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Who holds frontier markets’ foreign debt?

China and private bondholders have become increasingly important creditors to governments of many frontier markets, including some of those that are now finding themselves in debt distress. This is likely to make any debt restructuring talks more complex and longer which could, in turn, could delay bailouts from the IMF.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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Emerging Markets Economics Update

A closer look at the surge in EM food inflation

Aggregate EM food inflation has risen to its highest rate since 2008 and, while it should fall back in 2023, it’s likely to stay extremely high for at least the next four-to-six months. That will keep consumer spending under pressure and provide another reason for EM central banks to tighten monetary policy further. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

28 June 2022

Emerging Markets Economics Update

EMs stepping up to support currencies

A handful of EM central banks have ramped up FX sales to provide support to weakening currencies over the past couple of months. And with inflation high and the US dollar likely to strengthen further, others could follow suit. FX intervention is unlikely to prevent further depreciation, but central banks with healthy FX reserve buffers may have some success in slowing the pace of currency falls. In view of the wider interest, we are also sending this Emerging Markets Overview Update to clients of our FX service.

24 June 2022

Emerging Markets Economics Chart Book

High inflation to keep central banks in tightening mode

Having surged in recent months, there are some tentative signs that EM inflation is nearing a peak. Our measure of aggregate EM inflation was steady at 7.0% y/y between April and May and some indicators of pipeline price pressures have eased. But even so, our aggregate measure is running at its highest rate since 2008 and, even when inflation does fall back, it’s likely to remain well above many EM central banks’ targets for some time. Against this backdrop, most EM central banks are likely to tighten monetary conditions further. Indeed, we generally expect more rate interest rate hikes than most analysts do over the next 12-18 months. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

More from Kimberley Sperrfechter

Emerging Markets Economics Update

Counting the fiscal costs of higher oil prices

Higher oil prices will boost government revenues in the major EM energy producers, but many other EMs will face a fiscal cost via fuel subsidy programmes. While these costs are likely to be small in most cases, there are a few countries of concern, particularly Tunisia and Argentina. Emerging Markets Drop-In (7th April, 10:00 EDT/15:00 BST): Join us on Thursday for our next monthly Emerging Markets briefing where our economists will discuss how the Ukraine war’s spillovers are helping and hurting EMs, and the impact of global central bank tightening. Register here

4 April 2022

Emerging Markets Economics Update

Challenges mounting for EM manufacturers

The broad-based fall in March’s manufacturing PMIs shows that the war in Ukraine is starting to take its toll on EM industry, particularly in Emerging Europe, while China’s lockdown is hitting industry there. The surveys provided signs that external demand is weakening, supply constraints are worsening and that the surge in commodity prices is pushing up input prices.

1 April 2022

Emerging Markets Activity Monitor

Clouds gathering over the near-term outlook

Activity in large parts of the emerging world has rebounded following the easing of Omicron waves, but the war in Ukraine has caused the growth outlook for most EMs to worsen again. While commodity producers across the Gulf and parts of Latin America stand to benefit from the surge in prices, we have revised down our GDP growth forecasts for most other parts of the emerging world.

24 March 2022
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