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Net portfolio inflows into EMs have been close to multi-year highs this month, and that appears to have come alongside an uptick in sovereign Eurobond issuance in recent weeks. Even so, debt issuance hasn’t been abnormally large. And it has been skewed …
17th December 2020
Frontier economies will receive only a relatively small direct economic boost from the roll-out of vaccines next year. But the indirect benefits via higher commodity prices, capital inflows and tourism spending will be more substantial. These indirect …
15th December 2020
One striking observation from the latest EM goods trade data is that exports have continued to rebound faster than imports, causing trade positions to improve further. While some of these gains may endure, various factors that have boosted EM trade …
11th December 2020
The race to secure and approve COVID-19 vaccines is in full swing and, while roll-out will generally be slower in EMs than in DMs, immunisation of vulnerable populations over the next year or so is a realistic goal, which should allow lockdowns to be …
10th December 2020
Positive vaccine developments have diminished, but not dispelled, financial risks in emerging markets. Brazil and South Africa are still facing slow-burning fiscal crises, while India’s banking sector looks worryingly frail. Elsewhere, despite the recent …
3rd December 2020
November’s headline manufacturing PMIs were generally encouraging and suggest that EM industrial sectors are faring well, even in Central & Eastern Europe where overall GDP will slump in Q4. We expect industrial sectors to continue to lead the EM recovery …
1st December 2020
This Focus sets out a framework for thinking about how the distribution of COVID-19 vaccines will affect the outlook for EMs. For much of Emerging Europe and Chile, these developments may allow economies to return to normal more quickly than we had …
30th November 2020
The latest activity and mobility data are consistent with economies in Latin America, India and South Africa registering another quarter of positive growth in Q4, and those in Central & Eastern Europe (CEE) suffering renewed contractions. But we still …
27th November 2020
Equities and bonds in emerging markets (EMs) rallied sharply on the vaccine news earlier this month, particularly outside of Asia. We think they will continue to fare well as the global economy recovers. The reaction of EM assets to the vaccine news …
The US election outcome and positive vaccine news has triggered a jump in EM net portfolio inflows to their highest level since 2014. These inflows are likely to remain robust over the coming quarters. Our total EM Capital Flows Tracker is constructed …
24th November 2020
Zambia became the first African government to default during the current crisis and debt risks are high in several other Frontier Markets, including Ghana and Kenya. The G20’s recently-announced ‘Common Framework’ to provide debt relief is a step in the …
23rd November 2020
This month’s positive vaccine news has dramatically improved the near term global economic outlook, but it doesn’t fundamentally alter our dovish view on EM monetary policy. Many EMs have only small (or non-existent) purchase agreements and face …
20th November 2020
Climate change will be more costly to EMs than developed countries, with parts of Africa, as well as South and South East Asia most vulnerable to rising global temperatures. That said, some EMs could benefit as investments to mitigate climate change …
19th November 2020
Relatively few EMs have signed large-scale advance purchase arrangements with pharmaceutical companies and the roll-out of vaccines is, in large part, likely to be slower than in DMs. This Update answers five questions on vaccine distribution in EMs and …
18th November 2020
An effective vaccine rolled over the course of 2021-22 would probably result in weaker demand for COVID-19 related products and some consumer goods, removing a tailwind to exporters in parts of Asia and Central & Eastern Europe. Meanwhile, higher …
12th November 2020
The distribution of an effective COVID-19 vaccine across the emerging world would clearly improve the near-term economic outlook significantly. Even so, some EMs, including India and parts of Latin America and Africa, would still suffer economic …
10th November 2020
The recent pressure on the Argentine peso and the Turkish lira has echoes of the currency crises both countries suffered in 2018. But there are also some important differences which mean that, even if Turkey and Argentina were to suffer outright currency …
3rd November 2020
India’s banks entered the crisis in worse shape than other major EMs, although large state involvement in the financial sector means the government is unlikely to remain idle if loan losses start to mount. Elsewhere, we have concerns in Brazil, Mexico, …
October’s headline manufacturing PMIs released so far for EMs were generally encouraging across the board, but they do not fully reflect the very latest surge in global COVID-19 cases and restrictions imposed across much of Europe. We think that these …
2nd November 2020
The rapid spread of COVID-19 in Central & Eastern Europe (CEE) will cause a renewed slump in the region in Q4. That contrasts with India and parts of Latin America and Africa, where falling new cases and easing containment measures should support …
30th October 2020
Recoveries in much of the emerging world were slowing even before the renewed surge in COVID-19 cases across many parts of the globe. The economies of Central & Eastern Europe will be hit hard in Q4 by their alarming outbreaks and the sizeable tightening …
29th October 2020
At the aggregate level, EM exports continued to recover in August and September. But this masks a wide divergence in performance at a country level, which we expect to persist in the coming months. Our seasonally-adjusted measure of aggregate EM goods …
27th October 2020
Hopes for more debt relief for distressed EMs have been dampened in recent weeks. This Frontier Markets Monthly looks at why we are now at an impasse, the role of China, which EMs need help most, and how things might play out from here. What’s the current …
Table of Key Forecasts Overview – The speed and strength of economic recoveries in emerging markets will continue to vary enormously by country, with China and some other parts of Asia leading and India, South Africa and much of Latin America lagging. …
23rd October 2020
