Long-lasting economic damage

We estimate that aggregate EM GDP will shrink by 4% this year, by far the worst outturn since reliable records began in 1960. The recovery will be fitful, with output at an aggregate level likely to remain below its pre-virus path even by the end of 2022.
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Emerging Markets Economics Update

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. China slowdown webinar: Join us on Thursday, 5th August for a special webinar assessing the impact of China’s economic slowdown on the global recovery. Neil Shearing will lead a discussion with economists from across our economics and markets services to assess whether investors should brace for fresh volatility with China poised for a structural deceleration. Register here for sessions at 0900 BST/1600 HKT or 1100 ET/1600 BST.

2 August 2021

Emerging Markets Activity Monitor

Clouds over Asia, bright spots in EM Europe & Lat Am

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

Emerging Markets Economic Outlook

Low vaccine coverage makes variants the key risk

Low vaccine coverage means that the threat to economic recoveries from the highly-contagious Delta variant is much larger in the emerging world than in developed economies. And EMs will take longer to return to their pre-crisis path of GDP as a result. In much of Asia, this threat adds to reasons to think that central banks will keep monetary policy loose. But inflation concerns are likely to keep policymakers in Emerging Europe and Latin America in tightening mode.

29 July 2021

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Emerging Markets Economics Chart Book

Asia now the epicentre

The severe waves of COVID-19 that afflicted Emerging Europe and Latin America earlier in the year are now subsiding and the near-term economic outlook there has brightened. But several Asian economies have become the focus of concern instead. India accounts for about half of total global new virus cases, although the latest figures at least offer hope that the worst may be over. Other Asian economies such as Thailand, Taiwan and Vietnam that had, up till now, controlled the virus very well have suffered a rise in new cases (albeit to still very low levels in the latter two). (See Chart 1.) That is likely to weigh on activity and also serves as a reminder that, for the many EMs where vaccination coverage remains low, the threat of new outbreaks will persist.

19 May 2021

Emerging Markets Economic Outlook

New virus waves to drag on the recovery

The surge in virus cases across large parts of the emerging world and the slow pace of vaccine rollout mean that the headwinds facing the EM recovery are building. EM currencies are likely to see further falls against the dollar this year, but fears of a repeat of the Taper Tantrum look overdone. One consequence is that EM central banks won’t turn to turn to monetary tightening as quickly as most currently expect.

28 April 2021

Emerging Markets Economics Chart Book

Virus outbreaks cloud the outlook

New COVID-19 cases have surged in the emerging world, with India, Emerging Europe and Latin America particularly hard hit. Social distancing measures have been tightened in many countries, which will weigh on activity. The early evidence suggests that the EM recovery had already lost some momentum in Q1 and that’s likely to continue into Q2. Growing headwinds to the economic outlook add to reasons to think that most EM central banks will look through the coming spike in inflation.

21 April 2021
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