Wednesday, August 2
CATCH ME IF YOU CAN
Brazilian lawmakers to decide whether to put president on trial
Brazil’s lower house is scheduled to vote on whether to put President Michel Temer on trial for corruption today. If lawmakers back the move and the Supreme Court convicts Temer, he could become the second Brazilian president to be impeached in a year.
Last month, Temer was charged with accepting bribes from a meatpacker in return for political favours, allegations he strenuously denies. The charges are part of a sweeping corruption scandal that has seen 150 people convicted of graft-related crimes in the past three years.
Wednesday’s vote will only take place if two-thirds of the 513-member Chamber of Deputies take their seats; ironically, the president will be hoping they do. He’s believed to have secured the 172 votes needed to avoid court after promising some $1.3 billion in spending for supporters’ home districts.
While Temer is expected to survive tomorrow’s vote, there are more charges being brought against him, opening the door to a protracted crisis. Little respite for scandal-weary Brazilians.
AGAINST THE TREND
India’s central bank expected to cut rates amid sluggishness
Markets will be surprised if India’s central bank doesn’t cut interest rates today.
Figures released last month showed the Indian economy has been buffeted by headwinds over the past year, including Prime Minister Narendra Modi’s surprise decision to remove 86% of all cash from circulation. Inflation now sits at a five-year low of 1.5%, while first quarter GDP growth came in at a modest 6.1%—the slowest since 2015.
The figures are in stark contrast to those released 12 months ago. Then, growth clocked more than 9% and inflation was at an overheated 6%.
To combat the sharp downturn, Reserve Bank Governor Urjit Patel is widely expected to cut rates by 0.25% today, lowering borrowing costs and injecting much-needed cash into the economy. Indeed, Patel came under fire from PM Modi’s top economic adviser Arvind Subramanian for failing to make a move last month.
While a rate cut will bring India’s lending rate to 6%—the lowest point in seven years— markets have largely factored in the move; expect short-term market turmoil if Mr Patel and his team fail to make it.
NO PROGRESS AT SEA
Asian states to discuss South China Sea dispute at ASEAN summit
Today, the Philippines will host the 50th ASEAN Ministerial Meeting, attended by foreign ministers of 27 Asia Pacific-rim countries, including the US, Russia and China.
Negotiations over the South China Sea dispute will top the agenda. Regional tensions have flared as China steadily encroaches on and militarises waters disputed by a host of nations, most recently culminating in China forcibly halting a Vietnamese oil drilling operation.
Building on an agreement reached in 2002, China and ASEAN are expected to endorse a draft Code of Conduct to establish a framework to “manage incidents”, “ensure maritime security” and promote “freedom of navigation and overflight” in the South China Sea. But like the 2002 deal, the new Code of Conduct does not contain any formal dispute resolution mechanisms, and its commitments to cooperation will be non-binding.
China is all too happy to appear cooperative and spend time negotiating the details of a toothless deal while the balance of power in the South China Sea steadily tilts further in its favour. ASEAN nations should be sceptical that any deal without claws will prevent China from leaving them with a fait accompli.
Delve deeper: Progress in the South China Sea? Not really.
HAPPENING ELSEWHERE…
One of Myanmar’s top journalists—Swe Win, editor of Myanmar Now—is expected to face court. Win is under investigation for a Facebook post that criticised a notoriously nationalist Mandalay monk. His detention, along with four other journalists, is raising fears of a crackdown on the media in the Southeast Asian country.
Following last month’s flawed elections, Papua New Guinea’s lawmakers will elect a new parliamentary speaker. The vacancy was created after former speaker Theo Zurenuoc failed to hold onto his seat. The vote is being seen as a bellwether—the party that can install their candidate as speaker is likely to be able to elect their choice for prime minister (who is chosen by MPs, not the general public).
The US city of Chicago will become the latest to impose a sugary drink tax. The windy city will join San Francisco, Oakland, Philadelphia and others in the US. Similar taxes are due to be introduced in the UK and Ireland next year.
Tesla, the now-mature electric-car startup, will report its second quarter earnings. The release comes just days after its first mass-produced ‘affordable’ car—the Model 3—was delivered to customers (who also happen to be employees). The firm’s share price has dropped more than 10% in the past month after figures showed it delivered fewer cars than targeted last quarter and amid ongoing concerns about the firm’s long-term financial sustainability.