Emerging Markets Capital Flows Monitor (Nov.)

Our tracker suggests that capital flows into and out of the EM world were essentially balanced last month. Over 2017 as a whole, outflows will be about US$55bn, just an eighth of the total recorded in 2016.
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Emerging Markets Economics Update

Emerging Markets Capital Flows Monitor

Net capital outflows from emerging markets appear to have eased over the past month, helped by a pickup in portfolio flows into South East Asia and India. Looking ahead, even if rising US Treasury yields were to trigger renewed outflows in the coming months, vulnerabilities in most major EMs look limited.

15 September 2021

Emerging Markets Economics Update

EM financial conditions still loose barring LatAm

Our financial conditions indices show that conditions remain loose by historic standards in most EMs. The key exception is Latin America, where conditions have tightened sharply this year due to rising interest rates and fiscal risks. This could pose a headwind to economic recoveries in the region.

13 September 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.

9 September 2021

More from Capital Economics Economist

US Economics Weekly

Stronger growth not generating major imbalances

After the Fed’s decision to raise interest rates by another 25bp, Fed Chair Jerome Powell claimed in the post-meeting press conference that “the economy is doing very well” – we couldn’t agree more. That view was bolstered by May’s retail sales figures, which suggested that both consumption and GDP growth will rebound strongly in the second quarter, to above 4% annualised. The Fed’s financial account data, released last Friday, illustrate that the economic expansion is not being accompanied by a sharp rise in private sector debt. Rising household wealth is prompting households to save less of their incomes and firms have plenty of resources to fund investment, not least thanks to the 2017 tax reform. The main vulnerability is a renewed surge in Federal debt, but even that wasn’t as bad as it looked, because it was boosted by the suspension of the debt ceiling and partly matched by a rise in assets held in the Treasury account at the Fed.

15 June 2018

Commodities Weekly Wrap

Fears of protectionism weigh on prices

The Fed’s decision to hike its target rate by 25bp and the announcement that the US was going to press ahead with a 25% tariff on imports of Chinese goods prompted a rally in the dollar, which in turn weighed on commodity prices. China has already said it will retaliate, notably with a 25% tariff on soybeans, which was a key factor in the 4% slump in their price this week. Softer Chinese activity data for May, released on Thursday, also worried investors, particularly in the industrial metals markets.

15 June 2018

Canada Economics Weekly

Household debt will remain a risk for years to come

The news earlier this week that household debt had edged down to 168.0% of disposable incomes in the first quarter, from 169.7% in the final quarter of last year, was greeted by some as confirmation that the Bank of Canada had somehow engineered a soft landing in the housing market. It hasn’t. Debt usually surges in the fourth quarter ahead of the Holiday season and falls back in the first quarter, as people pay down their credit cards. Moreover, by focusing on debt exclusively, those commentators also conveniently failed to note that overall household net worth declined to a two-year low of 857% of disposable income.

15 June 2018
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