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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 …
11th August 2016
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
The vote by the UK to leave the EU is already creating a flight to safety, with financial markets in EMs that have deeper and more liquid markets (Mexico), large current account deficits (South Africa), heavy foreign currency debt burdens (Malaysia), or …
A continued build-up of private sector debt in China is increasing financial risks. We don’t expect the sharp rise in credit to cause imminent problems, but we are concerned about sustainability in the medium-term. A messy unwinding of the Chinese credit …
23rd June 2016
EM growth has shown some signs of life in recent months. GDP data for Q1 showed a rise in aggregate growth for the first time since 2013 and our GDP Tracker suggests that the improvement continued in the early part of Q2. (See Chart.) The turnaround has …
22nd June 2016
Consumer spending in the emerging world finally looks to have turned a corner, thanks mainly to the bottoming-out of consumer recessions in Russia and Brazil. Spending in Central and Eastern Europe and Emerging Asia have continued to grow at a decent …
21st June 2016
Our Tracker shows that, having spiked at the start of this year, capital outflows from the emerging world have fallen to almost zero over the past couple of months. … Emerging Markets Capital Flows …
14th June 2016
A vote by the UK to leave the EU would likely cause ripples rather than shockwaves in the emerging world. Trade ties with the UK are too small to have a material impact on EM exporters. And while a handful of EMs with large current account deficits would …
10th June 2016
Financial markets in the emerging world have rallied in recent weeks as disappointing US employment figures for May caused investors to trim their expectations for the future pace of Fed tightening. Emerging markets (EMs) are likely to suffer bumps along …
9th June 2016
South Africa’s April output figures suggest that, after a disastrous Q1, the economy improved a touch going into Q2. But the country will still struggle to avoid a technical recession. … “Brexit” poses little risk to EM …
While the manufacturing PMIs rose in most EMs last month, the general picture is still of growth remaining rather tepid by past standards. Central Europe remains the bright spot with the PMIs there pointing to a strengthening in industry over the coming …
1st June 2016
Our GDP Tracker suggests that EM growth picked up for the second consecutive month in March, suggesting that fears of an imminent collapse continue to be misplaced. The latest rise was broad-based but was helped in large part by an improvement in …
27th May 2016
While we have consistently been among the most bearish forecasters of EMs over the past 4-5 years, the consensus has moved a long way in our direction over the past 12 months. Over the next year we suspect that it is now more likely that growth surprises …
23rd May 2016
Emerging market policymakers have been in tightening mode over the past year, but this reversed last month. Our EM interest rate diffusion index shows that more EM central banks cut rates than hiked in April – the first time in ten months that this has …
20th May 2016
Low commodity prices, slower growth and a string of elections have prompted a move towards reform in a handful of frontier market economies in recent months. But while these governments have made impressive starts, much of the hard work is still to be …
19th May 2016
Financial markets in Latin America have comfortably outperformed the rest of the emerging world in the past month. But with rising commodity prices unlikely to offer much more support, we doubt that they will remain the shining star in the months ahead. …
12th May 2016
Credit growth is slowing in most of the economies we have previously identified as being at risk from a rapid build-up of private sector debt. The exception is China, where aggressive stimulus has prompted a recovery in growth, but at the expense of …
The rate at which EM exports are declining slowed sharply in March. We expect that higher commodity prices and an improvement in China’s economy will see export values return to growth later this year. … EM export recovery …
11th May 2016
Our Tracker shows that total capital outflows from EMs declined sharply in April to a 10-month low of a little over $10bn. Outflows from China remained relatively low compared to the past year, while other EMs enjoyed a pick-up in net capital inflows . …
9th May 2016
From Brazil to Turkey, and Malaysia to South Africa, political risks are rising in emerging markets. The immediate triggers for unrest vary from country to country but there are some common themes – including weakening growth and rising discontent with …
6th May 2016
With the Fed leaving the door open to another interest rate hike at June’s FOMC meeting, focus is starting to shift once again to financial vulnerabilities in EMs. A handful of countries are likely to come under pressure as interest rates in the US move …
4th May 2016
There were sharp drops in the manufacturing PMIs in Brazil and India last month, which pulled down the aggregate EM figure. That said, in both countries this seems to reflect survey data catching up with reality, rather than a renewed deterioration in …
3rd May 2016
Our GDP Tracker suggests that EM growth has turned a corner, with the BRIC economies leading the way. Looking ahead, we think that the BRICs will continue to drive a recovery in EM growth. We expect economic activity to strengthen in India and China, …
28th April 2016
A number of frontier markets have turned to the IMF for financial support over the past few months in order to counter strains in their balance of payments. Angola has formally opened negotiations with the Fund, becoming the first major EM oil producer to …
22nd April 2016
The worst looks to be over for many EM commodity producers. Their currencies have again been among the best performers this month, helped by a continued recovery in commodity prices. The slump in their exports also eased considerably in February. What’s …
21st April 2016
The rate at which EM exports are declining slowed markedly in February. Rising commodity prices and a rebound in China should boost exports later this year. … EM export decline easing …
15th April 2016
The further recovery in commodity prices over the past month has given financial markets in the emerging world another leg up. We doubt that commodity prices will rise much further, but with clearer signs that China’s economy is on the mend the rally in …
14th April 2016
Our Tracker suggests that total capital outflows from EMs eased further in March, reaching a nine-month low of just under $40bn. One reason is that the recent improvement in sentiment towards EMs has led to a pick-up in flows to EM bond and equity …
13th April 2016
Angola last week became the first EM oil producer to turn to the IMF since oil prices started to fall in 2014. In the near-term, we don’t expect any others to follow suit. External risks in EM oil producers are limited. There are pockets of vulnerability, …
12th April 2016
The sense of crisis that had been building in emerging markets has started to ease over the past month or so. So what next? In this Update we identify three risks – China, commodities and the threat of currency wars – that we don’t think will trouble …
8th April 2016
The sense of panic about emerging economies that gripped financial markets at the start of this year has eased. This is justified. There are few signs that the emerging world is on the brink of a crisis. Nonetheless, we should not expect a major …
5th April 2016
The rise in the EM manufacturing PMI in March to its highest level in a year adds to evidence that economic conditions across the emerging world are improving. The pick-up in the survey in China is particularly encouraging and reinforces our view that …
1st April 2016
Our GDP Tracker suggests that aggregate EM growth dipped at the start of this year, but this appears to have been driven by deepening problems in Brazil and a recent soft patch in India. China’s economy has been relatively stable and there is growing …
30th March 2016
A combination of improving investor sentiment and a pick-up in global commodity prices has underpinned a recovery in frontier financial markets in recent weeks. Since reaching a two-year low in early January, the MSCI Frontier Markets Index has risen by …
24th March 2016
