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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 …
Construction has started the year on a weak note across the emerging world and particularly in those EMs that most need to raise their investment rates, notably Brazil and Russia. This adds weight to our concerns that growth in these economies is set to …
6th June 2013
The 25% year-on-year rise in equity prices in advanced economies, combined with rising property prices in some countries, should provide a boost to household consumption. However, we suspect the benefit will be small in most cases, with the notable …
4th June 2013
High public debt and large budget deficits mean that the governments of Egypt, Jordan and Hungary need to tighten fiscal policy. Moreover, despite appearing healthy, the public finances of some commodity producers could come under pressure if commodity …
3rd June 2013
Our EM GDP Tracker suggests that growth in Q1 may have slumped to a three-and-a-half year low, having been hit by a dip in global trade and structural problems in the BRIC economies. … EMs continue to lose …
30th May 2013
Healthy demographics can certainly play a role in supporting growth in emerging markets. However, the future performance of places such as India, the Middle East and Africa, where demographics are likely to be most supportive of growth, will be mainly …
29th May 2013
In aggregate terms, EM monetary policy has been loosened over the past six months. But there has been a big difference between the actions of central banks in each EM region. In Europe and, more recently, Asia, interest rates have been cut in order to …
28th May 2013
The recovery in emerging market (EM) growth during the second half of 2012 has faltered since the start of this year. This is due in large part to renewed weakness in the BRIC economies, which we think reflects a transition to a new structurally slower …
23rd May 2013
Over-invoicing by exporters over the last five months has significantly inflated the apparent strength of overseas demand. While official customs data show a surge in exports, this is not evident in the imports reported by trading partners. China’s …
17th May 2013
This week’s bumper foreign debt sale by Brazil’s Petrobras has put the spotlight on the fast-expanding overseas market for EM corporate bonds. As it happens, this type of financing is still a small part of the overall universe of EM company debt. …
16th May 2013
Economic activity across the emerging world looks to have moderated since the start of the year, with our GDP tracker pointing to weaker growth in Emerging Europe, Emerging Asia and Latin America. Meanwhile, consumer price inflation remains subdued in …
15th May 2013
The latest trade data provide further evidence that Emerging Market exporters are starting to struggle. But while exports from Emerging Asia have continued to grow (albeit at a slower rate), exports from both Emerging Europe and Latin America are now …
10th May 2013
Total debt in emerging markets (EMs) is relatively low by international standards. But the history of EMs suggests that crises often occur when credit grows rapidly for several years rather than crosses a specific threshold. On this basis, China, Korea …
9th May 2013
The April manufacturing PMIs add to evidence that the emerging market (EM) recovery has lost pace in recent months. The slowdown has affected most EM regions, but the BRIC economies seem to have been the major underperformers. … EM manufacturing …
3rd May 2013
Industrial output in the emerging world has increased by a remarkable 30% in the past five years. Yet impressive growth at an aggregate level masks a wide variation in the performance of individual regions. Almost all of the increase in output since 2008 …
1st May 2013
Recent evidence of weaker economic activity in China and falling global commodity prices supports our view that overall emerging market (EM) growth will disappoint in the years ahead. But while commodity producers in Latin America and Africa may …
24th April 2013
The recent weakness of the economic data across the emerging world has been exacerbated by calendar effects. Even so, our EM GDP Tracker reveals a broader trend of weakening activity, particularly in the BRIC economies. … BRICs continue to …
22nd April 2013
