Em. Europe & Lat Am leading the recovery in Q3

Most economies in Emerging Europe and Latin America look set for a strong third quarter and, while the near-term outlook for Southeast Asian economies remains challenging, high-frequency mobility provide early signs that at least parts of the region are over the worst.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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Emerging Markets Activity Monitor

EM recoveries enter a more difficult phase

Persistent supply shortages, fading reopening boosts and tighter financial conditions all pose headwinds to recoveries in Emerging Europe and Latin America over the coming quarters, while cooling construction activity looks set to weigh on growth in China. By contrast, the near-term outlook has brightened in South East Asia as economies emerge from lockdowns.

25 November 2021

Emerging Markets Economics Update

Headwinds build as financial conditions tighten

The sharp tightening of financial conditions in Latin America and Emerging Europe will add to headwinds facing both regions and feeds into our view that recoveries there are entering a slower phase. Financial conditions in Asia have tightened too, albeit to a much smaller extent. And with most central banks in the region in no rush to raise interest rates, conditions there will probably stay loose for some time yet.

24 November 2021

Emerging Markets Economics Chart Book

EM tightening cycles have further to run

Inflation in the emerging world has generally surprised to the upside in recent months. But while inflation in most parts of Asia remains at levels which central banks are comfortable with, it has risen well above target in much of Emerging Europe and Latin America. Soaring energy (and in some countries food) prices explain a big chunk of the rise in headline rates, although the re-opening of economies and goods shortages have caused core price pressures to intensify too. This has prompted central banks to step on the brakes and raise interest rates, with policymakers in Brazil, Chile and Czechia in particular stepping up the pace of tightening over the past few weeks. Looking ahead, with inflation across both Latin America and Emerging Europe set to remain above central bank targets for a while yet, further rate hikes lie in store. The key exception is Turkey where, under pressure from President Erdogan, the central bank has signalled that it will ease policy again at its next meeting.

19 November 2021

More from Kimberley Sperrfechter

Emerging Markets Trade Monitor

EM goods exports may have reached a turning point

Having surged over the past year or so, EM exports appear to be peaking as final demand is levelling off and commodity prices are dropping back. That said, exports will likely remain at elevated levels for some time yet.

23 August 2021

Emerging Markets Economics Update

Emerging Markets Capital Flows Monitor

Net capital outflows from major emerging markets have picked up sharply over the past couple of weeks, driven by virus concerns, growing expectations that the Fed will begin tapering asset purchases this year as well as falls in commodity prices. But even if outflows persist, the macroeconomic fallout should be limited in most major EMs.

20 August 2021

Emerging Markets Economics Update

Asian industry struggles, strong recoveries in EM Europe

June’s PMIs show that virus outbreaks have weighed on manufacturing in Southeast Asia while supply bottlenecks and weaker demand created headwinds for industry in China. In contrast, Indian industry rebounded sharply and manufacturing recoveries continue strongly in most of Emerging Europe. Supply disruptions are continuing to exert upward pressure on prices in the latter.

2 August 2021
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