One year on from the oil slump

Emerging market inflation and export growth jumped in January, although this had more do with base effects than a marked strengthening of underlying demand or price pressures. The year-on-year growth rates were pushed up due to the comparison with the same month of 2016, when oil prices fell below $30pb – some 70% lower than their average last month. Overall, we expect export growth and inflation to be stronger this year than in 2016 in most EMs. But the impact of the low base of comparison will fade in the coming months. As a result, January’s export and inflation figures probably mark the peak, not the start of an upward trend. One consequence is that central banks are likely to look through the recent rise in inflation. We don’t expect a wave of interest rate hikes.