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Emerging Market export growth strengthened a little in May and may have accelerated further last month. Even so, the latest country-level trade figures have fallen short of expectations, and suggest that global demand may not be as strong as we had …
10th July 2014
Emerging market dollar-denominated corporate bonds outperformed similarly-rated US corporate bonds in the second quarter of this year. We expect this outperformance to continue. Admittedly, bonds issued by emerging market companies are arguably more …
8th July 2014
The latest batch of emerging market (EM) PMIs suggests that the rebound in EM manufacturing gatheredpace in June. The best performers are still in Asia and Central Europe, as well as Mexico, but there hasalso been a welcome improvement in the BRICs, …
4th July 2014
Fears of an EM-wide crisis have receded and the outlook for smaller EM manufacturers is brightening. But structural problems will continue to hold back the largest emerging economies even if, as seems likely, China avoids a hard landing. As a result, …
3rd July 2014
Financial markets in the emerging world have rallied in the past quarter as fears about the impact of Fed tapering and a hard landing in China have eased. But while the latest Capital Economics Risk Indicator (CERI) shows that the risk of a crisis in …
1st July 2014
Our Tracker suggests that GDP in the emerging world, in aggregate, has expanded by around 4.5% y/y in recent months which is in line with Q1’s outturn. Some of the more open EM economies have gathered momentum, but growth in the larger BRIC economies …
30th June 2014
The escalation of violence in Iraq over the past week or so has led to concerns that unrest in the Middle East might trigger another spike in oil prices. As it happens, the impact on world oil markets has so far been limited. But a sharp rise in prices …
25th June 2014
Financial conditions across the emerging world have eased in recent months, as continued policy support from central banks in the developed world has supported risk appetite. This in turn has reduced the immediate threat to emerging economies running …
19th June 2014
The slowdown in EM GDP growth over the past couple of years has been driven in large part by weakness in the four largest emerging economies, the BRICs. Much of this weakness has, in turn, been caused by structural problems that will only be overcome by a …
13th June 2014
We do not think the recent outperformance of Russia’s financial markets and currency will last. Indeed, the ruble has already dropped back slightly over the past week or so. There are three key reasons. First, ongoing conflict in Ukraine suggests that the …
11th June 2014
Emerging Market (EM) export growth picked up a little in April and the rebound in Chinese exports last month suggests that it has since strengthened further. In aggregate, EM export growth is still sluggish by past standards. However, there is a growing …
9th June 2014
Foreign exchange reserve accumulation by emerging markets has been cited by some as a reason whybond yields in the developed world have fallen in recent months and by others as evidence that the morevulnerable EMs are rebuilding external buffers following …
6th June 2014
May’s PMI data suggest that EM manufacturing strengthened a little last month, having softened for most of the past half a year. There was a welcome improvement in the PMIs of the BRICs, particularly China. In contrast, much of the weakness of …
3rd June 2014
After a choppy 2013, financial markets have turned optimistic over the outlook for EMs in recent months. In many ways this makes sense. We were always of the view that last year’s concerns that Fed tapering – and ultimately tightening – might trigger an …
2nd June 2014
Growth in the emerging world as a whole was steady at around 4.5% y/y over the first few months of the year, but there are several bright spots. Growth has picked up in some of the more open, manufacturing oriented EMs such as Mexico and Central Europe. …
29th May 2014
A year on from the start of the so-called “taper tantrum”, in which concerns about the withdrawal of monetary stimulus by the Fed sent shock waves through EM financial markets, the vulnerabilities that put several EMs in the spotlight remain. As a result, …
19th May 2014
Having shown signs of picking up towards the end of last year, growth across the emerging world seems to have slowed once again in recent months. The latest slowdown has been due to several factors, some of which are likely to be short-lived. In …
16th May 2014
China’s economy is likely to slow over the coming years, as it rebalances toward a more sustainablegrowth model. But that won’t necessarily be bad news for all of the EM world. In fact, strong growthin Chinese consumer spending and weaker global commodity …
15th May 2014
The “stripped” spread of the JP Morgan EMBI+ Index has dropped below 300 basis points for the first time in about a year. However, we forecast the spread to rebound as less accommodative US monetary policy ultimately diminishes investors’ appetite for …
9th May 2014
Emerging market (EM) exports continued to fall in March. Admittedly, this can in part be explained by distortions in the Chinese data, which appear to have persisted in April too. However, the bigger picture is that EM-wide export growth remains sluggish …
8th May 2014
April’s PMIs suggest that manufacturing across the emerging world softened further last month. While there are signs that manufacturing growth in the smaller EMs is starting to lose steam, the weakness remains concentrated in the larger BRIC economies. …
6th May 2014
Although growth has remained roughly unchanged across the emerging world as a whole over the past few months, there are some stark differences in performance across regions. In particular, growth in Emerging Europe (excluding Russia) has accelerated, …
30th April 2014
The crisis in Ukraine has so far had only a small impact on most emerging markets. Although EM equities have fallen in recent days as the crisis has intensified, they have still risen over the past month. The clear exception, other than the Ukraine …
17th April 2014
There are signs that the decline in EM consumer spending growth experienced in 2013 has bottomed out in recent months, with several economies reporting stronger retail sales figures since the turn of the year. However, the improvement has been spread …
16th April 2014
EM-wide exports fell in February and, while this may be due in part to distortions in the Chinese data, the bigger picture is that EM export growth has been sluggish for the past two years. There are a few bright spots. Exports from highly-open …
10th April 2014
