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The US tariffs on China announced last week will, if implemented, have knock on effects on other EMs though supply chains, particularly in parts of East Asia and in Chile. The impact of the measures announced so far would be small. An escalation of US …
12th April 2018
The proposed US tariffs on imports of Chinese goods could have knock-on effects on other EMs, especially in East Asia, via supply chains. And countries such as Turkey are vulnerable to a deterioration in risk appetite resulting from escalating trade …
4th April 2018
The falls in EM manufacturing PMIs last month provide further signs that, after a pick-up right at the start of this year, growth in the emerging world eased over the course of Q1. … EM manufacturing softens at the end of …
3rd April 2018
As long as they aren’t followed by far more extensive trade sanctions than have been seen to date, the protectionist clouds looming over the global economy are unlikely to have a major bearing on emerging economies over the next year. Nonetheless, in …
28th March 2018
Having slowed over the final quarter of last year, our GDP Tracker suggests that EM growth nudged up for the first time in five months in January. … Better news at the start of …
27th March 2018
Most major Emerging Market currencies have fared well over the past month even as concerns of a global trade war have mounted, but a number of those in Frontier Markets have struggled. Indeed, only four out of the 32 frontier currencies that we cover have …
23rd March 2018
The EMs with the largest debt burdens are (unsurprisingly) most vulnerable to a spike in global borrowing costs. However, interest rates are only one of several components that determine debt sustainability. Even if they remain stable, there are reasons …
21st March 2018
The Fed is likely to raise interest rates once again this week but, from the perspective of EMs, the most striking thing remains how few central banks have followed in the Fed’s footsteps. As our diffusion index shows, more central banks in the emerging …
20th March 2018
Media reports suggest that the US is planning to impose more extensive tariffs on China. This could have a significant knock-on impact for a number of economies in Emerging Asia (Taiwan, Malaysia, Vietnam and Korea) – as well as for some industrial metal …
16th March 2018
Emerging market (EM) credit spreads have stabilised recently after a slight pick-up in early February on the back of the sell-off in global equity markets. But this may just be a temporary respite. In our view, spreads are likely to rise much further over …
15th March 2018
Our Tracker suggests that, after a short period in January in which capital flowed into EMs, the emerging world experienced net capital outflows once more in February. So far, the deterioration in capital flows has been limited to portfolio flows. But as …
9th March 2018
Fears are growing that recent developments in the US, including the imposition of tariffs on steel and aluminium as well as the apparent ascendancy of economic nationalists within the White House, may represent the start of a more fundamental shift …
8th March 2018
GDP data for 2017 revealed a widespread improvement in growth in key EM commodity producers last year. While we are relatively downbeat on the medium-term prospects for most of these economies, we think the cyclical recovery currently underway has further …
6th March 2018
The steel and aluminium import tariffs announced by the US yesterday are unlikely to have a major impact on emerging economies but fears that they might presage a broader shift towards protectionism have nonetheless rattled EM markets today. With this in …
2nd March 2018
The latest EM aggregate PMI from Markit remained unchanged in February, and suggests that the emerging world’s manufacturing sector continues to grow at a robust rate. However, this masks regional divergences in industrial performance that have emerged in …
1st March 2018
International bond markets have been inundated with debt issuance from frontier markets over the past couple of years and there’s no sign yet that appetite is waning. Since the start of this year alone Nigeria, Kenya and Argentina have all issued dollar …
28th February 2018
Events over the past month suggested that the Emerging Market (EM) recovery might not be as strong and stable as some seem to think. Economic data for the end of last year pointed to slightly softer growth. Our GDP Tracker suggests that total EM growth …
27th February 2018
Our GDP Tracker suggests that EM growth softened at the end of last year and early indicators point to further weakness at the start of 2018. … Further slowdown of EM GDP …
26th February 2018
The recent sell-off in emerging market (EM) equities after the US stock market slumped reiterated how exposed they are to movements in developed market equities. Although EM equities have since recovered a bit, we think that further falls in the S&P 500 …
23rd February 2018
Our Capital Flows Tracker suggests that net flows to EMs turned positive in January for the first time since April last year, but subsequent market moves suggest that we are likely to have seen a shift back to outflows in February. That said, despite the …
21st February 2018
The consensus on growth in Emerging Markets (EMs) remains too rosy; by contrast we think that the current cycle is now close to peaking. While we do not expect EM growth to collapse, we do think it will slow over the course of 2018 and 2019. What’s more, …
20th February 2018
Concerns about rising inflation pressures in the US have sent shockwaves through EM financial markets over the past week or so, but the economic fallout is likely to be limited. A sharp and sustained rise in US inflation would present a significant …
15th February 2018
Survey-based measures of manufacturers’ export expectations suggest that EM export volume growth is set to strengthen over the coming months. Growth in both EM export volumes and values will, however, probably slow in the second half of the year. … …
14th February 2018
The further falls in global equities over the past 24 hours have not left EMs unscathed, but in general EMstocks have held up better than DM stocks and there’s little evidence that falls in equities are affectingother EM assets. From an economic …
9th February 2018
EM governments with the largest financing needs are, in theory at least, most vulnerable to a global spike in bond yields. This includes Egypt, Brazil, South Africa and India. However, it’s worth noting that the rise in US government yields over the past …
