The latest Q2 GDP figures show diverging depths of downturns between EMs (outside China), which can largely be explained by differences in the severity of virus outbreaks and the stringency of lockdowns. Recoveries are following this pattern too. China’s …
20th August 2020
Property valuations improved substantially in Q2, on the back of a huge 120 bps drop in equities earnings yields. However, while the office, retail and apartment sectors look undervalued on our valuation measure, with income streams likely to fall over …
EM goods exports rebounded reasonably strongly in June and July but, with the global recovery showing signs of losing momentum, further gains from here are likely to be slow-going. Having collapsed between February and April, our seasonally-adjusted …
19th August 2020
Our Mobility Trackers suggest that the EM recovery hit a snag in July, partly due to escalating coronavirus cases and tightening restrictions in some EMs (South Africa, Colombia, Hong Kong). This may form part of a broader trend across the emerging world, …
28th July 2020
Data from the CPB Netherlands Bureau showed a further fall in world trade in May. Admittedly, the decline in trade so far this year has been smaller than the collapse in GDP might have led us to fear and timelier data are consistent with an improvement in …
24th July 2020
EM goods exports remained weak in May, but partial June data point to a fledgling recovery. This is likely to continue in the coming months, although a number of factors look set to constrain the uptick. EM trade data for May were relatively …
16th July 2020
While the valuations of emerging market (EM) equities look high relative to their past levels we don’t think that this will necessarily prevent them from rising further, provided that the continued spread of the coronavirus pandemic doesn’t derail the …
15th July 2020
Despite talk of a bubble in “risky” assets, we do not think that their valuations are particularly stretched and will prevent them from gaining further ground over coming months . As the prices of risky assets have continued to recover over the past few …
10th July 2020
We continue to think that central bank backstops make a re-run of the March panic in financial markets unlikely, a key assumption underpinning our view that “risky” assets will recover further ground in the second half of 2020. While equity markets have …
30th June 2020
April’s world trade data confirmed that coronavirus restrictions have taken a very heavy toll on trade flows. But the damage has been slightly less severe than we had feared and more timely data from early-reporting economies offer hope that the worst is …
25th June 2020
The latest hard data, and our Covid Recovery Trackers , suggest that the downturn in EM GDP bottomed out in April and activity is now edging higher. But the recovery is uneven, with rebounds strong in parts of Emerging Asia and Emerging Europe, and much …
22nd June 2020
EM goods exports have slumped during the coronavirus crisis but perhaps by less than might have been expected. Indeed, shipments from parts of Asia appear to have been boosted by a surge in demand for medical and electronics products. A rebound in overall …
18th June 2020
The broad-based jump in equity dividend yields following the virus-driven collapse in equity prices meant that property valuations deteriorated in Q1. (See Chart 1.) This impact was exacerbated in southern Europe, as well as Russia and Turkey, where the …
4th June 2020
Strains on the financial system have eased further as central banks have continued to backstop key markets. In our view, their support will remain essential to maintaining that calm and sustaining the recovery in risky assets as economies gradually …
2nd June 2020
Property valuations improved markedly in Q1 thanks to a more-than 120 bps fall in Treasury yields as investors flocked to safe-haven assets. This marked the fifth consecutive quarter of improving valuations, with the apartments and retail sectors nudging …
27th May 2020
Given that the lockdowns were implemented in most countries in March, the 1.4% m/m contraction in world trade volumes seems fairly muted. However, the global number was flattered by a sharp rebound in China as shutdowns there eased. And more timely data …
Conditions in money markets have continued to ease gradually as central banks have expanded their backstop measures. In our view, extensive support from policymakers will remain a key factor underpinning the markets for both safe and risky assets for the …
6th May 2020
Whilst the CPB world trade data showed another small drop in February, with lockdowns taking effect across much of the world in March, we expect much sharper falls in the coming months. In total, we expect the coronavirus to knock around a fifth off world …
24th April 2020
Strains in financial markets are continuing to ease slowly as central banks’ efforts contain the fallout from the pandemic take effect and equity markets rebound on hopes that the spread of the virus is slowing. But vulnerable sovereigns remain in the …
17th April 2020
Strains in the financial system appear to have eased a little over the past week or so, as policymakers continue to roll out new support measures. Our view remains that while central banks can probably prevent the pandemic from morphing into a full-blown …
3rd April 2020
The latest trade figures from the CPB revealed only a small fall in world trade volumes in January, but export orders from the PMI surveys have since slumped. With the coronavirus plunging the world economy into recession, global trade looks set to fall …
25th March 2020
Although we think that continued support from policymakers will prevent a financial system meltdown that would amplify the economic shock from the coronavirus pandemic, tensions in markets are likely to remain significant until there are signs that the …
Property valuations generally improved a touch in Q4 on the back of a nearly 50bps fall in equity earnings yields as equity prices rose. This was the fourth consecutive quarter in which valuations had improved, albeit the smallest improvement in that …
5th March 2020
The uptick in government and corporate bond yields in Q4, coupled with the continued decline in property yields, resulted in a deterioration in the relative valuation of commercial property markets in Europe. (See Chart 1.) That said, less than a third of …
This Activity Monitor outlines five key points on the coronavirus fallout for EMs, including what we can say about the impact so far. At the very least, it looks like the virus will cause aggregate EM GDP growth over this year as a whole to slump to its …
28th February 2020
