Emerging Markets

Emerging Markets Economics Focus

Emerging Markets Economics Focus

Why is inflation different in Asia?

Inflation hasn’t emerged as a concern across Emerging Asia in the same way it has in the rest of the emerging world, in part because food price inflation in Asia is much lower, but also because the region has experienced much less disruption from the pandemic than other EMs. Whereas central banks in Latin America and Emerging Europe will tighten monetary policy further over the coming months, interest rates in most of Asia will remain on hold.

22 November 2021

Emerging Markets Economics Focus

The pandemic and EM scarring risks

The pandemic is likely to inflict lasting damage on potential growth in economies in much of Latin America, Africa and South and Southeast Asia, adding to the structural headwinds that they already faced. However, the risk of permanent scarring in many other emerging markets – including much of East Asia and Emerging Europe – is overstated. In view of the wider interest, we have made this Emerging Markets Update available to clients of our Long Run Service

9 September 2021

Emerging Markets Economics Focus

EM vulnerabilities are mainly home-grown

A rise in US Treasury yields and tightening of external financial conditions could cause vulnerabilities in Turkey and a handful of smaller frontier markets to crystallise. However, most major EMs’ dependence on capital inflows looks limited. Instead, in the largest EMs, the biggest risks are domestic in nature. These include public debt problems in South Africa and Brazil, as well as banking sector risks in India and China.

12 April 2021
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Emerging Markets Economics Focus

How vaccines will affect our EM forecasts

This Focus sets out a framework for thinking about how the distribution of COVID-19 vaccines will affect the outlook for EMs. For much of Emerging Europe and Chile, these developments may allow economies to return to normal more quickly than we had expected. But it will take still take a long time for GDP to recover to its pre-crisis trend in much of the rest of Latin America, as well as South Asia and Africa.

30 November 2020

Emerging Markets Economics Focus

The winners and losers from climate change

Climate change will be more costly to EMs than developed countries, with parts of Africa, as well as South and South East Asia most vulnerable to rising global temperatures. That said, some EMs could benefit as investments to mitigate climate change increase. One group of winners will be commodity producers that are able to provide the resources needed for the transition to cleaner forms of energy.

19 November 2020

Emerging Markets Economics Focus

Could the crisis lead to higher EM inflation?

Large output gaps look set to keep inflation low in most emerging markets over the next few years. But further out, we think that worrying public debt trajectories in some places (Brazil and South Africa), and greater emphasis on growth over inflation by central banks in others, could result in monetary policy being kept too loose for too long, creating medium-term inflation risks.

Emerging Markets Economics Focus

Lasting blow to supply capacity is not inevitable

It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to revert to the path of output they were on before the crisis. Nonetheless, with demand likely to be slow to recover fully, this could still take several years. And there will be several important exceptions to this generally optimistic picture.

Emerging Markets Economics Focus

The coronavirus and the emerging world

The impact of the coronavirus means aggregate EM GDP is likely to have contracted in q/q terms for the first time since the global financial crisis in Q1. If the outbreak is contained quickly, most lost output should be recovered later in the year. But if the virus spreads further or supply chain disruptions persist for much longer, we think this could plausibly knock as much as a percentage point off EM growth this year. And EM asset prices would suffer renewed falls.

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