5th February 2018
The latest EM aggregate PMI from Markit dipped in January but nonetheless remains consistent with solid rates of output growth in most regions. The dip in the headline figure was driven by a fall back in surveys in India, the Philippines and Brazil – …
1st February 2018
EMs in Latin America and Emerging Asia have benefitted most from China’s recovery over the past 18 months. These economies therefore have the most to lose if China begins to weaken again, although the modest slowdown we expect this year is unlikely to …
31st January 2018
Our estimates for aggregate EM GDP growth suggest it hit a five-year high over 2017 as a whole, but there are signs that growth slowed in the final quarter of last year. … EM GDP growth loses steam in …
30th January 2018
The recent rally in oil prices has brightened the outlook for the majority of frontier oil exporters. In the Gulf, for example, higher oil prices and strong balance sheets have enabled the authorities to ease back on the harsh fiscal austerity of the past …
26th January 2018
The trade protection measures that have so far been announced by the Trump administration are fairly small in scope and will not have much of a bearing on the outlook for EM exports. However, we’ve long argued that the risks around trade are likely to …
24th January 2018
EM currencies have strengthened at the start of 2018 and our synthetic EM exchange rate index has jumped to an 18-month high, but we don’t expect the rally to continue. Indeed, we think most EM currencies will end the year weaker than their current …
22nd January 2018
EM financial markets have made a flying start to 2018, with most equity markets up by 4-6% since the start of the year and most currencies up by 2-3% against the US dollar. However, the incoming economic data have, if anything, been slightly softer than …
19th January 2018
Early data for December suggest that EM export growth finished 2017 on a slightly softer footing and support our view that trade growth will slow this year. … Signs of EM trade softening heading into …
18th January 2018
The economic gains from the recent rise in oil prices are concentrated among a handful of EMs (mainly in the Gulf) but the losses are spread more widely. That being said, if oil holds onto its recent gains it would push current account deficits back over …
15th January 2018
Our tracker suggests that EM capital outflows picked up a bit in December, but remained slow over the year as a whole. Portfolio flows into EMs hit a record high last year, and look strong going into 2018. … Emerging Markets Capital Flows Monitor …
12th January 2018
Several major EMs, notably Brazil and Russia, are likely to experience a pick-up in growth this year. But in others, including China, the cycle is now peaking. The net result is that, in contrast to the upbeat consensus, we expect aggregate EM growth to …
11th January 2018
Our indicators suggest that, while financial risks in EMs have diminished over the past couple of years, pockets of vulnerability exist in several countries including Turkey, Hong Kong and Singapore. … Vulnerabilities linger in a handful of …
10th January 2018
Frontier markets have enjoyed a recovery in 2017, with aggregate GDP growth set to reach close to 3%, up from a seven-year low of 2.3% in 2016. Frontiers in Latin America and Sub-Saharan Africa have exited recession, while growth has strengthened among …
20th December 2017
Our GDP Tracker suggests that the emerging world is on course to grow by just over 4.5% in 2017 – it’s fastest pace of expansion in six years. The pick-up has been broad-based, with growth in Emerging Asia, Emerging Europe and Latin America accelerating …
18th December 2017
2017 was the first year since 2014 in which EM exports recorded positive growth. However, two of the key props to this year’s export recovery are likely to weaken over the coming quarters – meaning that EM export growth is likely to soften in 2018. … …
15th December 2017
The emerging world is currently expanding at its fastest pace in four years, but we don’t think this will last in 2018. In this Focus we outline our key calls for next year. … Key calls for EMs in …
14th December 2017
Despite the prospect of more monetary tightening in the US than investors are anticipating next year, we think that local factors will have more of a bearing on monetary policy in emerging markets (EMs) then. Reflecting this, we would not be surprised to …
13th December 2017
Our tracker suggests that capital flows into and out of the EM world were essentially balanced last month. Over 2017 as a whole, outflows will be about US$55bn, just an eighth of the total recorded in 2016. … Emerging Markets Capital Flows Monitor …
12th December 2017
In this note we publish a guide to elections that are scheduled across the emerging world in 2018. The calendar is busier than it was in 2017 but, whereas elections this year boosted the prospects for economic reforms in some EMs (e.g. Argentina), the …
6th December 2017
The latest Markit PMI surveys suggest EM manufacturing growth has gained momentum across the emerging world and looks set to end the year on a positive note. … EM manufacturing growth on the rise in …
1st December 2017
Our GDP Tracker suggests that aggregate EM growth picked up to its fastest pace in just over five years in September. However, more timely data from early reporting countries suggests that growth has softened at the start of Q4. … EM GDP growth ends Q3 on …
29th November 2017
The risks around EM credit expansion are, in our view, commonly misunderstood. In particular, threemyths appear to have developed in commentary around the subject. … Debunking three myths about EM …
28th November 2017
Frontier markets have been gripped by political upheaval in recent weeks. In the largest frontier economy, Saudi Arabia, Crown Prince Mohammed bin Salman (known as MbS) has overseen a high-profile anti-corruption crackdown. Tackling corruption is clearly …
24th November 2017
The latest data continue to show a broad acceleration in GDP growth across most of the emerging world. A common thread has been a pick-up in exports, with volumes growth now up on the start of the year in every EM region with the exception of the Middle …
22nd November 2017
Periodic bouts of investor concern over Fed policy tightening appear to be having less and less effect on financial markets in EMs. That being said, the one consistent theme that emerges from our analysis of recent Fed-related sell-offs is that one EM …
15th November 2017
