Filtered by Subscriptions: Emerging Markets Economics Use setting Emerging Markets Economics
Table of Key Forecasts Overview – 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 …
28th April 2021
The broad-based improvement in EM goods trade balances over the past year is likely to unwind over the coming quarters as consumption patterns gradually normalise and oil prices recover further. But at the same time, a big build-up of external imbalances …
22nd April 2021
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 …
21st April 2021
With the notable exception of Turkey, the net capital outflows from emerging markets seen in February and March appear to have eased in recent weeks. Outflows may yet intensify over the coming quarters amid the backdrop of rising US Treasury yields, but …
15th April 2021
Virus outbreaks have taken a sharp turn for the worse across several large EMs – including India and much of Latin America – and look likely to hold back economic recoveries in Q2. The recent experience of Chile suggests that it will be a long slog for …
14th April 2021
A rise in US Treasury yields and tightening of external financial conditions could cause vulnerabilities in Turkey and a handful of smaller frontier markets to crystallise. However, most major EMs’ dependence on capital inflows looks limited. Instead, in …
12th April 2021
The mooted $650bn allocation of IMF Special Drawing Rights (SDRs) that looks close to being signed off would provide welcome relief to some smaller frontier markets such as Ghana and Kenya that still face very high foreign borrowing costs. But it won’t …
7th April 2021
Markit’s EM manufacturing PMI dipped last month, but the survey still paints a pretty positive picture of the sector’s recovery across the emerging world – with Brazil a notable outlier. In the meantime, supply chain disruptions are causing price …
1st April 2021
We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years . EM assets and currencies have come under pressure recently. (See …
The rapid re-opening of Israel’s economy since February has triggered a rebound in activity that looks stronger than had been widely anticipated. In particular, the recovery in hospitality and leisure spending has been faster than that which followed …
31st March 2021
The economic data out of the emerging world for Q1 look reasonably strong, but worsening COVID-19 outbreaks and a shift towards policy tightening are creating headwinds for some EMs. Activity in Central Europe, Brazil and the Philippines is already …
Particularly weak recoveries lie in store for tourism-dependent emerging markets, including much of Africa, parts of the Middle East (e.g. Jordan), and South East Asia (e.g. Cambodia). A lacklustre rebound in tourism could add to balance of payments …
29th March 2021
The raft of EM central bank decisions over the last couple of weeks suggests that the door has largely closed on further rate cuts and that the balance will shift (slightly) towards hikes over the coming months. But this has more to do with domestic …
26th March 2021
EM exports have continued to rise sharply in recent months and this strength may persist for a little while yet. But the big tailwind to some of the Asian economies from strong demand for electronics will turn into a headwind in the coming quarters, which …
24th March 2021
The latest crisis engulfing Turkey will make it harder for the country to roll over its external debts, with the banking sector particularly vulnerable. If Turkey’s crisis worsens, it may cause wobbles in a few EM currencies, but there are reasons to …
22nd March 2021
The recent rise in EM sovereign bond yields will, if sustained, make public debt problems in some countries even worse. Those with large local currency debts may ultimately turn to financial repression policies, which might improve debt dynamics but at …
18th March 2021
EM financial markets have been hit this month by the rise in US Treasury yields, which has re-ignited some concerns about a re-run of the Taper Tantrum. So far, capital outflows from EMs have been relatively small. And financial conditions across the …
16th March 2021
Portfolio outflows from several EMs have intensified over recent weeks as fears over a re-run of the “Taper Tantrum” appear to be playing on investors’ minds. But outflows are currently much smaller than they were in 2013 and, even if there were a …
15th March 2021
Recent currency falls and rises in inflation have all but guaranteed interest rate hikes in Turkey and Brazil next week, and Russia’s central bank is likely to lay the groundwork for tightening too. More broadly however, low inflation and still-large …
11th March 2021
The rise in US Treasury yields poses a risk for those EMs with large external financing needs such as Turkey as well as some smaller frontier markets, and could force central banks in these countries to tighten monetary policy. The accompanying rise in EM …
10th March 2021
While further market turmoil is a risk over the coming quarters, the likelihood of outright banking, sovereign debt and currency crises among the large EMs is low. More acute vulnerabilities lie in some of the smaller frontier markets. Regular readers …
5th March 2021
A fresh allocation of IMF Special Drawing Rights (SDRs), if implemented, would provide a welcome boost to the depleted foreign exchange reserves of some distressed frontier economies. But an allocation wouldn’t address underlying dire debt dynamics, …
3rd March 2021
February’s manufacturing PMIs released across the emerging world were the proverbial mixed bag but, taken together, generally point towards solid EM industrial production growth in the next month or two. There are signs under the hood of supply …
1st March 2021
A global shortage of semiconductors is disrupting auto production, and – among EMs – it could hit exports from Central Europe and Mexico in particular. But some of the lost revenue should be made up once shortages ease. Meanwhile, strong semiconductor …
26th February 2021
Despite the rise in EM bond yields over the past week, EM financial conditions remain very loose. Most central banks are likely to look through the accompanying sell-off in currencies (indeed, some may welcome weaker exchange rates). But these moves do …
President Biden’s fiscal plan would support the US economy but the positive spillovers to emerging markets via trade are likely to be surprisingly limited. We doubt the Fed would move more quickly to reduce stimulus in response, and external financing …
25th February 2021
