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The jump in oil prices over the past couple of weeks doesn’t radically alter the outlook for EMs. However, if sustained, it could exacerbate concerns we already have about some parts of the emerging world – for example, by causing Turkey’s current account …
13th November 2017
EM exports look to have finished Q3 on a strong note, albeit with help from seasonal effects. Otherwise, a year on from Trump’s election, protectionist rhetoric is yet to result in material changes to trade policy. But Trump’s words during his Asia tour …
10th November 2017
Our tracker suggests that EM capital outflows picked up to a nine month high in October. Even so, they remained weak by the standard of recent years. … Emerging Markets Capital Flows Monitor …
9th November 2017
One year on from his election, Donald Trump is struggling to live up to the promises he made on the campaign trail to get tough with countries that run big bilateral trade surpluses with the US. However, it is clearly too soon to sound the all-clear, …
8th November 2017
The nomination of Jerome Powell to be the next chair of the Fed doesn’t have significant implications for EMs. We think that the economic recovery is close to peaking in several emerging economies and that the best days of the rally in EM asset prices are …
2nd November 2017
Our estimate of the aggregate Emerging Market manufacturing PMI suggests that manufacturing activity weakened at the start of the Q4. This slowdown appears to be broad-based across EM regions. … EM manufacturing growth eases in …
1st November 2017
Our GDP Tracker suggests that aggregate EM growth picked up to its fastest pace in four-and-a-half years in August. However, there are some early signs that EM growth will ease over the coming months. … EM GDP growth at multi-year high in …
30th October 2017
The raft of GDP data released over the past month or so showed that the recovery in frontier markets strengthened in Q2. According to our GDP-weighted measure of growth, frontier economies expanded by 2.4% y/y in Q2, up from 1.9% y/y in the previous …
25th October 2017
Our relatively sanguine view on the outlook for EMs over the next 12-18 months has prompted several clients to ask about risks to our forecasts. While risks – both positive and negative – are by their nature difficult to anticipate, we think there are …
24th October 2017
In an otherwise quiet month for EM markets, the sharp falls in the Mexican peso and Turkish lira have stood out. In each case, the triggers have been different – the 7% fall in the peso against the dollar since the start of the month reflects concerns …
20th October 2017
After a big rally earlier in the year, emerging market (EM) currencies have weakened against the dollar recently as US rate expectations have picked up. We doubt that much larger falls are around the corner, even though we think that the Fed will hike by …
19th October 2017
Total EM capital outflows slowed to a trickle in September. Portfolio inflows also seem to be slowing, but they remain very high by the standard of recent years. … Emerging Markets Capital Flows Monitor …
17th October 2017
EM exports look to have grown strongly in Q3, helped by a rise in commodity prices. However, this is unlikely to herald a return to the rapid rates of export growth seen at the beginning of 2017. Export growth is instead set to gradually slow over the …
13th October 2017
All EMs have entered a period of permanently weaker growth but it remains the case that growth rates over the next decade or so will differ significantly between countries. In this Focus we identify the likely characteristics of winners – and losers – in …
11th October 2017
Economic growth looks set to strengthen in most EMs over the next year, but the cycle is now close to peaking in China and parts of Central and Eastern Europe. … Nearing the cyclical …
5th October 2017
The decision by the Fed to begin the process of balance sheet reduction this month – coupled with the heavy hints that a December rate hike remains on the table – has led several clients to ask about dollar debt burdens in EMs. In this note we revisit a …
4th October 2017
The latest Markit PMI surveys suggest that conditions in emerging market manufacturing eased a touch at the end of Q3, but remain robust compared with the past few years. … EM manufacturing still in decent …
2nd October 2017
Our GDP Tracker suggests that EM growth picked up in July to its fastest pace since Q1 2014. But there are early signs that growth has since peaked in parts of the emerging world. … EM growth picks up at the start of …
28th September 2017
The jump in oil prices, from $51pb at the start of September to around $59pb at the time of writing, should provide a fillip to the large frontier oil economies, such as Saudi Arabia, Nigeria and Kazakhstan. If sustained, we estimate that this would …
26th September 2017
There are several reasons why the gradual tightening of monetary policy in developed markets is unlikely to cause major problems for EMs, but one of the most important is that current account deficits have narrowed substantially over the past few years. …
The fact that aggregate EM sovereign debt has now surpassed $11.7trn has grabbed a few headlines but several factors – notably the increase in EM GDP over the past decade – mean that fiscal risks are lower than the dollar numbers on sovereign debt …
19th September 2017
Emerging market (EM) corporate bond spreads are around their lowest since the onset of the global financial crisis. We think that they will remain low for the next year and a half or so – but expect them to rise sharply further ahead. … How vulnerable are …
15th September 2017
The latest activity data from EMs suggest that the economic recovery continued at the start of Q3. Consumer spending has continued to pick up across most regions, while both industrial production and export growth have remained relatively robust. Overall, …
13th September 2017
Having slowed in Q2, emerging market (EM) export growth ticked up a little at the start of Q3. However, this is likely to be temporary and EM export growth is set to soften over the remainder of the year. … EM export slowdown to be very …
12th September 2017