World trade volumes rose slightly in December in another sign that global trade was stabilising at the end of 2019. In the months since, early evidence suggests that the coronavirus has dealt a heavy blow. So far, the effects seem to have been …
25th February 2020
There are early signs that the economic disruption resulting from China’s measures to contain the coronavirus is hitting supply chains and trade in Emerging Asia. There is also some tentative evidence of a hit to the trade further afield. EM exports had …
21st February 2020
The coronavirus outbreak could expose financial vulnerabilities in China and other EMs if factory and other workplace closures are extended. Within China, property developers are particularly vulnerable to a halt in spending, though the government would …
6th February 2020
Our Tracker suggests that aggregate EM GDP growth stabilised in Q4, but it will no doubt weaken sharply in Q1. The coronavirus has already dealt a significant blow to China’s economy, and other EMs (mostly in the rest of Asia) will be hit via the impact …
31st January 2020
Our China Activity Proxy (CAP) estimate for China’s rate of growth in December is somewhat academic at this point but, for what it’s worth, it showed the economy holding up well. Measures to constrain the new coronavirus will have dealt a sizeable blow to …
28th January 2020
World trade volumes fell in November after a slight rise in October. But leading indicators suggest that a turnaround in global trade growth is just around the corner, though the recovery will be gradual. Recent data published by the CPB Netherlands …
24th January 2020
The latest data suggest that y/y EM export growth turned positive in December, having contracted for much of 2019. We think this will mark the start of a run of better EM export figures. Meanwhile, the Phase One US-China trade deal removes a downside risk …
17th January 2020
Our China Activity Proxy (CAP) suggests that growth picked up last month. That’s a challenge to our expectations of a slowdown in growth in 2020. But the resilience of property construction still looks unsustainable. If this sector slows significantly so, …
20th December 2019
EM activity slowed at the start of Q4 and aggregate growth in 2019 as a whole is likely to be the weakest since 2015. Conditions should improve in 2020, but we think growth across many EMs will disappoint. All but a few of the smaller emerging economies …
The contraction in EM export growth deepened in October and November but should ease in the next few months as the drags from lower commodity prices and a shift in the Asian electronics cycle fade. Meanwhile, although trade deals agreed by China and …
17th December 2019
EM GDP growth picked up in Q3 and, despite a likely slowdown in China, we expect that aggregate EM growth will be a touch stronger in 2020 than it has been this year. Most major EMs have now released Q3 GDP data. By our estimates, EM GDP growth edged up …
29th November 2019
Our China Activity Proxy (CAP) suggests that the economy decelerated last month to its weakest pace of growth since May. Recent headwinds are domestic in origin, reflected in slower movements of freight and of travellers for business and leisure. Property …
26th November 2019
September’s fall in world trade volumes was a blow to hopes that the global economy may have reached a turning point. There are some signs of stabilisation in leading indicators of trade, and base effects should push the annual growth rate above zero …
Lower government bond yields improved the relative valuation of commercial property markets for the third consecutive quarter. (See Chart 1.) Less than one fifth of markets look overvalued, with more than half of industrial markets fairly valued. Since …
21st November 2019
The year-on-year rate of EM export growth should turn positive in the coming months, but this will mainly reflect favourable base effects from the Asian electronics cycle rather than stronger underlying demand. The latest EM export data have been weak . …
19th November 2019
Our Trackers suggest that growth slowed across large parts of the emerging world in Q3. But aggregate EM growth is probably close to bottoming out and we expect that it will strengthen a little in 2020. We estimate that aggregate EM GDP growth eased to …
30th October 2019
Economic and financial vulnerabilities are generally low across much of the emerging world, but there are a handful of weak links. Argentina’s sovereign debt vulnerabilities remain high and, whichever direction the new president takes, we think that a …
29th October 2019
After a jump in July, world trade volumes rose again in August. But this is unlikely to be the start of a material recovery – indeed, most indicators point to subdued trade growth in the closing months of 2019. Recent data published by the CPB Netherlands …
28th October 2019
Our China Activity Proxy (CAP) suggests that growth edged up at the end of last quarter due to a rebound in industrial activity. But the prop from industry should be short-lived, and with the recent boom in property construction levelling off, growth …
24th October 2019
The EM export recovery paused in August and September, although we think exports should still strengthen over the coming quarters. This isn’t because of developments in the trade war – the recent improvement in the mood music is unlikely to be a prelude …
17th October 2019
While world trade volumes rebounded in July, they only recovered ground lost the previous month. The big picture is that world trade is set to remain weak in the coming months as the global industrial downturn drags on. Data published this week by the CPB …
27th September 2019
The recent stabilisation in EM GDP growth has come alongside further evidence that solid consumer spending is helping to offset weakness in industry. We expect this trend to continue in the coming months. Our Tracker suggests that EM GDP expanded by …
Our China Activity Proxy (CAP) suggests that growth remains resilient but has edged down slightly since the end of Q2. With property construction no longer accelerating and broader activity still under pressure, growth is likely to drop back further in …
23rd September 2019
EM exports stabilised in July and August but, with the latest round of US-China tariffs yet to feed through and global growth subdued, we expect EM export growth to remain weak in the coming quarters. While the dollar value of EM exports in the three …
18th September 2019
The raft of GDP figures published in the last few weeks suggest that, having slowed over most of the past year, aggregate EM growth ticked up in Q2. But activity is still soft and we expect that EM growth to remain weak over the next 12-18 months. Almost …
29th August 2019
