Asian industry struggles, strong recoveries in EM Europe

June’s PMIs show that virus outbreaks have weighed on manufacturing in Southeast Asia while supply bottlenecks and weaker demand created headwinds for industry in China. In contrast, Indian industry rebounded sharply and manufacturing recoveries continue strongly in most of Emerging Europe. Supply disruptions are continuing to exert upward pressure on prices in the latter.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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EM recoveries enter a more difficult phase

Persistent supply shortages, fading reopening boosts and tighter financial conditions all pose headwinds to recoveries in Emerging Europe and Latin America over the coming quarters, while cooling construction activity looks set to weigh on growth in China. By contrast, the near-term outlook has brightened in South East Asia as economies emerge from lockdowns.

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Headwinds build as financial conditions tighten

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While the pandemic continues to hold back recoveries in Southeast Asia, the near-term outlook appears brighter in Emerging Europe and Latin America. However, low vaccine coverage in the latter means that economies remain susceptible to renewed outbreaks and containment measures. And the slowdown in China is likely to weigh on growth in EM industrial metal producers.

30 July 2021

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Taking stock of the improvement in EM budget deficits

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Central Europe strengthens, but headwinds in Asia

The PMIs for June show that manufacturing strengthened in most of Emerging Europe, but virus outbreaks, supply chain disruptions and a softening of demand created headwinds for industry in Asia. One common theme is that supply shortages persist, which is causing price pressures to build in most EMs.

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