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The jump in the dollar caused by the so-called “Trumpflation” trade is unlikely to cause widespread or systemic problems in the emerging world, but several EMs do look vulnerable. The most exposed are those with high dollar debts, notably Turkey. … …
16th November 2016
The year-on-year contraction in EM trade growth seen in recent years is easing as values stabilise. But trade growth will not return to the rapid rates seen before 2012. A move towards protectionism in the US would pose a threat so some EMs. … Tepid …
15th November 2016
The sell-off in EM markets following Donald Trump’s victory appears to have been driven by a general rise in investor risk aversion, rather than specific concerns over a shift towards greater trade protection in the US or expectations of tighter Fed …
11th November 2016
Our Tracker shows that total capital outflows from the emerging world declined a little last month, and were barely a third of the size seen earlier in the year. The sell-off in EM financial markets following Donald Trump’s presidential victory suggests …
Financial markets in Mexico have slumped since Donald Trump’s victory in the US presidential election was confirmed on Wednesday, but losses in many other emerging markets (EMs) have so far not been particularly alarming. Nonetheless, with the outlook for …
The sell-off in EM financial markets in the wake of Donald Trump’s victory in the US election has been swift but policymakers in most countries will look through the initial volatility – only central banks in Mexico and (possibly) Turkey are likely to be …
9th November 2016
Manufacturing in the emerging world was at its strongest in more than two years in October, according to the latest PMI surveys, with all the major EM economies seeing a substantial pick-up in the index. … EM manufacturing makes a strong start to …
1st November 2016
Saudi Arabia’s successful international bond sale earlier this month has eased concerns about the sustainability of its currency peg, but exchange rates in other frontier oil exporters remain in the spotlight. The Kingdom’s US$17.5bn issue was a record …
31st October 2016
Our GDP Tracker suggests that, having stalled in July, the EM recovery has since resumed. This is due in large part to a pick-up in growth in China. In contrast, the latest data from Brazil have softened, while growth in Emerging Europe has slowed …
28th October 2016
EM GDP is currently growing at its fastest pace in 18 months, with the recovery being driven mainly bystronger growth in commodity producers as well as an upturn in China. According to our GDP tracker,EM GDP growth reached 3.2% y/y in August – the fastest …
26th October 2016
South Africa’s manufacturing PMI fell dramatically last month. The sharp fall in the measure of future conditions suggests that hopes of a swift improvement in the country’s economic and political situation are fading. … EM exports recover as commodity …
24th October 2016
Sovereign foreign currency bond sales by emerging markets could top $100bn this year although, outside a couple of vulnerable countries, it seems unlikely that these will cause future debt problems. … What to make of the surge in EM foreign currency debt …
17th October 2016
Our Tracker shows that total capital outflows from the emerging world eased a little last month, and they remain well below the levels seen earlier in the year. … Emerging Markets Capital Flows Monitor …
14th October 2016
Widespread expectations for a sustained rebound in emerging market growth after the slowdown of recent years will be disappointed. The 2000s were a transient “Golden Age” for the emerging world, with a number of one-off supports for rapid growth that …
13th October 2016
The Mexican peso and South African rand have been buffetted by political developments in recent weeks, as Donald Trump continued to take aim at Mexico and South Africa’s Finance Minister was charged with fraud. … Political risks hit Mexican peso and …
11th October 2016
Economies across the emerging world have strengthened so far this year and we expect further improvements in the months ahead. But growth is likely to peak in 2017 at rates far below the averages of the past decade. … Recovery to grind …
6th October 2016
The EM manufacturing PMIs for September suggest that industry across the emerging world performed better in Q3 than in Q2. That said, the index remains consistent with relatively weak growth in industrial production across most major EMs. … EM …
3rd October 2016
Our EM GDP Tracker suggests that, after accelerating for most of this year, EM growth was unchanged in July. We think that this pause in the EM recovery should prove to be temporary and we continue to expect EM growth to regain some momentum over the …
30th September 2016
Our CERI suggests that financial risks for the average EM are the lowest in over 20 years. Even so, there are pockets of vulnerability. The CERI is flashing warning signs in Egypt, Colombia, Venezuela, Argentina and most significantly, China. Problems …
29th September 2016
Emerging market policymakers have been in loosening mode in recent months, with our EM interest rate diffusion index showing that more EM central banks cut rates than hiked again in August. Rate cuts since the start of the year have been concentrated in …
21st September 2016
An increasing number of frontier markets are turning to the international bond markets as they look to paper over the cracks in their finances. Argentina got the ball rolling earlier this year when it sold US$16.5bn of dollar bonds, the largest amount …
The majority of governments in commodity-producing EMs are still in the process of adjusting to the new reality of lower commodity prices and are being forced to cut spending. Accordingly, while growth should accelerate in some of these EMs over the …
20th September 2016
Emerging market (EM) equities have fallen in recent weeks as investors’ reacted to mixed signals from FOMC members regarding the outlook for monetary policy in the US. … EM equities under fire, as attention turns back to …
15th September 2016
Emerging market consumer spending growth appears to have bottomed out in recent quarters, but the subsequent recovery will be slow going. While the immediate outlook is brightest in Emerging Asia and parts of Emerging Europe, spending growth in Brazil and …
