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The broad stability in EM credit growth in recent quarters masks a large divergence between individual countries, with an acceleration in lending in China offset by a contraction in Brazil and Russia. These divergences should narrow over the course of …
19th April 2017
Our Tracker shows that capital outflows from emerging markets essentially ceased in March. Outflows will probably pick up again later this year, but they are likely to remain weak by recent standards. … Emerging Markets Capital Flows Monitor …
18th April 2017
It has been plain sailing for emerging market (EM) assets again over the past month, with equities and bonds both posting solid gains, and most currencies making more headway against the US dollar. However, we think that the wind will come out of the …
11th April 2017
Political risks in some parts of the emerging world have escalated in recent weeks, but not to the extent that we are marking down our near-term growth forecasts. … Political risks don’t warrant major growth revisions – …
Earlier this week we published our latest Emerging Markets Economic Outlook, which outlined our core macroeconomic and financial market forecasts for 2017-19. In this Update, we summarise five key areas where we think the consensus may be wrong. … Five …
6th April 2017
There has been a sharp turnaround in EM growth in recent months and we expect growth in several major economies, including Brazil and Russia, to surprise on the upside over the next year or so. But this is likely to be offset by a renewed slowdown in …
4th April 2017
March’s PMIs suggest manufacturing in the emerging world rounded off the quarter strongly. In particular, conditions improved in Brazil, Turkey and India. The main exception was Korea, where business conditions declined as political upheaval weighed on …
3rd April 2017
Our GDP Tracker suggests that EM growth has continued to pick up in recent months and is now running at a three-year high. While China’s recovery seems to be running out of steam, Emerging Europe and Latin America have picked up the baton and are now …
30th March 2017
Investors’ attention over the past month has been primarily focussed on the Federal Reserve and the expected number of interest rate hikes in the US this year, but other factors have arguably had a greater influence on frontier financial markets. The …
29th March 2017
There is growing speculation that the largest EMs might step up to fill the void left by the US in the event of a protectionist shift under President Trump. However, there are good reasons why intra-EM trade deals – or indeed EM-led global trade deals – …
21st March 2017
Our tracker suggests that EM capital outflows slowed to a three-year low in February. Outflows will probably increase over the coming months, but they are likely to remain subdued by recent standards. … Emerging Markets Capital Flows Monitor …
20th March 2017
The Fed’s decision to raise interest rates this week has created ripples rather than waves among EM central banks. Policymakers in China and Turkey followed by tightening policy too, but this was as much to tackle domestic problems as it was to address …
17th March 2017
Investors are now united in the belief that the Fed will raise interest rates this week, but we doubt that central banks in the emerging world will necessarily follow suit. Indeed, in several major EMs – notably Brazil and Russia – the bias over the …
13th March 2017
EM export growth continued its strong start to the year buoyed in equal parts by the recovery in commodity prices after their precipitous falls a year previously and an improvement in underlying demand. … EM export rebound not just a commodity price …
10th March 2017
Emerging market (EM) assets have fared quite well over the past month, despite investors expecting the Fed’s next hike to arrive sooner than they did previously. But we doubt that the resilience of markets will last for long. … Bond markets still …
9th March 2017
The latest batch of PMI data suggest that, partly thanks to stronger external demand, conditions in manufacturing sectors across the emerging world continued to improve in February. … EM manufacturing still going …
1st March 2017
The lack of any meaningful reaction in EM currency markets to increased speculation that the Fed could raise interest rates this month appears to reflect three factors: a growing recognition by investors that most EMs are now better placed to withstand …
The recent improvement in the global economic backdrop has been mirrored by a pick-up in growth across frontier markets. National accounts data released by early-reporting frontiers over the past month showed most economies recorded stronger growth in the …
24th February 2017
Our GDP Trackers suggest that the EM world is now growing at its fastest pace in almost three years. However, with China’s economy likely to lose steam over the course of this year, this may be about as good as it gets for EM growth. … EM growth hits …
23rd February 2017
Emerging market inflation and export growth jumped in January, although this had more do with base effects than a marked strengthening of underlying demand or price pressures. The year-on-year growth rates were pushed up due to the comparison with the …
17th February 2017
Aggregate Emerging Market net capital outflows slowed sharply in January. This appears to be partially due to large – but temporary – inflows into the Czech Republic. But it also reflected the continuing easing of outflows from China. According to our …
16th February 2017
EM exports appear to have made a good start to the year, with shipments from China, Brazil and Korea all growing strongly in dollar terms in January. The recent improvement in EM exports hasn’t just been driven by price effects – underlying demand also …
10th February 2017
Financial markets in the emerging world have maintained their strong start to the year. But we don’t expect this to be sustained, as the Fed resumes its tightening and geo-political uncertainty persists. … Recent recovery likely to prove a false …
8th February 2017
2016 was a bumper year for dollar bond sales from frontier markets and the recent pull-back in US Treasury yields has prompted a number of countries to consider returning to international markets. Last week, Argentina issued US$7bn in dollar bonds in a …
31st January 2017
Our GDP Tracker suggests that the EM GDP growth has continued to accelerate in recent months and is now running at its fastest pace in two years. While the recovery is still being driven by China, there are signs that economic conditions in Russia and …
