Filtered by Region: Emerging Markets Use setting Emerging Markets
The recent earthquakes that hit Turkey and Syria are a human tragedy and foremost in everyone’s minds. Nonetheless, the financial markets will also need to bear in mind the economic cost and, to the extent that this provides some comfort, the damage to …
7th February 2023
Investors’ concerns about sovereign debt risks in frontier markets have eased a touch recently but several countries, particularly Tunisia and Pakistan, remain on the path to default. The latest (and last-minute) demands from China in debt talks with …
We’ve received a lot of questions recently about the impact of China’s re-opening on EMs, including at our monthly Drop-in today. This Update answers three key questions on the winners and losers, the inflationary impact and the outlook for EM financial …
2nd February 2023
EM banks will face an increase in loan losses this year, but the good news is that banking sectors on the whole appear well-placed to absorb these, particularly in parts of Latin America, Emerging Europe and the MENA where capital buffers are high. That …
The manufacturing PMIs picked up in most emerging markets in January, offering hope that the worst for EM industry may have now passed. But activity remains soft against the backdrop of high interest rates and weak global external demand. The aggregate …
1st February 2023
Consumer spending in emerging markets initially recovered quickly from the pandemic, but it looks like high interest rates and inflation caused spending growth to slow sharply over the second half of last year. And we think consumer spending is likely to …
27th January 2023
China’s statutory retirement ages for men and women are low. But raising them would not make a big difference to the size of the workforce since most workers today keep working once they have passed retirement age. Only a quarter of men drop out of the …
25th January 2023
China’s re-opening will have a significant impact on the rest of the emerging world by lifting commodity prices. That will improve the terms of trade of EM commodity producers, particularly Chile, Peru and the Gulf economies. However, we think that this …
The powerful re-opening rally in China’s stock market has eroded a large part of the valuation gap that led us to judge that equities there were relatively appealing a couple of months ago. That said, we think there’s still some scope for it to continue …
18th January 2023
The surge in FDI inflows to a 15-year high in Central and Eastern Europe (CEE) last year will partly unwind this year given the weaker global macro backdrop. But we think that a large part of the increase reflected structural forces, which will keep FDI …
17th January 2023
It looks highly likely that Tunisia’s government will this year follow in the footsteps of Sri Lanka and Ghana by defaulting on its external debts. Fortunately, public debt risks elsewhere don’t look as acute. But while the focus is on sovereign …
We have revised up our forecasts for equities in China, given a brighter outlook for the economy there. We have also increased our China 10-year sovereign bond yield forecast for end-2023, as we think that a faster economic recovery will lead to tighter …
13th January 2023
Foreign capital inflows into EMs have picked up a little since the beginning of the year. This should provide some relief to those countries with sizeable current account deficits, including Chile, Colombia, Philippines, and several countries in Central …
11th January 2023
In this Update , we take a look at the key elections that are scheduled across the emerging world this year. The most notable ones are in Argentina, Nigeria and Turkey, where opposition victories could be the catalyst for a shift away from the …
10th January 2023
China’s abandonment of its zero-COVID policy could lead to supply chain disruption in other EMs, particularly other parts of Asia and Mexico, though we’re not too concerned yet. And outbound Chinese tourism is likely to soar, to the benefit of Hong Kong …
4th January 2023
Although the manufacturing PMIs for December picked up in some highly-open EMs in Asia and Central Europe, industry in these countries remains very weak. And the surveys suggest that activity has softened further in major EMs including China (due to …
3rd January 2023
We expect lower global risk appetite, as well as rising country-specific risk premia in some cases, to put upward pressure on the yields of 10-year local-currency (LC) government bonds in emerging markets (EM) in the first half of 2023. But later in the …
21st December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
15th December 2022
A widening of Russia’s budget deficit next year to 2.5% of GDP will increase pressure on the government to keep a firm grip on non-military spending. But it should be able to finance the shortfall from its savings and domestic bond issuance. The bigger …
14th December 2022
The statement accompanying the Brazilian central bank’s meeting yesterday, at which the Selic rate was left at 13.75%, made clear that policymakers are increasingly concerned about fiscal loosening when president-elect Lula takes power. This reinforces …
8th December 2022
The EM manufacturing PMI broadly plateaued in November, but the surveys remained weak in parts of Central Europe and recorded sharp declines in Brazil, Colombia and Vietnam. On the bright side, price pressures appear to be easing further . The aggregate …
1st December 2022
EM GDP rebounded in Q3, but this is unlikely to be the start of a sustained upturn. Headwinds in the form of high inflation, tight monetary policy and weak external demand will drag on growth in the coming year and our 2023 GDP forecasts are generally …
30th November 2022
We think the stretched valuations of Indian equities compared to those elsewhere will prevent the standout performance of Indian equities seen so far in 2022 being sustained over the longer run. The performance of India’s stock market has been fairly …
28th November 2022
Monetary tightening cycles in EMs are advanced relative to DMs, and are now drawing to a close in many countries. Elevated inflation will mean that policy will stay tight over the coming months, but the conditions for several EM central banks to start …
24th November 2022
Russia’s agreement to extend the Black Sea grain deal with Ukraine should help to keep a lid on wheat and corn prices over the coming months, reducing upward pressure on inflation in the emerging world and alleviating economic imbalances. Countries that …
21st November 2022
