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.
William Jackson Chief Emerging Markets Economist
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Emerging Markets Financial Risk Monitor

Turkey and frontiers in the firing line

The dramatic slump in the Turkish lira over the past month once again leaves the currency firmly in crisis territory. One crumb of comfort is that Turkish banks are in a better position to cope with large falls in the lira than they were during the 2018 crisis. Elsewhere in the emerging world, sovereign vulnerabilities look particularly acute in a handful of frontier markets, while longer-term banking sector risks loom in the UAE, India and Russia.

7 December 2021

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Disruptions no longer worsening, but Omicron a threat

November’s PMIs offered tentative signs that the worst of the supply disruption may have passed, but the bigger picture is that manufacturers in the emerging world remain stretched. And while it’s still too early to tell, the Omicron variant could exacerbate existing strains. The upshot is that supply constraints are likely to continue to weigh on industry for some time yet.

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Emerging Markets Trade Monitor

The impact of Omicron on EM trade

If the new Omicron variant leads to tighter containment measures across the world, that would probably prop up demand for pandemic-related goods to the benefit of Asian exporters. Meanwhile, oil producers are likely to see external positions deteriorate if the plunge in prices is sustained. But arguably the most clear point for now is that the new variant will lead to renewed slumps in tourism, adding to balance of payments risks in the likes of Tunisia and Sri Lanka.

30 November 2021

More from William Jackson

Emerging Europe Data Response

Russia Consumer Prices (Jun.)

The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most likely, but the probability of an even larger 100bp hike has risen.

7 July 2021

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EM credit growth: where do the risks lie?

With the (usual) exception of Turkey, the strong rates of credit growth seen in some EMs including Brazil and Korea are unlikely to be sustained as policymakers have already started (or will soon turn to) tightening policy. The bigger concern is the extreme weakness of credit growth in other EMs such as Mexico and the Philippines, which threatens to further hold back economic recoveries.

6 July 2021

Latin America Data Response

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The 1.4% m/m rise in Brazilian industrial production in May only partially reversed the falls in output in the three preceding months. And while surveys point to a stronger reading in June, the sector was probably a drag on q/q GDP growth over Q2 as a whole.

2 July 2021
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