The MSCI Emerging Markets Index has returned nearly 3% in local currency terms since this time last month. At least three factors may explain why emerging market equities have been on the mend. First, investors’ fears of a hard landing in China may have …
8th April 2014
The IMF downgraded its expectations for EM growth in today’s World Economic Outlook (WEO), bringing its forecasts a step closer to our own. Nonetheless, while there is now not much difference between our forecasts for aggregate EM growth over the next …
After a stellar run over the past decade or so, growth across “frontier markets” as a whole is likely to slow over the next couple of years. But the moderation in aggregate growth will mask important divergences between the fortunes for individual …
Concerns about the impact on emerging economies of tapering by the US Fed have taken a back seat as investors have begun to focus on issues closer to home. The worst fears about a “hard landing” in China and the subsequent impact on the rest of the …
3rd April 2014
Manufacturing across the emerging world appears to have taken another turn for the worse in the first quarter of this year. This was largely driven by a renewed downturn in the BRIC economies. By contrast, the recovery in manufacturing in smaller emerging …
2nd April 2014
Growth across the emerging world appears to have remained unchanged at around 4.5% y/y at the start of this year. The recovery in Emerging Europe has faltered, but this was largely due to the weakness in the Russian economy, while the rest of the region …
27th March 2014
The Capital Economics Risk Indicator (CERI) has fallen to a ten-year low suggesting that there is very little threat of a 1990s-style systemic emerging market (EM) crisis. That being said, some countries remain vulnerable, with Venezuela and Thailand …
24th March 2014
At an aggregate level, the current account deficit of the “fragile five” (Brazil, India, Indonesia, South Africa and Turkey) showed a welcome improvement towards the end of last year. But progress has been uneven. What’s more, in those economies where …
21st March 2014
Worries about the impact on other emerging economies of a slowdown in China have risen back to the top of the agenda over the past month. While we do not believe a hard landing is likely, we do expect growth in China to slow further this year and next as …
19th March 2014
Having been the darling of international investors over the past couple of years, a number of “frontier markets” have been cast in a negative light recently. In this Update, we take a step back to make some general observations about frontier markets …
14th March 2014
The past few days have seen renewed fears of a hard landing in China ripple through EM financial markets. These fears are nothing new and have in fact resurfaced at a time when EM export growth to China has edged up a little. Our view remains unchanged: …
13th March 2014
Despite the crisis in Ukraine, which has hit some currencies and assets in Emerging Europe hard, there are signs that investors are rediscovering an appetite for investing in selected emerging markets. For example, the total return from the MSCI Emerging …
12th March 2014
Export growth was more or less flat at an EM-wide level in January, but there’s a growing divergence at a country level, with highly-open manufacturing economies in Central Europe and East Asia outperforming. By contrast, commodity producers are faring …
10th March 2014
Emerging market (EM) manufacturing appears to have lost some momentum last month. But while manufacturing PMIs have slumped in both Emerging Asia and Latin America, manufacturers in Emerging Europe appear to be faring much better. … Emerging European …
4th March 2014
EM GDP growth has remained stable at around 4.5% y/y in recent months, but this has masked a shift in the fortunes for individual regions. Emerging Europe appears to be experiencing a relatively strong recovery. In contrast, while Asia remains the fastest …
28th February 2014
The eruption of anti-government protests in several emerging economies over the past month has led many investors to add “political risk” to the lengthening list of reasons to be cautious on EMs. But in truth political risk has always been an issue for …
25th February 2014
The EM recovery is still struggling for momentum, with our GDP tracker suggesting that the upturn in growth seen in mid-2013 may have stalled. On the positive side, it seems unlikely that the most recent bout of market turmoil will have a significant …
20th February 2014
In contrast to the BRICs, where economic growth is likely to disappoint without structural reform, there are parts of the emerging world where recent economic reforms should provide a major boost to growth over the next decade. Four countries that we …
19th February 2014
“Frontier” currencies have been the hardest hit in the latest bout of EM financial market turmoil. Looking ahead, we think further exchange rate weakness is likely to be concentrated in those countries that have already seen the sharpest falls – …
17th February 2014
Surprisingly strong export growth from China last month has raised hopes of a broader recovery in EM exports. However, the country level data suggest that export performances are highly uneven, with the fastest growth coming in the highly-open …
12th February 2014
Like most other emerging market assets, dollar-denominated bonds have performed poorly over the past month. But they have at least fared better than they did during last summer’s sell-off. Spreads on both government and corporate securities have generally …
11th February 2014
The recent slowdown in the major BRIC economies has been driven largely by structural factors, meaning that a new wave of reforms is needed if they are to regain their vigour. But, as things stand, the likelihood of a big shift in policy over the coming …
10th February 2014
Emerging market (EM) manufacturing appears to have slowed last month but, perhaps more importantly, there is a widening divergence between countries. Activity seems to be picking up in the more open EMs, but it’s weakening in some of the larger economies …
6th February 2014
The emerging world may not be facing a re-run of the late-1990s, as some have suggested, but theprecarious position of some EMs makes it likely that several economies will run into trouble overthe next couple of years. Events remain in a state of flux but …
4th February 2014
It’s too early to say with any certainty what impact the current turmoil in financial markets will have on EM growth. But while we expect the countries that have been hit hardest in recent weeks – notably Turkey and South Africa – to struggle this year, …
30th January 2014