Net capital outflows from emerging markets slowed a bit in August, but the big picture is that they remained low by recent standards. Portfolio inflows weakened from the highs recorded earlier in Q3. … Emerging Markets Capital Flows Monitor …
8th September 2017
Last month’s PMIs suggest that conditions in EM manufacturing sectors improved in Q3, supported by most of the major BRIC economies. … EM manufacturing still going strong in …
1st September 2017
In a quiet month for economic news across frontier markets, politics has provided a regular stream of headlines. Investors were buoyed by results from Argentina’s primary elections which showed that support for President Macri’s coalition had held up …
31st August 2017
Our GDP Tracker suggests that EM growth was stable in June, adding to recent evidence that growth has peaked in this cycle. … EM growth stable in …
30th August 2017
Despite the focus in advanced economies on the timing of monetary policy tightening, the majority of EMs remain in easing mode. More EM central banks cut their policy interest rates than raised them for the fourth consecutive month in July. The bulk of …
22nd August 2017
Total EM capital outflows remained pretty stable in July. Net portfolio inflows picked up a bit, though more recent figures suggest that this may have reversed in August. … Emerging Markets Capital Flows Monitor …
18th August 2017
In this Focus we unveil the Capital Economics EM “Growth League”, which ranks EMs according to their growth prospects over the next two years. Countries such as Ethiopia, India and Vietnam are likely to record the fastest growth rates, while Venezuela …
14th August 2017
Emerging market (EM) export growth slowed a touch in Q2 and the early signs are that it weakened a little further at the start of the current quarter. However, the slowdown is very gradual – EM exports are far from collapsing. … EM export growth nudges …
11th August 2017
July’s PMI data remain consistent with a continued expansion in EM manufacturing, albeit at a pace that is down slightly from the highs seen at the start of the year. … EM manufacturing recovery soft at the start of …
1st August 2017
The recovery in frontier economies continued over the first half of this year. GDP growth averaged around 2.0% y/y in Q1, twice the rates seen in mid-2016. It would have been stronger still were it not for weakness in the largest frontier market, Saudi …
31st July 2017
Our GDP Tracker suggests that EM growth picked up slightly in May, but this partly reflects a bounce from a soft April. The bigger picture is that overall EM growth looks to have nudged down a bit in Q2 compared to Q1, but so far the slowdown has been …
28th July 2017
EM retail sales growth picked up for a third consecutive month in May and is now running at a 12-month high. What’s more, the improvement has been widespread across different EM regions. In Russia and Brazil, a drop in inflation has both helped to boost …
24th July 2017
We expect EM equities to rise this year and next, but not at anything like the pace that they have done so far in 2017. The MSCI Emerging Markets (EM) Index has returned around 20% so far this year. But this is nearly all due to a huge rally in stock …
21st July 2017
EM bond markets have, for the most part, shrugged off the rise in developed market bond yields since the end of June. This strengthens our view that policy normalisation in developed markets is unlikely to cause systemic problems for emerging markets. …
20th July 2017
Our Capital Flows Tracker shows that net capital outflows from emerging markets remained subdued in the first half of 2017. We expect that outflows will stay low over the coming quarters. … Emerging Markets Capital Flows Monitor …
17th July 2017
EM export growth ticked up in May, but the big picture is that the sharp acceleration caused by the rebound in global commodity prices over the past year or so is now behind us. We don’t expect EM export growth to collapse, but we do expect it to nudge …
14th July 2017
The past couple of weeks have seen renewed concerns about credit risks in emerging economies. The key point that has been missed in much of the analysis, however, is that credit bubbles have begun to deflate in several major EMs, including Brazil and …
11th July 2017
The growth outlook for major EMs is starting to diverge. While there are signs that a slowdown is now underway in China, cyclical rebounds lie ahead in India, Brazil and Russia. … Cycles start to turn in the …
3rd July 2017
Our GDP Tracker suggests that EM growth softened a little in April, but in several countries this was driven by calendar effects that should reverse in May. … EM growth slows at start of …
29th June 2017
MSCI’s latest review of its benchmark equity indices has prompted significant moves in some of the largest frontier stock markets over the past month. Saudi Arabia’s Tadawul has jumped 8% since MSCI said that the country had been added to its “watch list” …
28th June 2017
The recovery in emerging market growth over the past year is likely to level out in the coming quarters. However, this stability masks important shifts among individual countries. We expect China’s economy to slow, which will weigh on growth in parts of …
27th June 2017
Within the EM world, the main beneficiaries of the recent drop in oil prices are Korea, India, Turkey, and South Africa, while the biggest losers are the Gulf States, Russia and Nigeria. That being said, while this helps to explain market moves over the …
22nd June 2017
The EMs with the deepest trade ties to China have, unsurprisingly, benefitted most from the economy’s rebound since the start of 2016. These countries lie mostly in Asia. It follows that these are the EMs that are most vulnerable to the slowdown in China …
21st June 2017
The latest economic data from across the emerging world have been mixed but our EM GDP Tracker suggests that growth has levelled off at around 4% y/y. While China’s growth has now passed its peak, other economies are picking up the baton. Brazil and …
16th June 2017
Emerging market (EM) sovereign and corporate bond yields have fallen steadily so far this year, but we doubt that this will continue for much longer. … How long will the rally in EM bonds …
13th June 2017
Our Capital Flows Tracker shows that net capital outflows from emerging markets stabilised in May. We expect that they will remain subdued over the remainder of the year. … Emerging Markets Capital Flows Monitor …
12th June 2017
