More to EM rebound than trade

The latest data continue to show a broad acceleration in GDP growth across most of the emerging world. A common thread has been a pick-up in exports, with volumes growth now up on the start of the year in every EM region with the exception of the Middle East and Africa (where the OPEC production freeze has hit oil exports). But while the rebound in trade has grabbed the headlines, there are also signs that domestic demand is starting to turn the corner in large parts of the emerging world too. With the sole exception of the Philippines, consumer spending has accelerated in every EM that has so far reported Q3 GDP. In most cases, the pick-up in GDP growth is a welcome rebound from the economic slowdown experienced in 2015 and early 2016. But in some EMs the sheer pace of growth is now becoming a cause for concern. This is particularly true in Central & Eastern Europe, where policymakers are, in our view, at risk of falling behind the curve as rapid growth threatens a build-up in macroeconomic imbalances.