Whatever the outcome of the US election, we expect that the trends of US-China decoupling and deglobalisation will continue. The election result could be pivotal for some EMs: a Joe Biden victory could raise geopolitical tensions with Turkey and Russia. …
16th October 2020
Large output gaps look set to keep inflation low in most emerging markets over the next few years. But further out, we think that worrying public debt trajectories in some places (Brazil and South Africa), and greater emphasis on growth over inflation by …
13th October 2020
Daily data suggest that foreign investors have been net sellers of emerging market bonds and equities in recent weeks, but there are reasons not to be very concerned. Our EM Capital Flows Trackers are constructed using monthly data on foreign exchange …
8th October 2020
September’s relatively strong batch of emerging market manufacturing PMIs suggests that recoveries in industrial production continued in September. But with the global rebound losing steam , growth in export-led EM industrial sectors is likely to slow in …
1st October 2020
Recent moves by Angola and Zambia to restructure their public debts (or seek to) are unlikely to act as a trigger for a wave of similar steps by other debt-distressed frontiers. Indeed, their experience highlights the difficulties of reaching agreements …
30th September 2020
The latest activity and mobility data indicate that the EM recovery has lost some steam in recent months and we expect the pace of recovery to remain slow-going in the coming quarters. The main exception is China, where the recovery looks set to stay …
EM financial conditions have tightened a little in recent weeks, although only in Turkey does this threaten to become a significant headwind to growth. Elsewhere, conditions remain very loose but the positive effect of this on activity will be dampened by …
29th September 2020
Most EMs in Latin America, Africa and South Asia that were battling worryingly large virus outbreaks appear to have passed the peak in recent weeks. That should allow a gradual scaling back of restrictions, supporting economic recoveries. Meanwhile, the …
Despite the sell-off in most emerging market currencies over the past week, we continue to think that most will strengthen against the US dollar as the global economy recovers. In particular, we have recently revised up our forecasts for the Chinese …
24th September 2020
After an initial burst of growth following the lifting of national lockdowns, the latest activity data and mobility indicators point to a slower pace of recovery in most EMs in recent months. (See Chart 1.) This looks set to continue in the next few …
A number of EMs – notably Brazil, Mexico and Korea – have experienced strong increases in food inflation in recent months, which have pushed up headline rates. But we think that food inflation in the worst-affected countries is close to a peak. Even if it …
The rebound in EM exports continued in July, but further gains will be harder to come by from here. Indeed, the initial boost from re-opening economies is likely to fade and the slowing global recovery is dimming the outlook for exporters. Having tumbled …
17th September 2020
Our Tracker suggests that last month EMs suffered the largest net outflow of capital since the height of the market turmoil in March. Net outflows look set to persist in the coming months, although they should remain small compared to past standards, …
16th September 2020
China’s strong economic recovery is likely to provide more of a support to the recovery in (non-oil) commodity producers in Latin America and Africa than it will in the rest of Asia. But we don’t think that China’s growth will provide as much of a boost …
10th September 2020
The experience of the aftermath of the Global Financial Crisis (GFC) chimes with our EM rates view on two counts. The first is that easing cycles in many EMs are now at an end (Brazil) or will draw to a close over the coming months (Mexico, South Africa …
9th September 2020
Most major EMs have managed to avoid acute balance of payments, banking sector and sovereign debt problems so far this year. But pockets of vulnerability remain. In particular, the risk of another full-blown currency crisis in Turkey is very high. And …
4th September 2020
The further rise in the EM manufacturing PMI to a nine-year high of 52.5 in August, from 51.4 in July, suggests that the EM recovery continued in the middle of Q3. But the rebound has been uneven across countries, with PMIs falling in countries recently …
1st September 2020
Our Tracker suggests that EMs experienced net capital inflows last month for the first time since the coronavirus crisis began. Daily data suggest that net capital inflows were generally sustained in August, with Turkey a key exception. But even if …
26th August 2020
We think that the recent outperformance in local-currency terms of the MSCI EM Index relative to the MSCI World Index of developed market (DM) equities will continue as the global economy recovers further. (See Chart 1.) Back in April , when stock markets …
25th August 2020
A handful of countries in East Asia and Eastern Europe (notably Korea and Poland) are suffering from rising coronavirus cases again, but the hit to activity there resulting from precautionary consumer behaviour and renewed restrictions is likely to be …
Emerging markets account for the majority of new global coronavirus cases each day (see Chart 1) and, while containment measures may be tightened sporadically, these are generally likely to be targeted and localised. The spread of the virus is, of course, …
21st August 2020
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
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
Concerns are mounting that Turkey is on the brink of a fresh currency crisis which, were it to materialise, could trigger some turbulence in other EMs’ financial markets. But it’s unlikely to result in stress in the rest of the emerging world on anywhere …
13th August 2020
A fundamental force behind the growing pressure on the Turkish lira is the economy’s widening current account deficit. But in most cases, the Covid-19 crisis appears to be causing current account deficits to narrow, which is one factor that should limit …
12th August 2020
Argentina and Ecuador’s swift debt restructuring deals may provide a blueprint for other debt-distressed sovereigns. But these deals are not quite the success stories they seem at first sight. In any case, no two restructurings are ever alike, and other …
5th August 2020