High carry emerging market (EM) currencies have generally fared better than their low carry counterparts over recent months, but we doubt this will continue. We think currencies in EM Asia will fare best over the next two quarters, despite their low …
18th November 2022
Having increased sharply throughout the year, we think that emerging market (EM) local currency sovereign bond yields will probably only increase by a little more in the first half of next year, despite a looming world recession. Yields may then start to …
Foreign capital inflows into EM financial markets have risen sharply so far this month, as investor risk appetite has improved. But with the global economy set to enter recession, we aren’t convinced that this will last as EMs are likely to find it more …
16th November 2022
The dramatic improvement in EM public finances since the height of the pandemic is starting to run out of steam. And we think that fiscal dynamics are likely to get worse next year in parts of Central Europe and in most commodity-producing countries. …
11th November 2022
Nigeria’s demonetisation efforts are likely to add to already-high economic costs of the country’s unorthodox policies. The resulting currency falls will fuel inflation further and disruptions to activity are more or less inevitable, supporting our …
10th November 2022
Our seasonally-adjusted measure of aggregate EM goods exports recorded a decline in dollar terms in September and leading indicators point to further falls over the rest of the year. And with commodity prices on a downward trend and the global economy …
8th November 2022
Brazil’s financial markets have been some of the world’s best performers lately, supported in part by the prospect of centrist policymaking by incoming president Lula. With the presidential election now complete, and Lula set to be inaugurated soon, a …
Although the aggregate EM manufacturing PMI rose in October, a closer look at the surveys shows that there was a widespread deterioration in EM industry. Highly-open manufacturing economies including Taiwan, Czechia and Poland are struggling in …
2nd November 2022
A closer look at core inflation across EMs suggests that underlying price pressures have started to ease. But they remain very strong by historic standards in most countries – and particularly so in Central and Eastern Europe (CEE). The CEE economies …
26th October 2022
Since independence, India has preferred to stay unaligned geopolitically. But in a fracturing global economy, the security and macroeconomic benefits of leaning towards the US – and away from China – may prove too compelling for India to remain on the …
24th October 2022
Policymakers in Turkey have doubled down on their new economic model of “lira-isation” by pursuing more extreme de-dollarisation policies in recent months. These appear to be having an impact in terms of stemming lira depreciation. But the central bank …
20th October 2022
One question that we frequently get asked is which EM could be the next Sri Lanka. While there are several candidates, Tunisia concerns us most. The good news for the rest of the world is that the most vulnerable countries’ sovereign foreign bonds are …
13th October 2022
The surge in energy prices this year (particularly gas) will have the biggest impact on Central and Eastern Europe (CEE) and push economies there into recession. There will be an impact in the rest of the emerging world but we expect it to be much smaller …
29th September 2022
Capital inflows into EMs have dropped sharply over the past few weeks as the US dollar has been on a tear. External financing is likely to remain challenging in this environment, posing a threat to EMs whose current account deficits have widened sharply, …
23rd September 2022
The strong dollar environment is particularly worrying for those EMs with large dollar debts, including parts of Latin America, Turkey and many frontier markets. But it’s also a concern for countries with large current account deficits (including parts of …
20th September 2022
Shifts in China’s approach in debt talks with Zambia and planned changes to the Common Framework, such as establishing firm timelines, will go some way to smoothing the debt restructuring process for affected EMs. For now, though, there are reasons to …
14th September 2022
In this Update, we analyse the impact of surging energy prices in Europe and show that the Central and Eastern European (CEE) economies are the most vulnerable. The share of household disposable income spent on energy could double to more than 10% and a …
12th September 2022
The National Bank of Poland (NBP) slowed down the pace of its tightening cycle again today with a 25bp rate hike to 6.75%. There was no new guidance in the communications in terms of the central bank’s next move, but with policymakers seemingly more …
7th September 2022
The fall in the EM manufacturing PMI to a three-month low last month was driven by China’s recovery stalling and weakness in export-oriented manufacturing EMs in parts of Asia and Eastern Europe. The one crumb of comfort is that price pressures have eased …
1st September 2022
While EM real effective exchange rates have held up better than their nominal exchange rates against the dollar since 2021, we think there are some economies where appreciations look stretched, and nominal exchange rates may need to adjust further. …
26th August 2022
The further widening of Chile’s current account deficit in Q2 combined with an increased reliance on portfolio inflows leave the Chilean peso vulnerable to a deterioration in investor risk appetite. We think the peso will remain under pressure and, as a …
24th August 2022
Bank Indonesia (BI) hiked interest rates by 25bp to 3.75% today, and the hawkish commentary from the press conference increases the risk that the Bank will tighten policy further this year. Today’s decision came as a surprise. Of the 27 analysts …
23rd August 2022
Recent national accounts data show that many of the major EMs experienced a difficult second quarter . Looking ahead, a combination of weaker global demand, high inflation and rising interest rates is set to weigh on the outlook over the coming months. …
22nd August 2022
Despite the broad-based rebound over the past month or so, we expect deteriorating risk sentiment to put renewed pressure on most emerging market (EM) currencies before long. This Update zeroes in on which EM currencies are most vulnerable to large falls. …
19th August 2022
The recent falls in the Turkish lira have led to increased speculation that, with the CBRT showing no sign of willingness to raise interest rates, policymakers will be forced to turn to capital controls to prevent sharp and disorderly moves in the …
16th June 2022