The outlook for emerging markets has improved in recent weeks, but we still expect a relatively slow and bumpy economic recovery over the next 12-18 months. The raft of Q4 GDP data released so far have been encouraging . Despite tighter social distancing …
24th February 2021
We still expect emerging market (EM) “risky” assets and currencies to make further gains this year, despite growing concerns about another “taper tantrum”. EM assets and currencies have made significant gains since their troughs last year. And we think …
23rd February 2021
While the mood in EM financial markets has soured a little of late, from an economic standpoint, the past month has brought several positive developments. First, Q4 GDP data released so far have generally been better than expected. Recoveries have been …
Israel’s rapid vaccination programme has allowed the government to set out plans to re-open the domestic economy in the coming weeks and may offer some lessons for other countries. The speed at which the restrictions will be lifted is the most striking …
19th February 2021
Taken alone, prolonged restrictions on international travel would do little to hinder the global recovery since overseas tourism is a small share of world GDP and some of the lost spending would be made up. But the aggregate masks a wide range of effects. …
18th February 2021
The latest rise in the price of oil – and our view that it will increase further this year – could push current account and budget balances into surplus in many of the EM producers. It should ease any concerns about dollar pegs in the Gulf, although we …
17th February 2021
We do not expect a re-run of the 2013 “taper tantrum”, in which EM assets went into a tailspin and some EM central banks were forced to hike policy rates. But even if there were a similar period of turmoil, the fallout for EMs would be less severe. The …
16th February 2021
The recovery in many emerging markets after the Global Financial Crisis was characterised by concerns about destabilising capital inflows, overheating, and asset price bubbles. This recovery is likely to be more gradual, external imbalances are unlikely …
12th February 2021
Net portfolio inflows into many emerging markets reached multi-year highs towards the end of 2020, which allowed a handful of central banks to lean against the wind and accumulate FX reserves. That said, early data suggest that net portfolio inflows have …
10th February 2021
The rise in global agricultural prices in recent months has sparked concerns about a surge in food inflation across the emerging world but we think that these fears are overdone. In any case, most central banks would probably look through higher food …
5th February 2021
The announcement of FX purchase programmes by several EM central banks has evoked comparisons with the “currency wars” that followed the Global Financial Crisis. One lesson from this period is that FX intervention is unlikely to prevent further currency …
4th February 2021
Manufacturing PMIs from emerging markets generally rose last month, underscoring that industrial sectors should continue to weather renewed outbreaks and restrictions in the coming months. But China’s manufacturing PMIs fell, providing further evidence …
1st February 2021
While we expect a swift recovery in developed economies over the course of this year, we doubt that this will come alongside a boom in EM goods exports. Instead, as global consumption patterns start to normalise, the key story over the next year or so …
29th January 2021
High COVID-19 cases across parts of the emerging world have grabbed headlines over the past few months. But while these outbreaks will inevitably create bumpiness in the affected countries’ economic recoveries, large downturns should be avoided. The …
28th January 2021
Table of Key Forecasts Overview – China’s recovery is already in full swing, and economies elsewhere in Asia and in Emerging Europe will recover lost ground relatively quickly over the next year. But slow vaccine roll-out and austerity in some cases mean …
27th January 2021
The roll-out of COVID-19 vaccines is getting underway across EMs, but in many cases progress has been slow-going . In the meantime, many countries are suffering from worsening outbreaks. New cases are high and/or rising across Latin America (see Chart 1), …
22nd January 2021
The main risks to the outlook for emerging markets this year relate to virus developments and vaccine rollout. (See here and here .) The more traditional macro risks are smaller, but one going under the radar in a few large EMs is that fiscal support …
21st January 2021
The speed at which vaccines can be rolled out will be a key determinant of economic performance this year, and this is likely to differ widely across EMs. This Update sets out a provisional framework for thinking about this process and when it will allow …
19th January 2021
High-frequency data show that the surge in net inflows to EM bond and equity markets seen last month is now easing, but inflows remain strong. We think that will remain the case as global risk appetite continues to improve. The data provide signs that the …
15th January 2021
In this Update , we take a look at the key elections that are scheduled across the emerging world over the coming year and outline their implications for economic policy and growth . Table 1 gives a summary of the major elections taking place across the …
13th January 2021
The risks to vaccination programmes fall into three groups: procurement, deployment, and effectiveness. In the coming few months, deployment issues will be a key limiting factor in most countries. These should be overcome relatively quickly in DMs, but …
8th January 2021
While the EM manufacturing PMI declined last month, largely reflecting a fall in China’s index, the overall message is that EM industry held up well at the end of last year. The sector is likely to fare well in 2021 provided that the rollout of vaccines …
4th January 2021
The latest activity data continue to show a divergence across countries, but also sectors. Consumers have generally driven recoveries in parts of Latin America, while manufacturing has been the main area of strength in much of Emerging Asia and Emerging …
21st December 2020
Positive vaccine news has not changed our view that monetary policy in many emerging markets (EMs) will generally remain loose for some time yet. That is a key reason why we still expect EM local currency government bonds yields to stay low by historical …
18th December 2020
