EM growth running at a three-year low

EM GDP growth slowed to just 3.3% y/y in Q1, its weakest pace since the first half of 2016, and our Tracker suggests that it remained sluggish in Q2. Growth should pick up a little in the second half of the year. Large commodity producers, such as Brazil, Russia and South Africa, are likely to find their feet again after a terrible performance in Q1. And Turkey and Argentina should recover from the downturns caused by last year’s currency crises. But growth will remain weak and, in most cases, our 2019 and 2020 GDP growth forecasts are below consensus.
Continue reading

More from Emerging Markets

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. China slowdown webinar: Join us on Thursday, 5th August for a special webinar assessing the impact of China’s economic slowdown on the global recovery. Neil Shearing will lead a discussion with economists from across our economics and markets services to assess whether investors should brace for fresh volatility with China poised for a structural deceleration. Register here for sessions at 0900 BST/1600 HKT or 1100 ET/1600 BST.

2 August 2021

Emerging Markets Activity Monitor

Clouds over Asia, bright spots in EM Europe & Lat Am

While the pandemic continues to hold back recoveries in Southeast Asia, the near-term outlook appears brighter in Emerging Europe and Latin America. However, low vaccine coverage in the latter means that economies remain susceptible to renewed outbreaks and containment measures. And the slowdown in China is likely to weigh on growth in EM industrial metal producers.

30 July 2021

Emerging Markets Economic Outlook

Low vaccine coverage makes variants the key risk

Low vaccine coverage means that the threat to economic recoveries from the highly-contagious Delta variant is much larger in the emerging world than in developed economies. And EMs will take longer to return to their pre-crisis path of GDP as a result. In much of Asia, this threat adds to reasons to think that central banks will keep monetary policy loose. But inflation concerns are likely to keep policymakers in Emerging Europe and Latin America in tightening mode.

29 July 2021

More from Capital Economics Economist

Japan Economics Weekly

Post-Olympics public spending boost, BoJ holding firm

Japan’s government appears to be lining up a stimulus programme to prevent an economic downturn after the Tokyo Olympics next year. While increased public spending would provide a welcome boost to GDP, we don’t believe there’s any particular reason to expect a post-Olympics slowdown. Meanwhile, the Bank of Japan is bucking the global trend towards additional monetary easing. Unlike some commentators, we don’t think that loosening by other major central banks puts the Bank of Japan’s policy framework under pressure.

21 June 2019

Emerging Asia Economics Weekly

Growth continues to weaken, rates to be cut further

After a very weak first quarter that saw GDP growth in many countries drop to a post-financial crisis low, the most recent data suggest growth across Emerging Asia has continued to slow. Weak growth is likely to prompt further interest rate cuts over the coming months across the region. Despite leaving rates unchanged on Thursday, we expect the central banks of the Philippines and Indonesia to loosen monetary policy at their next meetings.

21 June 2019

China Economics Weekly

Baoshang reverberations, WTO defeat

In a Focus last month, we discussed what we see as the most plausible hard landing scenario for China: troubles at a small bank that spread to the interbank market and trigger a systemic banking crisis. There are disconcerting similarities in the strains that have followed the regulatory takeover of Baoshang Bank. These have intensified in the past week, taking credit spreads for low-rated banks to record levels. This may not be the Big One but recent events underline that a banking crisis is a significant medium-term risk. Meanwhile, China conceded defeat this week in a key case at the WTO. It will be hoping for a better outcome from talks between Presidents Xi and Trump at the upcoming G20.

21 June 2019
↑ Back to top