorian local currency bonds has a steep slope, increasing towards 8% on the long tenor given the need for fiscal consolidation and the challenging economic environment.

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OGResearch's Analytical Power Valuable to Aspen Institute CE Think Tank


December 15, 2017

OGResearch has been the exclusive partner of Aspen Institute Central Europe to analyze the economic potential of the Czech Republic and central Europe. Jiří Schneider, Aspen’s Executive Director, answered a couple questions on our partnership.

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Central Europe Should Do More To Promote New Business And Innovation, Says Study Led By Our Partner


November 29, 2017

For the second year running, we made a key research contribution to a study by non-partisan think tank Aspen on Central European economic competitiveness. The study, led by our Managing Partner David Vavra, argues that the region will need to invest more in creating an environment conducive to new business and receptive to innovative technologies.

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Macro Forecast Coverage Expands With Uzbekistan Becoming Our 20th Country


November 14, 2017

Uzbekistan has become the 20th country covered by our regular macroeconomic forecasts.

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Macroeconomic Insight: Risk of Currency Devaluation Keeps Looming Over Central Africa


November 10, 2017

Economic growth based largely on oil production and a lax approach to economic reforms have caused severe economic distress to some central African countries after the fall in oil prices in 2014. This has sparked concerns about potential devaluation of the West African Franc (XOF) and the Central African Franc (XAF). In this post, we examine the macroeconomic conditions in the West African Economic and Monetary Union (WAEMU, using the XOF) and contrast them with the conditions in the Economic Community of Central African States (CEMAC, using the XAF).

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Is the Russian Banking Sector in Crisis?


November 3, 2017

The Central Bank of Russia (CBR) has bailed out two banks in under a month, raising concerns about the banking sector’s stability both home and abroad. As we show in this post, a full-blown financial crisis appears unlikely. That said, increased concentration of large, state-owned banks in the sector poses contingent liability risks for the sovereign over the longer term.

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We Advise the National Bank of Tajikistan on IT Adoption Under EBRD-led Project


October 15, 2017

Our Managing Partner David Vavra and other experts have advised the National Bank of Tajikistan (NBT) on redesigning the monetary policy framework and internal and external communications to prepare for future adoption of inflation targeting. Our assistance has been provided as part of a technical cooperation project aimed at developing local capital markets and central bank frameworks in several countries in central Asia and Caucasus, led by the European Bank for Reconstruction and Development (EBRD).

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Aspen Institute’s Project Benefits From Our Focused Competitiveness Study


October 6, 2017

OGResearch has supported Aspen Institute Central Europe, becoming this non-partisan think tank’s exclusive research partner to analyze the economic competitiveness of the Czech Republic in the context of Central Europe. Our Managing Partner David Vavra has since 2016 led Aspen’s working group for Economy.

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Macroeconomic Insight: Fear of Floating Hampers Armenia’s Economy


September 27, 2017

Armenian authorities have chosen to stabilize the exchange rate at the cost of economic growth and well-below-target inflation, in a move referred to in the economic literature as “fear of floating”. A full-fledged IT regime would have implied a less steep monetary tightening, more pronounced accommodation through the exchange rate, and thus inflation remaining around its targeted value of 4%. The authorities’ fear of floating can be explained by the high rate of dollarization in the economy: over 60% of total loans and deposits, and likewise 85% of public debt, in the country are foreign-currency-denominated.

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Our forecasting successes showcased at TCX conference


September 25, 2017

Managing Partner David Vavra presented our approach to pricing currency risk in emerging and frontier markets at an anniversary conference organized by our client TCX on 20-21 September 2017 in Amsterdam. 

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Pricing Currency Risk In Frontier Markets: Mission Impossible?


September 17, 2017

Managing Partner David Vavra will tackle the topic of “Pricing the impossible: how to price currency derivatives in frontier markets?” at an anniversary conference organized by our partner TCX in Amsterdam on Thursday, 21 September 2017.

