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Consumer spending growth appears to have picked up in large parts of the emerging world over the past couple of quarters but Emerging Asia has bucked the trend and spending growth there has continued to slow. Looking ahead, consumer spending in the …
23rd October 2013
Having been spectators to the credit crisis that has gripped the developed world since 2008, debt problems now seem to be building in several major EMs. There are good reasons to think that the economic fallout may be less severe than in previous EM …
22nd October 2013
The currencies of the so-called “BIITS” (Brazil, India, Indonesia, Turkey and South Africa) have been singled out as being particularly vulnerable to a tightening of global monetary conditions. This is on account of their respective countries’ large …
21st October 2013
The past month has brought signs of stabilisation across the emerging world. EM financial markets largely shrugged off concerns over a possible US default and regained some of their lost ground following this summer's sell-off. Meanwhile, the recent …
17th October 2013
The IMF has downgraded its expectations for growth in the BRICS over the next couple of years, bringing its forecasts into line with our own. But while at face value the Fund expects growth to rebound further ahead, we think that weakness in the BRICS is …
15th October 2013
Emerging market currencies in all the major regions have generally risen against the dollar since this time last month. Those of countries in Emerging Europe have fared the best on average, although the strongest performer has actually been the Brazilian …
14th October 2013
The most recent Emerging Market (EM) trade data show that export growth maintained its upward trend in August. Forward-looking indicators point to further gains over the year ahead. … Continued recovery in EM …
11th October 2013
A default by the US government would be without precedent and the potential spillovers to emerging markets are unclear. Nonetheless, it seems likely that the same EMs that were hit during the summer sell-off that followed fears of Fed tapering would be …
10th October 2013
Financial markets have awakened to the vulnerabilities in the emerging world. These are real and will weigh on growth in the years ahead. But we believe that the doomsayers will be proved wrong – an imminent crisis in the emerging world is unlikely. … …
8th October 2013
Our EM-wide PMI suggests that the recovery in EM manufacturing continued at the end of Q3. However, the improvement is uneven. The rebound was most prominent in Emerging Europe, helped by the strengthening of key euro-zone trading partners. But in some of …
2nd October 2013
Suggestions that policymakers in troubled emerging markets (EM) now have a window of opportunity to reduce external vulnerabilities before the Fed begins to taper miss the point that these countries’ problems are largely structural. The reforms required …
27th September 2013
Despite recent talk of a “Great Deceleration” in the emerging world, our GDP Tracker suggests that EM growth has stabilised – albeit at a weak pace – over the past few months. … Talk of “Great Deceleration” overlooks recent …
26th September 2013
Financial markets across the emerging world have rallied in the wake of the Fed’s decision to delay QE tapering, easing concerns that several EMs were on the cusp of currency crises. As it happens, these fears were probably overdone. It’s worth noting …
20th September 2013
The Fed’s decision yesterday not to taper its asset purchases just yet provides some breathing room for the more troubled emerging economies. But their structural problems remain and uncertainty about the outlook for Fed policy has arguably now increased, …
19th September 2013
We expect the Fed to announce a small reduction in its asset purchases at the conclusion of today’s FOMC meeting. In this Update we revisit the implications for EMs and explain why, despite the market turbulence of recent months, the economic impact …
18th September 2013
The most recent Emerging Market (EM) trade data show that export growth accelerated in July. What’s more, on the basis of the latest leading indicators, a further improvement in EM exports looks probable in the coming months. … Signs of improvement in …
One of the more surprising features of August’s EM currency sell-off is how little policymakers in the worst-affected countries intervened in foreign exchange markets to try to stop it. In the case of Turkey, that probably reflects concerns that reserve …
17th September 2013
Returns from emerging market equities have been positive since this time last month. Moreover, emerging market equities appear to have stopped underperforming developed market equities. If this continues, it would restore the usual pattern whereby …
16th September 2013
In the five years since the collapse of Lehman Brothers, emerging economies have accounted for three-quarters of global growth. This has fed expectations that the emerging world can continue to comfortably outperform. In our view, while emerging economies …
13th September 2013
We do not expect the tapering and eventual ending of QE by the US Fed to be the trigger for a systemic Emerging Market (EM) crisis. Our Capital Economics Risk Indicator (CERI) suggests that financial risks in EMs are low, with only Venezuela in immediate …
12th September 2013
Our EM-wide PMI suggests that emerging market manufacturing improved a little last month. The recovery in the euro-zone in recent months appears to have boosted external demand, particularly in Central Europe and South Africa. But manufacturing in …
3rd September 2013
At an aggregate level, the second quarter GDP data suggest that the BRIC economies held up relatively well in Q2. However, this was largely due to a surprisingly strong rebound in Brazil. In the other BRIC countries, growth rates continued to slow towards …
2nd September 2013
Our GDP Tracker suggests that growth is no longer slowing across the emerging world, with the exception of Emerging Asia. But neither does it seem to be recovering. … EM growth remains …
28th August 2013
Improved fundamentals mean that currency crises pose a much smaller risk to Emerging Markets now than in the past. But it would be unwise to assume that the coast is therefore clear for the emerging world. … Should we still worry about EM currency …
26th August 2013
