Filtered by Region: Emerging Markets Use setting Emerging Markets
Brazil’s recent period of rapid growth is likely to come an end this year. Sovereign debt concerns will almost certainly rumble on, but further piecemeal austerity measures will probably prevent another rise in bond yields or leg down for the real. In a …
8th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
The latest inflation figures out of Turkey have given us more encouragement that the disinflation process is underway and that the central bank could lower interest rates towards 30% by year-end. Even so, real interest rates will need to be kept …
Brazil’s public finances have been in the headlines for all the wrong reasons over the past month. But while an extreme case, the combination of a large budget deficit and limited political will to rein it in isn’t unique to Brazil. Indeed, Mexico, …
The further slump in net foreign direct investment (FDI) inflows into India last year seems in large part a reflection of still-high global interest rates. One implication therefore is that the slump will reverse now that global monetary policy is being …
The small fall in the aggregate EM manufacturing PMI in December and the declines in headline PMIs for most countries suggests that EM industry lost some pace at the end of the year. We think manufacturing activity will remain fairly subdued over the …
2nd January 2025
Saudi Arabia’s constrained approach to oil policy is here to stay until April and, coupled with the turn to fiscal consolidation, means growth will pick up by less than others expect in 2025. The final estimate of Saudi GDP showed that the pace of …
19th December 2024
Inflation in South Africa is now running at extremely low rates by historic standards. While we think it will edge up from here, the extent of spare capacity in the economy and tight fiscal stance mean inflation will remain lower than consensus …
13th December 2024
Risks to Russia’s macroeconomic stability are mounting on the back of the recent credit boom and sharp rise in interest rates. Our EM financial risk indicators show that Russia is now at high risk of a banking crisis. We don’t expect these risks to …
12th December 2024
Capital inflows into EMs have been resurgent over the past few weeks amid a broader improvement in global risk appetite. Looking ahead, however, likely policies from President-elect Trump point to a renewed strengthening in the US dollar – an environment …
The Brazilian central bank’s aggressive interest rate hike yesterday may help ease concerns that fiscal dominance will take hold. But we think that measures to keep government debt servicing costs artificially low will ultimately form part of the solution …
2025 will be a far quieter year in terms of elections than this year was. But there are some key votes that will, among other things, determine whether Argentina’s President Milei builds support for his radical stabilisation plan and whether the Czech …
10th December 2024
The main presidential candidates and their parties in Ghana’s upcoming election appear to be committed to restoring fiscal discipline and getting inflation under control. That said, the opposition NDC, which currently appears on course to take power, is …
3rd December 2024
The pick up in the aggregate EM manufacturing PMI in November was largely driven by China. Elsewhere, manufacturing activity looks as though it will remain relatively soft into next year. The surveys suggest that goods price pressures picked up last …
2nd December 2024
This report was first published on the 2 nd December covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on the 4 th December. Growth continues to pick up, led by manufacturing The …
Latin American (LatAm) markets have been generally resilient in the aftermath of the US election, possibly because investors were already pessimistic about the region’s prospects. But we think domestic and global headwinds will translate into LatAm assets …
26th November 2024
Amid the Trump Trade, capital outflows from EM financial markets have persisted over recent weeks. Looking ahead, we expect the US dollar to strengthen further, suggesting that outflows will continue. This will not be a problem for most EMs, but those …
The South African Reserve Bank’s decision to lower its repo rate by 25bp to 7.75% was not a surprise and Governor Kganyago sounded more optimistic that inflation is under control. Lingering concerns about the vulnerability of the rand and the growing …
21st November 2024
US President-elect Trump’s protectionist rhetoric may mean that African sovereigns are contemplating the loss of preferential trade access to the US via the AGOA scheme. We think the overall impact from such a move would be limited, but specific sectors …
Friendshoring into India has for the most part been limited to high-end manufactured goods, but broader supply chain reconfiguration into the country could take place if the Trump administration imposes a 60% tariff on China. Trump has also been critical …
We held a series of client meetings in the US last week which focused on the implications of Trump’s victory in the US election and the spillovers to EMs. This Update answers some of the most frequent and important questions that came up. What impact will …
20th November 2024
South Africa’s activity data for September points to a subdued end to Q3, but we think this softer patch will be short-lived as low inflation and the SARB’s easing cycle provide some support to demand. That said, tight fiscal policy will prevent the …