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Our Client TCX Highlights OGResearch’s Creativity On The Eve of Its 10th Anniversary


September 13, 2017

OGResearch has been portrayed as a creative frontier-market researcher by one of our clients, The Currency Exchange Fund (TCX). The fund, the pioneer in enabling long-term local currency financing in frontier markets, has relied on OGResearch’s unrivalled macroeconomic modeling and forecasting service to determine a currency price in countries with no reliable economic data and underdeveloped financial sectors.

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Macro Forecast Coverage Expands Further With Madagascar Becoming Our 19th Country


September 12, 2017

Madagascar has become the 19th country covered by our regular macroeconomic forecasts.

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Macroeconomic Insight: Tajikistan's Economic Performance To Worsen And Exchange Rate To Slide Further


September 4, 2017

Our most recent Macro Forecast foresees a worsening economic performance in Tajikistan with both the banking sector troubles and an inevitable fiscal consolidation hampering economic growth. However this still means growth rates close to 5-5.5% in the next two years, according to OGResearch's medium-term macroeconomic prediction. Although this scenario assumes a deal with the IMF and international lenders by the end of 2017, it is still consistent with a sharp weakening of the somoni exchange rate until an agreement is reached. If a deal does not materialize, the situation could get easily out of control leading to an even weaker exchange.

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Macroeconomic Insight: Belarus to Sustain Growth in 2017, Absence of Reforms Weighs on Mid-Term Outlook


June 30, 2017

Following almost two years of recession Belarus GDP growth reached a positive figure of 0.3% YoY in the first quarter of 2017. Our Macro Forecast argues that economic growth will likely accelerate further towards year-end. Growth will be supported by exports in part due to the resolution of the longstanding oil and gas dispute between Belarus and Russia in April 2017. Over the medium term, growth will remain subdued due to an absence of reforms and a muted outlook for Russia, the key trading partner.

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Macroeconomic Insight: Russia to Keep Growing in 2017, Longer Term Prospects Look Dim


June 19, 2017

Although economic growth is expected to continue in 2017, we remain pessimistic about Russia’s prospects in the longer run. The strong ruble and tight monetary and fiscal conditions will constrain growth in the near future, and medium-term prospects will be limited by structural weaknesses. The difficult geopolitical situation will restrain foreign capital inflows, complicating diversification of the economy away from energy-sector-driven growth.

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Our Modeling Supports TCX's First Deal in Sierra Leone


June 2, 2017

A macroeconomic model for Sierra Leone co-designed by OGResearch was instrumental in allowing The Currency Exchange Fund (TCX) to provide a hedge in this West African country for the first time. The macro model was developed by TCX and OGResearch as its research partner.

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We Expand Macro Forecast Coverage, Adding Sierra Leone As 18th Country


June 1, 2017

Sierra Leone has become the 18th country covered by our regular macroeconomic forecasts.

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Ending Speculation on Czech FX Cap and Returning to Normal Monetary Policy


February 1, 2017

Managing Partner David Vavra writes: If euros continue to flow into the balance sheet of the Czech National Bank (CNB) at the rate they have been doing over the last few days, the central bank may soon get into a situation where it will no longer be willing to buy any more euros. This will give rise to a “Swiss-style” exit from the CNB’s exchange rate commitment before the end of the first quarter of this year.

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Our Managing Partner tells Bloomberg: Koruna Cap May End in ‘Tactical Surprise’


January 18, 2017

David Vavra, our Managing Partner who has advised a list of central banks globally, gave an exclusive interview to Bloomberg, telling the international news agency that the Czech National Bank may remove its formal commitment to limit koruna gains "sooner rather than later” while maintaining “heavily managed” currency for some time. David provided our forecast for the Czech koruna against the euro, saying after formal cap of 27/EUR is removed, OGResearch expects koruna to gain to levels between 26-26.5/EUR by end-2017 in “controlled appreciation”.

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Quo Vadis, Czech National Bank?


January 11, 2017

The interventions conducted by the Czech National Bank (CNB) to maintain its exchange rate commitment have become a hot topic in financial markets at the start of 2017. The CNB is currently saying it will probably abandon its commitment sometime around mid-2017. However, close observers have justified concerns that it will do so sooner – or much later – than this. Read an opinion piece by our Managing Partner David Vavra explaining how the CNB can easily avoid a Swiss-style exit from its currency regime.

