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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 …
EM exports fell sharply in July on the back of the renewed drop in global commodity prices. And the early data suggest that things are unlikely to have improved last month either. … Fresh commodity price weakness weighs on EM …
11th September 2015
Equity markets in the emerging world have been the biggest casualty of the uncertainty about when the Fed will finally push the button on rate hikes. For our part, we still expect “lift-off” later this month. But past form shows that EM markets have often …
10th September 2015
Despite concerns in some quarters, EM policymakers are unlikely to introduce capital controls. Many EMs are dependent on capital inflows – which capital controls would discourage – and many are likely to welcome currency weakness. Insofar as we do see a …
The outcome of next week’s FOMC meeting is finely balanced, but it’s possible that it could deliver the first increase in US interest rates since 2006. In this Focus we revisit research we’ve published over the past year or so and answer five key …
Our Capital Flows Tracker shows that total capital outflows from EMs increased in August to their highest level since the global financial crisis. This was overwhelmingly due to flows out of China. By contrast, in spite of the gloomy headlines, there is …
9th September 2015
On some measures, the slowdown in emerging markets (EMs) in the second quarter of this year meansthat EM growth is now not much faster than developed market (DM) growth. … EM growth now not much faster than DM …
4th September 2015
August’s PMIs, published earlier today, paint a gloomy picture of the health of the emerging world.Conditions in manufacturing appear to have deteriorated further across a wide swath of EMs last month. … Outlook for EM manufacturers deteriorates …
1st September 2015
EM growth edged down further in June. But for all the gloom in the headlines, we see no sign of the collapse some are talking about. In particular, in China, after a weak start to the year, conditions seem tohave stabilised. … EM growth lacklustre, but …
27th August 2015
China’s interest rate cut has helped to stem the panic that has gripped emerging markets in recent days, but it has also raised the obvious question about whether other EMs may follow suit. We doubt they will. But at the same time, we think only a handful …
25th August 2015
The rout in EM financial markets is generating increasingly hysterical headlines with many commentators seemingly fighting to outdo one another with predictions of doom and gloom for emerging economies. This is overblown. As we have warned for some time, …
24th August 2015
The recent devaluation of China’s renminbi and the slump in commodity prices were the two key factors behind Vietnam’s decision last week to widen the dong trading band with the dollar and the subsequent move by the Kazakh central bank to scrap its …
The impact of China’s renminbi devaluation is continuing to be felt across emerging markets. The Kazakh central bank today scrapped its trading band for the tenge, which subsequently fell by over 20% against the US dollar. The move follows hot on the …
20th August 2015
The most recent declines in emerging market currencies have been driven by renewed falls in global commodity prices, China’s ‘devaluation’ of the renminbi, and worries about the prospect of monetary tightening in the US. In this Update , we take a step …
18th August 2015
The slight improvement in EM export growth in June is unlikely to mark a turning point, given the fresh drop in commodity prices since the start of July. Indeed, judging by the data already released for last month, the EM export downturn looks to have …
12th August 2015
The decision by the People’s Bank of China to reduce the daily reference rate for the renminbi has generated plenty of headlines about spillovers to other EMs. In practice, however, we think that these are likely to be limited. … Spillovers to EMs from …
11th August 2015
Of the major EMs, the biggest losers from the most recent fall in commodity prices have been Russia, Nigeria and Colombia, while the biggest winners have been Korea, India and Thailand. A similar picture emerges if we look at winners and losers since the …
7th August 2015
The falls in commodity prices over the past year have caused consumer spending to slow in many commodity-exporting countries, with Russia and Brazil being hit particularly hard. Only consumers in commodity exporters in Emerging Asia and the Gulf don’t …
6th August 2015
Emerging market (EM) currencies suffered more heavy losses in the past month and while further big falls are hard to justify over a medium term horizon, there could be more downside in the near term as we approach Fed“lift-off”. … Another bad month for EM …
4th August 2015
July’s PMIs, published earlier today, showed that manufacturers across much of the emerging world struggled last month. The one bright spot was Central Europe, where the surveys improved in spite of the escalation of the crisis in Greece early last month. …
3rd August 2015
EM growth slowed to its weakest pace since 2009 in May. But the aggregate data have been pulled down by problems in Russia and Brazil. In contrast, other parts of the EM world have seen a pick-up in activityin recent months. … EM growth dragged down by …
30th July 2015
Most EM currencies have fallen over the past month, with many now at or close to multi-year lows against the US dollar. For the majority of countries the economic impact of recent currency weakness is likely to be fairly small. But for those EMs with high …
27th July 2015
Frontier market currencies are having a difficult time, with only three of the 31 currencies that we follow gaining ground against the US dollar over the past month. The biggest decline has been in Myanmar, where the kyat is down by 10% against the …
So far in July, more EM central banks have hiked interest rates than have cut rates – the first time this has happened since December last year. We expect to see further policy rate cuts in a few more places before the end of the year, notably India and …
22nd July 2015
Exports from emerging markets continued to be dragged down in May by the impact of low commodity prices and the strength of the US dollar. But as these effects start to unwind over the second half of this year, EM export growth should gradually recover. … …
21st July 2015
The slowdown in EM growth should bottom out over the second half of this year, but we don’t foresee a significant rebound in 2016-17. … Still stuck in a …
14th July 2015
Despite a rebound in recent days, Chinese equities have slumped since the middle June. Still, the Shanghai Composite is some 90% higher than a year ago, and there is little sign that the sell-off has spread to other emerging markets (EMs). As such, we are …
10th July 2015
Recent events in China and Greece have generated plenty of gloomy headlines about the spillovers to emerging markets but so far the reaction in EM markets has been relatively limited. One reason could be that lots of bad news has already been priced into …
9th July 2015
June’s manufacturing PMIs suggest that the slump in manufacturing across the BRIC economies may be bottoming out. It’s a mixed picture across smaller EMs, with those in Central Europe doing well, but Emerging Asian manufacturers still struggling. … …
1st July 2015
EM growth continues to slow and, according to our GDP Tracker, is now at its weakest pace in almost sixyears. However, the slowdown has almost entirely been driven by further weakness in the BRICs. Incontrast, many small and medium-sized EMs have …
30th June 2015
This note summarises our key calls for emerging markets, emphasising where we differ from the consensus. Detailed projections (with specific numbers) are available in our regular publications on the respective regional services and also summarised in the …
Beyond a handful of economies in Emerging Europe, the direct links between Greece and the rest of the emerging world are limited. What matters for most EMs is not so much the crisis in Greece itself, but whether this triggers contagion and large-scale …
29th June 2015
The relief rally in Chinese equities prompted by additional policy stimulus has turned global sentiment around, but a sustained recovery in commodity prices will probably require hard evidence that the Chinese economy is picking up again. Fortunately, …
26th June 2015
