The worst looks to be over for many EM commodity producers. Their currencies have again been among the best performers this month, helped by a continued recovery in commodity prices. The slump in their exports also eased considerably in February. What’s more, a cyclical rebound appears to be underway in China, led by a government infrastructure drive and a leap in property investment. This should help to ease fears over prospects for China’s commodity demand. Nevertheless, while external conditions for commodity producers are improving, the economic pain from the commodity price collapse will continue to be felt. Economic activity in EM commodity producers barely grew in February, and many will continue to struggle to cope with the large holes that have opened up on their balance sheets.
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