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OGResearch's Managing Partner Shares His Insight on Forecasting Emerging Markets


November 16, 2016

OGResearch, Macroeconomics in Finance

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Macroeconomic Insight: Mongolia's Economy Tainted By Past Policy Mistakes


October 4, 2016

Mongolia has requested an IMF bailout last Friday and negotiations are to shape the final agreement about the credit in coming months. Our forecast in August coincided with the sudden unveiling of a fiscal spending spree. The IMF deal emerged as a logical and prudent step. In this article we argue that Mongolia had this coming, not only by the fiscal slippage this year but consequent on the policy mistakes made in last years.

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Macroeconomic Insight: The Story Behind Zambia's Currency Depreciation


August 2, 2016

Zambia's currency, the kwacha, was the third worst performing currency last year. Monetary policy tightening delivered by the Bank of Zambia, the country's central bank, has been less than we expected, increasing the risk of currency depreciation. Our latest macroeconomic view on Zambia is that further currency depreciation, albeit at a more gradual pace, is still in store.

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Updated Macroeconomic Insight: Tajikistan's Currency to Weaken Further


July 13, 2016

Tajikistan grew by 6.5% in 2015. However, our updated macroeconomic forecast suggests that the central Asia's landlocked country dependent on remittances inflow from Russia may by now just be recovering from recession.

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Our Updated Take On Azerbaijan: Economic Recession to Continue


June 22, 2016

Our latest macroeconomic forecast shows that restoring balance sheets hit by the currency slump will result in a 3.5% decline in GDP this year. In following years, low oil prices and restrained fiscal spending will keep growth below 3% annually.

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Lower U.S. Rates for Longer No Panacea For Emerging Market Currencies


June 20, 2016

OGResearch scenario of “Lower for Longer” appears to be gaining traction as strong headwinds from abroad and mixed domestic indicators have at least temporarily halted the Fed’s policy normalization strategy which began in December 2015. However, simply because interest rates in the US would be lower for longer than previously assumed would not necessarily induce a robust recovery in emerging market currencies.

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Our Take On Kenya's Financial Stability


June 13, 2016

Is there a widespread fragility in the Kenyan banking system? We take a look at the case of Chase Bank, and then try to give you an answer.

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Watch Video from OGResearch-led Panel at Ukraine Central Banking Conference


June 1, 2016

OGResearch Managing Partner David Vavra led a panel discussion on inflation targeting challenges at a research conference organized by the National Bank of Ukraine (NBU) under the theme of "Transformation of Central Banking". David has helped a list of central banks move to flexible exchange rate regimes and implement inflation targeting framework. 

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Our Take On Ghana's Debt Sustainability


June 1, 2016

We still consider Ghana’s debt sustainable, given that the country is adhering to the ongoing IMF program. We believe that in a managed consolidation scenario, there will be enough market appetite to make the debt roll-overs possible on reasonable terms. 

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OGResearch Partner Leads Panel at Ukraine Central Banking Conference


May 19, 2016

OGResearch Managing Partner David Vavra speaks at this week's inaugural research conference organized by the National Bank of Ukraine (NBU) under the theme of "Transformation of Central Banking". David, who helped a list of central banks move to flexible exchange rate regimes and implement inflation targeting frameworks, leads a panel on inflation targeting challenges. The NBU has made great strides towards modernizing the central bank over the past few years, and OGResearch experts have on a regular basis provided assistance and advice in enhancing its policy formulation, decision-making capacity, and a policy communication strategy. 

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OGResearch-led workshop addresses central bank policy challenges


May 10, 2016

Policy formulation and communication challenges shared by central banks in Caucasus and Central Asia were hotly debated by participants from four regional countries at a high-level workshop held at the National Bank of Georgia in Tbilisi last week. OGResearch, which has assisted a number of regional central bank in modernizing their inflation targeting policy frameworks, was the leading organizer of the event. The European Bank for Reconstruction and Development supported the workshop as part of a technical cooperation project.

