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The Q4 EM GDP data released so far have generally been a bit stronger than might have been expected, in light of concerns about the health of the global economy. But more timely data suggest that growth weakened in early 2019. … Growth soft at the start …
26th February 2019
We think that the recent rise in the MSCI EM Index, and the particularly strong performance of equities in China and most of the rest of EM Asia, will reverse in the coming months. … EM equities’ strong start to the year not likely to …
22nd February 2019
The economic cycle in most EMs has passed its peak and a combination of domestic headwinds and a slowdown in the global economy means growth will be weaker than most expect across the emerging world. One consequence is that monetary tightening cycles will …
21st February 2019
The weakness of the latest inflation and economic activity data in many emerging markets, combined with growing expectations for looser monetary policy in the developed world, has prompted a dovish shift by many EM central banks. Policymakers in India and …
20th February 2019
The latest figures show that EM export sectors faltered at the end of 2018. Chinese trade numbers for January were surprisingly upbeat, but seasonal effects are probably distorting the real trend. We still think that EM exports will decline later this …
15th February 2019
Our Tracker suggests that the improvement in sentiment towards EMs at the start of this year was accompanied by a pick-up in capital flows in January. It looks like this was concentrated in flows to EM bond and equity markets, and timely figures suggest …
14th February 2019
The slowdown in growth in the emerging world this year is likely to be unusually broad-based. That will set a downbeat mood for EM assets over the course of this year. … EMs facing synchronised …
13th February 2019
The fall in oil prices and shift in interest rate expectations in the US and Europe seem to have brought EM monetary tightening to an end. While most central banks aren’t in a rush to loosen policy, the focus over the coming year is likely to be on …
8th February 2019
We expect EM risk premia to rise this year as global growth slows, something which has often been associated with EM central banks raising interest rates. But big currency falls and surges in inflation this year look unlikely. In fact, lower inflation …
6th February 2019
The sharp fall in the aggregate EM manufacturing PMI last month is consistent with a slowdown in industrial production growth to 2% y/y, from around 4% in 2018. This may be an early sign that EM growth is slowing more sharply than we had anticipated. … EM …
1st February 2019
Frontier dollar bonds have rallied this month, due partly to improved risk appetite, but also progress on IMF deals (Ukraine and Sri Lanka) and the political news flow (Venezuela and Lebanon). But it’s unclear to us that the narrowing of spreads will be …
31st January 2019
Aggregate EM growth slowed to its weakest pace in two years in the middle of Q4, and more timely data point to further weakness. We expect the slowdown to continue over the course of this year. … Slump in Asian industry drags down EM …
29th January 2019
EM export growth slowed sharply in November and the early signs are that the December figures will be even worse. Some of this was due to falls in commodity prices. But much of the weakness appears to have been concentrated in shipments of electronic …
25th January 2019
The slowdown in the global economy has raised fresh concerns about rising EM debt levels. The risks posed by China’s credit boom are now well known, although mitigated by the nature of the lending. Among major EMs, debt vulnerabilities appear most acute …
A number of EMs, particularly in Asia, look vulnerable to the impact of a China slowdown – and are just as exposed as they were when fears of a China ‘hard landing’ flared up in 2015. While we wouldn’t downplay the risks from slower growth in China to the …
22nd January 2019
EM GDP growth has started to slow and will be weaker than most expect in the coming quarters. Domestic strains are growing following previous policy tightening and external headwinds are building, regardless of how the US-China trade war develops. … A …
18th January 2019
Weak EM trade data at the end of last year is a sign of things to come in 2019. We expect that the combination of lower commodity prices and slower global economic growth will cause the US dollar value of EM exports to fall later this year. … EM Exports: …
16th January 2019
China’s government is loosening fiscal policy to cushion the slowdown and it looks like a handful of economies, mainly in East Asia, will also loosen the purse strings this year. However, more EMs are actually likely to tighten fiscal policy, which will …
15th January 2019
2018 was marked by currency crises in Turkey and Argentina, but the risks of large currency adjustments elsewhere in the emerging world have diminished. Meanwhile, sovereign debt risks appear to be rising. … Sovereign debt risks …
11th January 2019
Having experienced capital inflows of almost $150bn in 2017, we estimate that EMs suffered capital outflows of around $70bn in 2018. Our Tracker suggests that the pace of capital outflows eased sharply towards the end of the year. … Emerging Markets …
9th January 2019
The fall in the EM manufacturing PMI last month was fairly broad-based and supports our view that growth in the emerging world as a whole will slow this year. … PMIs point to further …
2nd January 2019
Growth in frontier economies eased over the course of 2018 and we expect activity to be soft in 2019. At a regional level, we think that growth will slow further in frontier economies in Emerging Asia and Emerging Europe next year – the latter will be led …
21st December 2018
EM GDP growth lost momentum over the second half of 2018 and we expect this to continue next year as growth in Emerging Asia, notably China, and Emerging Europe weakens. … EMs set for weaker growth in …
19th December 2018
In this Update we discuss the key implications of EM elections scheduled for 2019. Votes in Ukraine and Argentina – where opposition candidates could put IMF deals at risk – probably pose the greatest risk to local financial markets. Elsewhere, India’s …
18th December 2018
EM growth has slowed over the course of 2018 and our GDP Tracker suggests that aggregate growth fell to its weakest pace in two years in Q4, at around 4.0%. 2019 is unlikely to be better. We expect slower growth across large parts of the emerging world …
