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January’s PMIs suggest that stabilisation in manufacturing across EMs continued at the start of the year. It’s particularly encouraging that conditions are no longer getting worse in Brazil and Russia. All this adds to evidence that growth across the …
1st February 2016
Our GDP Tracker suggests that EM growth dipped again in November. However, this was driven overwhelmingly by a deepening downturn in Brazil – and more recent survey data have provided some hope that its economy may now be bottoming out. More …
29th January 2016
Frontier assets have had a difficult start to the year as fears over global growth caused fresh turmoil in financial markets. Oil producers have been particularly hard hit on the back of the collapse in oil prices, which touched a 13-year low earlier this …
28th January 2016
The recent volatility in global financial markets has had a disproportionate impact on emerging market (EM) assets. Equities have underperformed those in the developed world, dollar-denominated bond yields have risen markedly and currencies have continued …
25th January 2016
The dangers posed by a rapid build-up in EM debt have come back into the spotlight in recent weeks. In this Focus we revisit the lessons from history. Three points stand out – with potentially ominous implications for China, Brazil, Korea, Russia and …
22nd January 2016
A retreat to widespread competitive currency devaluations in emerging markets would certainly be a cause for concern but, despite recent claims to the contrary, there is so far little evidence to suggest this is happening. In China, which has been the …
20th January 2016
Sentiment towards emerging markets has worsened since the start of the year amid mounting worries about the outlook in a number of key economies. Nevertheless, the latest data provide no evidence of a major slump in economic activity over the past few …
19th January 2016
We don’t expect China to suffer a hard landing, but if it were to happen it would result in widespread currency weakness and slower growth in large parts of the emerging world. Emerging Asian economies would be hit via direct trade ties with China, …
18th January 2016
EM exports continued to perform poorly at the tail-end of last year, but we think that the pace of contraction should at least ease over the course of 2016. … Drop in EM exports still likely to ease this …
15th January 2016
EM credit growth remains weak by its usual standards but there is no evidence (yet) of a widespread “credit crunch” that could be the precursor to a more serious downturn in economic activity. … No sign (yet) of an EM credit …
14th January 2016
Our Capital Flows Tracker shows that aggregate EM capital outflows rose to a record $270bn in the final quarter of last year, even more than during the depths of the global financial crisis. This was driven by a fresh spike in outflows from China which …
13th January 2016
Many parts of the emerging world are facing a tough year in 2016. But the outlook is not as uniformly bleak as many assume and some important emerging economies could spring positive surprises. … Crisis or recovery: what next for emerging …
11th January 2016
Not so long ago we were among the most bearish commentators on emerging markets. But even we find some of the more recent gloomy headlines difficult to square with the evidence on the ground. In this Update we set the record straight in four key areas. …
8th January 2016
Equities and currencies have weakened across the emerging world today but the latest economic data, in the form of the manufacturing PMIs, point to a further slight improvement in December. A fall in China’s index may have triggered the market declines …
4th January 2016
The inauguration of President Mauricio Macri has brought about a shift towards more orthodox economic policymaking in Argentina. Over a decade of populist and interventionist macroeconomic policy has left the economy with an over-valued exchange rate, a …
22nd December 2015
Emerging market (EM) growth remained fairly stable in October, as it has for much of the year. Looking ahead, we expect EM growth to pick up a touch in 2016, even as the Fed tightens monetary policy. … EM growth steady as Fed starts to …
17th December 2015
The likelihood that the Fed will begin to raise interest rates this week has sparked fresh concerns about the knock-on impact on emerging markets. However, we think that most EMs are now well placed to withstand Fed tightening. Countries with large …
14th December 2015
Relative calm in most EM currencies over the past month (the Colombian peso and Russian ruble being the obvious exceptions) supports our view that emerging markets are generally well placed to withstand the onset of Fed tightening. Admittedly, countries …
10th December 2015
EM export revenues are on track to fall by a trillion dollars (equivalent to about 3.5% of EM GDP) this year compared to 2014. Although exports are set to remain weak in 2016, we expect the pace of contraction to ease on the back of a pick-up in global …
Most emerging market (EM) asset classes have underperformed their peers in developed markets so far this year. Plenty of downside risks remain going into 2016, but we continue to think that EM markets will perform reasonably well in the months ahead. … …
9th December 2015
The EM world looks to have grown by its weakest pace since the global financial crisis in 2015, but things should start to improve next year. In this Focus we outline the ten key issues that we think will shape the outlook for EM investors in 2016. … Ten …
Our Capital Economics Risk Indicator (CERI) suggests that financial risks in the emerging world in aggregate are low and there is little to suggest that the onset of Fed tightening will trigger an EM-wide systemic financial crisis. That said , there are …
4th December 2015
November’s PMI surveys, published today, point to a continued but extremely patchy recovery across the EM world. Industry seems to be doing better in Emerging Asia and Emerging Europe but the PMIs for both Brazil and South Africa slumped, suggesting there …
1st December 2015
Emerging market (EM) growth appears to have slowed a touch in September on the back of the deepening recession in Brazil. Even so, there are no signs of the collapse in broader EM growth that some continue to talk about. In fact, growth has been fairly …
24th November 2015
Central banks across the world’s frontier markets are preparing themselves as the US Federal Reserve finally moves toward its first rate hike in nine years. Central bankers in Angola, Ghana, Zambia, Mozambique, Trinidad & Tobago, and Argentina have all …