The recent strength of the US dollar has prompted several questions from clients about dollar debt burdens in emerging economies. In this Update, we outline the key points and provide a comprehensive database of dollar debt in major EMs. … EM dollar debt …
27th January 2017
There is no evidence that concerns about rising US interest rates and a strong dollar are forcing EM central banks to tighten policy – indeed, our diffusion index shows that more EM central banks have lowered interest rates than have raised them in recent …
25th January 2017
US foreign direct investment flows into most major EMs aren’t particularly large and a significant portion are concentrated in the mining and financial sectors. These are unlikely to be disrupted even if President Trump continues to encourage US …
23rd January 2017
Within the realms of economic policy, two concerns in particular are likely to occupy both EM governments and investors in the early days of President Trump’s administration: the direct effects on EM economies of a likely shift in trade policy under Trump …
20th January 2017
EM export growth increased towards the end of 2016, but this was mainly due to base effects rather than strengthening demand. While a further pick-up is likely in the near term, EM export growth is ultimately set to remain low by past standards. … …
19th January 2017
Total capital outflows from Emerging Markets (EMs) remained large at the end of last year. Portfolio inflows into EM bond and equity markets, however, remained resilient following the US election result. … Emerging Markets Capital Flows Monitor …
17th January 2017
The Mexican peso and the Turkish lira have come under further pressure over the past couple of days, but the more striking thing is how resilient other EM currencies have been in the face of a globally strong dollar. This reflects the fact that Mexico and …
11th January 2017
The recovery in EM growth has a bit further to run but we suspect it will lose steam during 2017 as China’s economy slows once again and recoveries in Brazil and Russia disappoint. … As good as it …
10th January 2017
Financial markets in the emerging world have generally made a bright start to 2017, but we doubt their recent good form will continue given the large amount of uncertainty regarding the global economic and political outlook. … Bright start to 2017 …
The tendency to bracket all EM political risk under the banner of “rising populism” conceals important nuances and prevents a proper understanding of the economic consequences of the risks that are building in different parts of the emerging world. In our …
5th January 2017
The switch to a so-called “border adjustment” system of corporate tax that has been proposed by US House Republicans could in theory lead to a weakening of EM currencies against the dollar, but in practice the overall impact would be more nuanced than …
4th January 2017
Manufacturing in the emerging world remained strong at the end of last year according to the latest PMIs. Conditions in China and Russia, in particular, continued to improve. That being said, the outlook in manufacturing sectors in India and Brazil …
3rd January 2017
The EM world is now growing at its fastest pace in nearly two years. According to our GDP tracker, EM GDP growth in October reached 3.5% y/y, which is the strongest since January 2015. China has been driving the rebound, with our China Activity Proxy …
21st December 2016
Financial markets in frontier oil exporters have performed well over the past month, as oil prices have rallied following the OPEC deal to cut output. Equity markets have perked up. And spreads of dollar-denominated bonds have narrowed, which has …
20th December 2016
EM exports performed poorly in 2016, but the rate of contraction eased later in the year. We expect that things will get better in 2017, though growth will remain modest. … EM exports set for modest recovery in …
19th December 2016
Financial markets in the emerging world have generally stabilised since the initial shock of Donald Trump’s election victory last month. But with Trump yet to take office, investors are likely to remain on edge for some time. … EM markets regain their …
13th December 2016
Our proprietary indicator of EM financial risk remains close to a 13-year low, which should help to reassure anyone concerned about a spate of crises across the emerging world in 2017. In particular, vulnerabilities to Fed tightening and a strong dollar …
Our Tracker shows that total capital outflows from the emerging world reached a ten-month high of $75bn last month. This was driven mainly by an acceleration in outflows from China, but it seems that Donald Trump’s election victory has also triggered a …
9th December 2016
Far from being the catastrophe that many had expected 2016 was – as we anticipated – a year of stabilisation and recovery for many emerging markets. In this Focus we outline the ten key issues that we think will shape the outlook for EM investors in 2017. …
5th December 2016
The EM manufacturing PMI edged down in November, but still suggests that conditions in manufacturing sectors are much healthier than a few months ago. Emerging Europe, in particular, appears to have accelerated in recent months. … EM manufacturing PMI …
1st December 2016
Our GDP Tracker suggests that the EM recovery has continued in recent months, driven in large part by a strong rebound in China’s economy. This has a bit further to run but we think the recovery will begin to lose steam by early next year. The Tracker …
29th November 2016
Frontier financial markets came under pressure in the wake of Donald Trump’s US election victory, with currencies weakening against the dollar and bond yields rising. The losses have been relatively modest and in some cases have already started to …
28th November 2016
We’ve written lots over the past two weeks about Donald Trump’s victory and the implications for EMs. While much remains uncertain, in this Update we draw out five early takeaways. … Trump and the fallout for EMs in five key …
23rd November 2016
Financial markets across the emerging world have stabilised following an initial sell-off in the wake of Donald Trump’s victory in the US presidential election earlier this month. This partly reflects a more conciliatory tone from the president-elect, …
22nd November 2016
Last month, we published a Focus outlining why we think the golden era for EM growth has passed and why the emerging world is set for structurally weaker growth. In this Focus, we explain why the same factors will prevent a significant revival in EM …
17th November 2016