13th September 2016
The sudden sell-off in EMs that started on Friday, triggered by hawkish comments from the head of the Boston Fed Eric Rosengreen, points to a turbulent period ahead for EM financial markets as the next Fed rate hike draws closer. But economic …
12th September 2016
We think that one-off disruptions explain most of the fall in EM exports in July. More timely data already suggest that EM export growth was stronger in August. … EM exports stumble, but recovery will …
9th September 2016
Our Tracker shows that total capital outflows from the emerging world edged up to around $42bn in August from $38bn in July, but they remain well below their peak at the turn of the year. And inflows to EM bond and equity markets have been strong and …
8th September 2016
The EM manufacturing PMI dropped back in August, but we aren’t too concerned: the fall was relatively modest and the survey remains well above its level a few months ago. What’s more, there are encouraging signs in some major economies that conditions in …
1st September 2016
Our EM GDP Tracker suggests that, after a brief pause in May, the recovery in EM growth resumed in June. The latest improvement has been driven by a pick-up in activity in Emerging Asia and Latin America. … Recovery …
30th August 2016
Political tensions have re-emerged in a number of frontier market economies in recent weeks, casting a shadow over the economic outlook. The outcome of the recent presidential election in Zambia has been disputed in court by the opposition, resulting in a …
25th August 2016
After a prolonged downturn, there are early signs that EM industry is finally starting to turn a corner. Our measure of EM industrial production growth picked up to 2.4% y/y in June, from 2.2% in May – the second consecutive month of acceleration. The …
18th August 2016
Yields on emerging market (EM) dollar-denominated government and corporate bonds have fallen even further in the past month as ultra-low returns in developed markets have boosted demand for riskier assets. A reassessment of the outlook for Fed policy …
11th August 2016
The slightly faster decline in EM exports recorded in June compared to May was due to price and currency effects that should prove short-lived. The recovery will continue over the coming months. … A pause, not a reversal, in recovery of EM …
The sharp rise in the aggregate EM PMI in July suggests that after a brief pause in Q2, the recovery in EM industry resumed at the start of the third quarter. The improvement was driven largely by China and Brazil, while the survey in Russia weakened. … …
1st August 2016
Our GDP Tracker suggests that the recent recovery in EM growth paused in May. Nonetheless, preliminary data from June have been more encouraging and we expect EM growth to regain some momentum over the course of this year. … Recovery in EM growth …
29th July 2016
The failed military coup in Turkey has sent local financial markets into a tailspin and re-focused investors’ attention on broader EM political risk. However, political stability in emerging markets has actually been improving over the past few decades. …
There is some evidence to suggest that countries are reaching “peak” industrialisation at lower rates of income than in the past. However, this doesn’t explain the recent slowdown in EM GDP growth, and is unlikely to be a brake on growth for the …
25th July 2016
22nd July 2016
Oil prices have been low for some time now, but the past month has brought further evidence that this new reality is starting to hit home in energy-exporting frontier markets. Recently-released data showed that growth in Saudi Arabia’s economy slowed to …
21st July 2016
Most EM central banks look set to maintain a loosening bias over the next couple of years. Nonetheless, there are a handful of emerging economies where inflationary pressures mean that interest rate hikes are on the cards. … What next for EM monetary …
20th July 2016
The decline of EM values slowed, in US$ terms, again in May. The volume of EM exports, which is more important from an economic standpoint, actually rose. … EM export slump gradually …
18th July 2016
Our Tracker suggests that capital outflows from the emerging world declined to their lowest level in a year in June. Admittedly, our estimate is clouded by some questions about the data from China, but the key point is that the large capital outflows seen …
14th July 2016
The structure of public finances across emerging markets has improved over the past couple of decades. As such, while EM governments that have experienced large blowouts in budgets can’t postpone fiscal adjustment indefinitely, most are now under less …
13th July 2016
Financial markets in the emerging world have sailed through recent headwinds stemming from a continued depreciation of the renminbi and the UK’s vote to leave the European Union. And the rally may not yet be over, given that one consequence of …
12th July 2016
EM growth is likely to accelerate over the second half of this year, but a downward shift in potential growth means the recovery could hit the buffers in 2017-18. … EM pick-up to prove …
7th July 2016
The fall in the aggregate EM manufacturing PMI in June suggests that growth probably weakened at the end of Q2. But there was some rare positive news from a handful of EM economies that have been struggling recently, including Russia, South Africa and …
1st July 2016
The past month has brought aggressive monetary easing in a handful of frontier markets, and we think others will follow suit over the rest of this year. Cuts in policy interest rates this month in Ukraine and Argentina, of 150bp and 450bp respectively, …
30th June 2016
EM financial markets are often hit hard during bouts of investor risk aversion, but most have come through the past few days in reasonable shape. Looking ahead, EMs are more likely to face acute sell-offs if market turbulence is triggered by concerns …
29th June 2016
Our GDP Tracker suggests that EM growth picked up for the third consecutive month in April, helped by an improvement in activity in Latin America and Emerging Europe. … EM recovery …
28th June 2016
There are already some signs that following the initial shock of the Brexit vote, financial markets in EMs are starting to stabilise. In this Update , we outline four common questions that we have been asked by clients today – and provide our answers. …
24th June 2016
