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
William Jackson Chief Emerging Markets Economist
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Emerging Markets Economics Update

Five years on from the “End of a Golden Age”

Five years ago this October, we published a piece arguing that the “golden age” for emerging markets had ended and that they were entering a period of permanently weaker growth. Since then, many of the structural problems that we anticipated have begun to bite and growth has weakened. There’s little that governments can do to restore economies to their previous rates of expansion since these were boosted by a series of one-off factors that can’t be repeated. But at the same time, there are few signs that they are embracing the policy reforms that could help cushion the slowdown.

18 August 2021

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A closer look at the drivers of EM inflation

A big chunk of the recent rise in headline inflation in EMs has been driven by a jump in energy inflation which will be transitory. But core inflation has also risen in parts of Latin America and Emerging Europe and is likely to prove more persistent. With headline rates in both regions set to remain elevated for some time, central banks there will remain in tightening mode over the coming months.

22 October 2021

Emerging Markets Economics Chart Book

Supply shortages take their toll

The supply shortages that have affected many DMs have also intensified in emerging economies over the past couple of months. The automotive sector has been hit hard by global semiconductor shortages, weighing on recoveries in Mexico, Czechia and Hungary in particular. More broadly, EM manufacturers are struggling to meet new orders, causing backlog of works to increase. Meanwhile, recent power shortages have weighed on recoveries in China, India and Brazil. As shortages continue, they are likely to not just weigh on growth, but also add to upward pressure to core inflation. That will probably keep central banks in Latin America and Central Europe in particular in tightening mode.

18 October 2021

Emerging Markets Economics Update

Car woes to weigh on recoveries in Mexico & CEE

The supply constraints that have hit global vehicle output have probably reduced the level of GDP by a modest 0.1-0.2% in most EM auto producers, but some countries like Czechia, Hungary and Mexico have suffered much bigger blows. And the drag from vehicle production is likely to persist for some time yet.

15 October 2021

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Emerging Markets Economics Update

China’s long-term property decline: the fallout for EMs

Irrespective of how the current problems in China’s property sector are resolved, property construction there is entering a period of structural decline. Among other EMs, the main effects will be felt in metals producers in Latin America and Africa, adding to reasons to expect weak long-term growth in countries such as Brazil and South Africa. In view of the wider interest, we have made this Emerging Markets Update available to clients of our Long Run Service

7 October 2021

Latin America Data Response

Brazil Industrial Production (Aug.)

The larger than expected 0.7% m/m fall in Brazilian industrial production in August suggests that the sector probably knocked 0.1-0.2%-pts off q/q GDP growth in Q3. Persistent shortages of component parts are likely to keep industry on the backfoot in the current quarter.

5 October 2021

Emerging Markets Economics Update

EM supply constraints mount

Although the emerging market manufacturing PMI ticked up last month, EM industry has been undergoing a slowdown for some time. And the surveys show that supply constraints are mounting, which is likely to weigh on manufacturers’ output in the months ahead.

1 October 2021
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