The recent run of poor data from around the emerging world is likely to set the tone for the rest of this year. Brazil’s struggles look set to continue, Russia is likely to slip deeper into recession and a property slowdown will continue to weigh on growth in China. EM growth is likely to remain stuck at around 4% y/y for the foreseeable future. The strength of the dollar presents a challenge for a handful of EMs but, for most, dollar debt burdens are more manageable than in the past. As such, policymakers in most EMs are unlikely to feel pressure to tighten in response to currency declines or in line with the Fed. Most central banks will move into tightening mode in 2016, but the shift will be gradual.
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