20th November 2015
Concerns about the outlook for emerging markets look increasingly overdone. Pockets of vulnerability exist, but in our view EM growth is more likely to recover over the next 3-6 months than it is to suffer a fresh downturn. … Crisis or …
19th November 2015
The slump in commodity prices over the past year has meant central banks in net commodity exporting and importing countries have continued to follow different paths. Despite the hit to growth from lower export revenues, policymakers in big commodity …
The past few weeks have seen increased awareness of potential debt problems brewing in the emerging world. In general, debt burdens are lower and more manageable in most EMs than in the past. But vulnerabilities exist in a handful of countries. Of the …
17th November 2015
Lower commodity prices have continued to weigh on consumption in commodity-exporting EMs. Indeed, there are signs that even in those economies where spending had previously held up reasonably well, such as Saudi Arabia, consumers are now starting to …
Our Capital Flows Tracker shows that EM capital outflows remained large in October, but they did at least decline from September. This should help to soothe concerns (overstated in our view) about an ever larger flood of investment leaving the emerging …
13th November 2015
EM exports remained weak in September as the drag from lower commodity prices continued to take its toll, even in countries which are not major commodity exporters. However, as this drag fades and global demand strengthens, we think that the pace of …
12th November 2015
EM financial markets took the blockbuster October US employment report in their stride, and we continue to expect them to perform well even as the Fed starts to raise interest rates. … EM markets take blockbuster payrolls in their …
11th November 2015
October’s manufacturing PMIs, published today, contain early signs that the worst may finally be over for manufacturers across the EM world. The headline index improved both in key large EMs, such as China and Russia, and in many smaller economies too. … …
2nd November 2015
The shift towards looser monetary policy in the emerging world earlier this year is over and, with the first rate hike in the US inching nearer, we think that many EMs are likely to tighten policy gradually. But the picture is nuanced, and policy is set …
29th October 2015
Against the backdrop of ongoing talk of an EM slowdown, it appears that growth in the emerging world has actually been fairly steady in recent months. In fact, the latest reading of our EM GDP Tracker suggests that conditions in the emerging world have …
28th October 2015
EM financial markets have rebounded from the summer turmoil as China’s economy has shown signs of stabilisation and Fed lift-off has been delayed. Equities have risen about 5% on average since the end of August, while EM bond indices have returned 1-2%. … …
22nd October 2015
Four frontier markets are due to hold national elections in the coming month. The most high-profile election is in Argentina where Daniel Scioli, the candidate of the ruling left-wing coalition, appears on course to win the country’s presidency. With the …
There has been very little in the latest data to justify fears of a widespread collapse in emerging markets. While economic growth remains subdued, conditions appear to have stabilised in recent months and our GDP Tracker actually points to a slight …
21st October 2015
EM exports continued to fall sharply in August, but the early data for September provide some hope that the worst may now be over. The year-on-year pace of contraction in export values is likely to ease over the coming months as the drag from last year’s …
15th October 2015
Our Capital Flows Tracker shows that over a quarter of a trillion dollars flowed out of EMs in the third quarter. This was largely due to China, although there are signs that the pace of capital outflows there started to ease towards the end of the …
14th October 2015
Having been too optimistic on the outlook for the emerging world over much of the past five years, the consensus has now shifted too far in the other direction. Economic and financial vulnerabilities cast a shadow over the outlook for a handful of EMs but …
7th October 2015
The IMF downgraded its forecasts for emerging market (EM) growth in its latest World Economic Outlook (WEO). While we agree with the IMF that EM growth should rebound next year, we think the IMF has become too pessimistic on some of the biggest EM …
September’s PMI data suggest that manufacturing activity across the emerging world weakened further last month, with export orders particularly subdued. But in the EMs that have been in the spotlight of recent concerns – notably China, Russia and Brazil – …
1st October 2015
Emerging market (EM) growth has slowed further recently, but there is no sign of the collapse that some are talking about. In fact, there is tentative evidence that EM growth has begun to stabilise. … EM growth slower, but not …
29th September 2015
Uncertainty over the outlook for monetary policy in the US and renewed concerns about the health of China’s economy are weighing heavily on frontier market currencies. The weakest currency has again been the Kazakh tenge , which has fallen by a further …
25th September 2015
Our Capital Economics Risk Indicator (CERI) suggests that, for all the recent talk of an “EM crisis”, financial risks in most of the emerging world are low. There is certainly nothing in the CERI to suggest that EMs will be the “third leg” of the global …
22nd September 2015
The decision by S&P to downgrade Brazil’s sovereign debt rating to junk last week has refocused attention on EM debt burdens. As it happens, we have been warned about rising debt levels in Brazil for several years. But there are other EMs, such as Turkey …
16th September 2015
Industrial production growth in the emerging world remains very weak, with our aggregate measure of EM industrial output expanding by just 2.2% y/y in the three months to July – the slowest pace since September 2009. The worst performing region is Latin …
With good news thin on the ground in the emerging world, it’s reassuring that there are at least a few emerging markets (EMs) where growth is holding up well. Most notably, the economies of Central and Eastern Europe have performed strongly over the past …
15th September 2015
Much of the gloom currently hanging over the EM world is warranted, but there are reasons to think that the slump in exports, at least, will start to reverse toward the end of this year. That said, structural factors are likely to keep export growth well …