14th December 2018
We think 2019 is likely to be a year in which EM growth slows, and by more than most expect, while asset prices fall. In this Focus , we outline our key calls for next year. … Key calls for EMs in …
13th December 2018
The yield of the JP Morgan EMBI Global has edged up over the past month as a whole, despite a slump in underlying Treasury yields. We expect this pattern to be repeated next year. … EM dollar bond yields likely to rise even …
11th December 2018
Our Tracker suggests that, in Q4, capital outflows from EMs are on course to be the largest since “Trumpflation” in early 2017. But the pace of outflows did at least ease a little in November. … Emerging Markets Capital Flows Monitor …
The agreement between OPEC and other major oil producers to cut oil production is likely to act as a headwind to growth across EM oil producers next year. The Gulf economies will suffer the biggest drag on economic growth, whereas the hit elsewhere is …
10th December 2018
Most of the major EMs have ample fiscal firepower. This is particularly true in Asia and we think fiscal policy is likely to be loosened in much of the region next year, which should cushion slowdowns in growth. Fiscal space is much more limited in a …
6th December 2018
The ‘cease fire’ in the US-China trade war has reduced a risk for Asian EMs that are integrated into Chinese supply chains. But the potential fallout was always likely to be pretty small. The sharp fall in oil prices, meanwhile, supports our view that …
5th December 2018
The aggregate EM manufacturing PMI edged up in November, which adds to the evidence that EM GDP growth has steadied in Q4 after a slowdown in Q3. The improvement has been driven by the BRIC economies, while manufacturing in the rest of the emerging world …
3rd December 2018
Frontier market dollar debt markets have been rattled in recent months. Part of this is due to the fall in oil prices, which helps to explain the widening of spreads in Venezuela and Nigeria. But that’s not the whole story. Investors seem to be …
30th November 2018
Aggregate EM economic growth slowed to its weakest rate in over a year in Q3, but the data for October provide early signs that growth has started to stabilise in Q4. … EM growth slowed in Q3, but stabilising in …
29th November 2018
The latest fall in oil prices means EM inflation is likely to rise more slowly. While we still expect a majority of EM central banks to hike interest rates, lower energy inflation may delay tightening in a few countries, including Hungary, Colombia and …
28th November 2018
The recent drop in oil prices will help Turkey’s balance of payments adjustment and should boost the terms of trade and growth in large EM oil importers including South Africa and India. The obvious losers are the oil producers, although the fall in …
26th November 2018
The fall in oil prices over the past couple of months will drag down fuel inflation across the emerging world, but it probably won’t be enough to prompt policymakers to slow the pace of monetary tightening. After all, the impact of weaker fuel inflation …
22nd November 2018
A rise in inflation and higher interest rates mean Turkey and Argentina are likely to experience deep recessions over the next couple of quarters. However, whereas the fall in the lira should help to mitigate the downturn in Turkey, the decline in the …
20th November 2018
The very early evidence suggests that EM GDP growth steadied at the start of Q4, as stronger export growth offset a slowdown in consumption. But activity is likely to weaken over the course of 2019. … EM growth holding up in early Q4, but set to …
16th November 2018
EM export growth remained strong in September, and probably picked up in October. But we think that a combination of escalating tariffs, lower commodity prices, and weaker economic growth in developed markets will cause export growth to slow sharply in …
14th November 2018
Although the MSCI Emerging Markets (EM) Index has recovered a little in the past couple of weeks, it is still below its level a month ago, and we suspect that it will fall much further by the end of next year. … EM equities likely to remain on the …
Our Tracker suggests that, in net terms, capital outflows from the emerging world picked up to about $100bn in the three months to October, the largest since “Trumpflation” in early 2017. But the pace of outflows appears to have eased more recently. … …
13th November 2018
The large current account deficits in Turkey and Argentina that precipitated currency crises this year are now narrowing and external positions are in decent shape in most major EMs. But there are a handful of countries, such as Romania and the …
7th November 2018
Strains in the balance of payments of some EMs last quarter seem to have been driven mainly by a decline in flows to bond markets. These flows now seem to have stabilised, but financial conditions have tightened beyond the usual suspects of Turkey and …
6th November 2018
The run of consecutive declines in the EM manufacturing PMI came to an end at the start of this quarter, thanks to an improvement in the surveys across the BRIC economies. Moreover, the breakdown of the PMI showed that the slump in EM exports this year …
2nd November 2018
Our EM GDP Tracker suggests that growth eased in Q3 on the back of weakness in Emerging Europe and Latin America. This seems to be due to a slowdown in consumer-facing sectors rather than industry. … EM growth eases in …
30th October 2018
Classic EM crises have caused waves, but have rarely triggered global downturns. And in any case the current risk of a 1980s-style EM crisis is low. The bigger risk is of a China ‘hard landing’ which could result in a painful slowdown in global growth …
29th October 2018
A handful of the more vulnerable Frontier Markets, including Ukraine, Pakistan and Bahrain, have received (or are close to getting) IMF or bilateral funding, but external risks remain a key concern. For one thing, meeting the conditionality of these …
26th October 2018
Price pressures have continued to strengthen in the emerging world. Our aggregate EM inflation measure jumped from 3.8% y/y in August to 4.2% y/y in September, its fastest pace since early 2016. The rise has occurred across all EM regions and the drivers …
23rd October 2018
Higher oil prices have weighed on consumer conditions in the emerging world recently, but while the impact of higher energy inflation is set to fade in the months ahead, we still expect consumer spending to weaken over the next year or so. In most cases, …
19th October 2018