The renewed sell-off in EM currencies has cast a fresh spotlight on vulnerabilities in the emerging world. In this Update we answer three key questions that have been raised by recent market moves. … Three questions (and answers) about the EM currency …
20th August 2013
The past month has brought some hope that economic conditions in two of the four BRICs – Brazil and China – might be improving. In China, data on trade, industrial production and investment have all surprised on the upside. Meanwhile, Brazilian industry …
15th August 2013
Improvements in technology are making it increasingly easy to trade services. This has led some commentators to argue that services can become a more viable driver of EM growth, allowing EMs to break from the old path of industrialisation that was …
14th August 2013
Dollar-denominated emerging market government bonds have recovered some poise over the past month. This has been driven primarily by a decline in credit spreads, which have fallen significantly from their recent peaks. However, emerging market …
8th August 2013
There are some signs in the latest EM trade data that the slowdown in exports witnessed over the first half of this year has eased. Even so, export growth remains broadly flat in year-on-year terms in all regions of the emerging world. … EM trade …
High global energy prices have contributed to rising subsidy spending across much of the emerging world. Some EMs have already started to cut back on subsidies. But fears of inflation and civil unrest will see many act with caution. … EMs likely to …
6th August 2013
Our EM-wide PMI estimate suggests that conditions in emerging market manufacturing are now the weakest they have been since early 2009. … EM PMI falls to four-year …
2nd August 2013
Recent talk of a looming “Great Deceleration” in EM growth has tended to miss the crucial fact that the emerging world has already been slowing for several years. In this Update we summarise five key points that are central to the debate over the outlook …
1st August 2013
Our GDP Tracker suggests that after a sharp slowdown at the start of the year, EM growth ticked up in May. Evidence of a possible turnaround is strongest in Emerging Europe, and weakest in Emerging Asia. … Glimmers of …
26th July 2013
The sell-off in EM currencies that has followed the Fed’s signal that it may start to taper its asset purchases under QE3 has led central banks in India, Indonesia and now Turkey to hike interest rates. But these countries are probably exceptions within …
23rd July 2013
Lingering fears over the impact of a tapering of asset purchases by the US Fed have seen emerging market currencies continue to weaken over the past month – countries with current account deficits have been among the hardest hit. Falling commodity prices …
18th July 2013
We think that the non-BRIC Emerging Markets (EMs) will play a more important role than the BRICs in driving a gradual acceleration of global GDP growth over the next 2-3 years. Within the EM world, the prospects for a strong economic rebound by 2015 …
15th July 2013
The latest batch of EM trade data suggests that exporters continue to struggle in the face of slowing demand from their major global trade partners. Moreover, there isn’t much in the forward-looking indicators to suggest that a meaningful recovery in …
11th July 2013
Yields of dollar-denominated emerging market government bonds have surged since late May, reflecting increases in both underlying US Treasury yields and credit spreads. But while Treasury yields have remained high in recent weeks, credit spreads have …
10th July 2013
Last week we published for the first time our forecasts for 2015 GDP growth in China, which put us right at the bottom end of consensus expectations. For the rest of the emerging world, the effects of weaker growth in China are likely to be felt most …
Emerging economies are much better positioned than in the past to withstand policy tightening by the Fed and few are at risk of an immediate crisis. Nonetheless, we are entering a new era for emerging markets (EMs) which will see old stars fade and new …
8th July 2013
There’s a vast amount of uncertainty about the potential for developing countries to follow the US and Canada in exploiting their shale reserves. But if they can, it could turn a large number of emerging markets from net gas importers to self-sufficiency. …
3rd July 2013
June’s PMIs suggest that the downturn in emerging market manufacturing is gathering pace, with our EM-wide PMI estimate dropping to its lowest level for nearly a year. Producers in Asia and Latin America seem to have borne the brunt of the slowdown, but …
2nd July 2013
While at first sight it does look like the recent falls in emerging market (EM) equities could cause growth to slow via “wealth effects”, we think there are only limited grounds for concern. … Market turmoil unlikely to cause EMs to slow via wealth …
28th June 2013
Our GDP Tracker suggests that the EM slowdown has continued into the start of Q2. Although all three main regions have reported disappointing growth, there are signs that the downturn in Emerging Europe may have finally bottomed out. … EM growth slows …
27th June 2013
26th June 2013
Concerns about a tapering of the US Fed’s asset purchases under QE3 have caused a sell-off in EM financial markets, but we think the economic impact on EMs from the end of ultra-loose monetary conditions in the developed world is likely to be relatively …
21st June 2013
Yesterday’s FOMC meeting cemented expectations that the Fed will start to taper its asset purchases under QE3 later this year and has weighed on EM financial markets today, but the economic impact of Fed tapering on EMs is likely to be limited. A handful …
20th June 2013
Despite having experienced relatively rapid wage growth in recent years, there is little evidence that China has suffered a significant loss of export competitiveness. Instead, the EM region that has experienced the greatest loss of competitiveness over …
14th June 2013
Most EMs are likely to tolerate the recent sell-off in their currencies. In some places this may even be welcomed. But there are a few exceptions. Inflation concerns mean that currency weakness will put policymakers under pressure in Brazil and India, …
12th June 2013
The weakness of the global economy continues to keep export growth subdued across Emerging Markets (EMs). Even in Asia, where exports held up relatively well until very recently, growth in trade has weakened over the past few months. This only adds to …
