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.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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With the notable exception of Turkey, net capital outflows from emerging markets have eased over the past month. However, the global backdrop for EMs this year will be challenging, particularly for those countries where external vulnerabilities are high (Turkey) or growing (parts of CEE and Latin America). Drop-In: Turkey’s new economic policy = old problems (Thurs 20th Jan, 09:00 ET/14:00 GMT). William Jackson and Jason Tuvey discuss the economic problems associated with the lira’s collapse, including the government’s policy response. Register here.

19 January 2022

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Current account risks building in Em. Europe & Lat Am

The shift to current account surpluses in Indonesia and South Africa suggest that these economies may be better placed to weather any fallout from rising US interest rates than in the past. But current account deficits have become an increasing cause for concern in parts of Emerging Europe (Hungary, Poland and Romania) and Latin America (Colombia and Chile). Drop-In: Join Chief Emerging Markets Economist William Jackson and Jason Tuvey, head of our Turkey coverage, shortly after this Thursday’s CBRT meeting for a discussion about Jason’s new report on economic policy-making in Turkey, the impact of the lira’s collapse and brewing macro risks this Thursday 20th January at 09:00 ET/14:00 GMT. Register here.

18 January 2022

Emerging Markets Economics Chart Book

Omicron sweeps across the emerging world

The Omicron variant of COVID-19 is causing new virus cases to surge in the emerging world. Many EMs are reporting record daily cases or that new infections are rising sharply. South Africa’s experience offers some hope – cases are now falling sharply there and it looks like the economic fallout was limited. Elsewhere, most EM governments are following South Africa’s playbook by imposing limited (if any) containment measures, although China is a key exception. And given weakness in testing capacity and large informal sectors in most EMs, workplace absenteeism is unlikely to be as economically disruptive as in DMs.

14 January 2022

More from Kimberley Sperrfechter

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 Update

Food prices a key factor behind diverging EM inflation

A significant share of the difference in headline inflation between Emerging Asia and other emerging regions has been driven by food inflation, which appears to be related to domestic conditions more than anything else. In Emerging Europe and Latin America, high food inflation is one factor that and will keep central banks in these regions in tightening mode.

12 November 2021

Emerging Markets Economics Update

Five points on the latest virus developments in EMs

The COVID-19 situation in many EMs has improved markedly over the past month or so as new infections have fallen sharply and vaccine rollouts have gathered pace. That said, the recent surge in virus cases in Emerging Europe serves as reminder that the risk of renewed outbreaks lingers, particularly where vaccine coverage is low. Countries in Sub-Saharan Africa still look particularly vulnerable on this front.

5 November 2021
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