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Our Take On Mongolia: Sharp Slowdown And Uncertainty


May 4, 2016

Being dependent on the commodity cycle and equally on Chinese demand, Mongolia saw a sharp slowdown in real economic growth to 2.3% in 2015 as a result of the commodity bust and the struggles of neighboring China. 

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Applications Due For Our Training Course: State-of-the-Art Macroeconomic Forecasting


April 14, 2016

This three-day, focused training course offers a unique opportunity for participating analysts, economists and risk managers to enhance their practical macroeconomic modeling and forecasting skills. To sign up to learn more about arts & science of macroeconomic forecasting, contact: trainings@ogresearch.com

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Our Take On Azerbaijan: Manat To Gradually Weaken


April 13, 2016

Azerbaijan, which is heavily dependent on oil exports, has been hit by the recent drop in commodity prices. Low export prices coupled with a weak external environment have put pressure on the manat, resulting in a two-step devaluation in 2015. In our latest macroeconomic forecast, we expect inflation to accelerate above 20 % this year, as a weak currency fuels a rise in import prices. The manat will gradually depreciate due to slow growth and low forex inflows.

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Our Take On Egypt: Where Will the Egyptian Pound Go?


April 4, 2016

Egyptian pound was devalued by 13% on 16th of March. The decision came after a gap between the official and the black market rates widened substantially, where the latter has seen levels around EGP/USD 9.68 as opposed to an official rate of 7.82 right before the devaluation. The Central Bank of Egypt (CBE) defended the official exchange rate by increasing the volume of dollar auctions from February and introducing new restrictions on dollar transactions. However, these steps proved to be costly in terms of international reserve erosion, and the Central Bank gave in to the depreciation pressure arguing that a more flexible exchange rate would be beneficial for the economy.

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Training Course: State-of-the-Art Economic Forecasting


March 21, 2016

This three-day, focused training course offers a unique opportunity for participating analysts, economists and risk managers to enhance their practical macroeconomic modeling and forecasting skills. To sign up to learn more about arts & science of macroeconomic forecasting, contact: trainings@ogresearch.com

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US Economy: Temporary Headwinds or Secular Stagnation?


March 18, 2016

If the secular stagnation hypothesis is true, delaying policy rate normalization in the United States would not result in unwanted overheating. On the contrary, rising Fed funds rates would encourage savings and discourage investment even further, prolonging low economic growth. In this case, the interest rate cycle might need to be reversed and near-zero rates can be expected to stay for a longer period. Still, the main message of the secular stagnation camp is that escaping secular stagnation requires the active use of aggressive fiscal policy.

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Our Take On Tajikistan: Fragile Economy And Vulnerable Currency


March 15, 2016

Tajikistan’s request for an IMF credit facility speaks louder about the peculiar state of the country’s economy than official data releases can. This helps underpin our growing opinion that the country is sliding into recession in spite of the rosy picture the local statistical data paints. Recent official real data shows over 6 percent growth in last year. The country has seen better days with a growth rate around 8 percent driven by high export prices.

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Our Take On Russia: Get Ready For Prolonged Recession


February 16, 2016

We remain pessimistic about Russia’s prospects. Our Macro Forecast shows that the economy will not emerge from recession until at least 2018.

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Azerbaijan: Risk of Further Painful Adjustments


January 10, 2016

Serious imbalances persist in Azerbaijan’s economy. Our Macro Risk "thermometer" keeps pointing at the risk of a potential further exchange rate adjustment and/or the necessity of an additional realignment of macroeconomic policies.

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Building a yield curve at the National Bank of Georgia


November 3, 2015

We assisted the National Bank of Georgia in its assessment and selection of the construction method of its yield curve, implemented our software for its production and advised on its web publication.

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Our experience shows in an IMF paper on policy frameworks in developing countries


October 27, 2015

OGResearch experts provided a valuable contribution thanks to their vast experience in advising on the modernization of monetary policy frameworks in developing countries.

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