Donald Trump’s re-election has changed perceptions of how the war in Ukraine will develop, with many hoping for a quicker end to the conflict. This Update looks at how the war might evolve and the economic implications for Russia and Ukraine, for Europe …
14th November 2024
South Africa’s mining sector has been a struggling part of the economy for some time and, while easing logistical and electricity constraints will provide some relief, weaker commodity prices in the coming years will hold back any recovery. The sector …
12th November 2024
Mexico is one of the most vulnerable economies to the policies that US President-elect Trump flagged on the campaign trail. This Update looks at the channels through which it could be affected. One key point in all of this is that policymakers don’t have …
7th November 2024
COP29 – which is set to kick off in Baku next week – has been dubbed the ‘finance COP’ given that the top priority for negotiators will be to agree on a new climate finance pledge. However, Trump’s election victory looms large over the event and adds to …
Large US tariffs would hurt China’s export sector but less than many suppose. We estimate that the direct impact of even a 60% US tariff on goods from China would be well under 1% of China’s GDP . The bigger challenge for policymakers could be the …
Inflation figures out of Turkey – including those published for October yesterday – have surprised on the upside and forward-looking indicators suggest that the disinflation process will be slow in the coming months too. Consensus expectations for the …
5th November 2024
Despite the tick-up in the EM manufacturing PMI in October, manufacturing activity appears to have remained soft and we think this will be the case over the rest of the year. The surveys suggest that goods price pressures were contained last month, but …
4th November 2024
The rise in Brazilian local currency government bond yields this year is now on a scale similar to that seen during its fiscal crisis in 2015. Back then, bond yields only started to fall back when wholesale political change was on the horizon. That’s not …
This report was first published on 31 st October covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 1 st November and on the Caixin services and composite PMIs on 5 th November. Economy continues to regain momentum The PMIs …
31st October 2024
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency risks ease further, regional divergence among fiscal risks Financial vulnerabilities have declined further …
30th October 2024
The South African Medium-Term Budget Policy Statement (MTBPS) was presented as a “pro-growth” statement, but the numbers underscore that the government has no room to loosen the fiscal stance. Continued fiscal austerity will help to sustain investor …
The outbreak of unrest in Mozambique after contested elections is unlikely to have a large impact on growth in the near term. But any attempts by the government to loosen fiscal policy to appease protestors or, further out, disruptions to large gas …
EMs are playing a growing role as substitute markets for Chinese exporters that face rising trade barriers in DMs. A second trade war with a re-elected President Trump would only accelerate that shift. It is plausible that a sizeable portion of the loss …
Our measure of capital outflows from EMs has jumped to its highest level since July 2022 amid the recent surge in US Treasury yields and strengthening of the dollar. If Donald Trump wins the US election, there is plenty of scope for these market moves to …
29th October 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
24th October 2024
Recent threats by Donald Trump to impose tariffs on Mexico’s vehicle sector could just be pre-election bluster or an attempt to get concessions from Mexico. But if implemented, they would deal a big blow to Mexico’s economy – a 0.6% drop in real GDP for …
23rd October 2024
Following a record high in August, our proprietary measure of China’s green export volumes edged down in September. Meanwhile, China’s exports of EVs to Europe surged despite the recent EU tariffs, and we expect continued strong performance in China’s …
22nd October 2024
The outcomes of the EM central bank meetings since the beginning of October underscore the point that Asia will lead the next phase of the EM easing cycle. Central banks in Central and Eastern Europe and Latin America are slowing the pace of (or pausing) …
21st October 2024
South Africa’s economy continued to pick-up in the middle of Q3 but the recovery is taking place at different speeds across sectors; lower inflation is supporting consumer-facing sectors but industry is lagging behind. As the drag from supply-side …
16th October 2024
Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some …
15th October 2024
The BRICS+ summit in Russia next week is likely to see another push on expansion, mainly to close allies of China and Russia. But limited economic benefits for potential new members, divisions among existing members, and concerns (for some) about …
Having stormed to victory in February’s presidential election, Prabowo Subianto, a former army general and the current defence minister, will take over from Joko Widodo on Sunday (20 th October). Since his election victory, Prabowo has made a number of …
South Africa’s Finance Minister Enoch Godongwana will be in the unusual position of presenting the Medium-Term Budget Policy Statement (MTBPS) later this month against the backdrop of a sharp improvement in the public finances. And he is likely to use the …
Contrary to many expectations in the aftermath of the BJP’s humbling in the general election, there is little evidence so far of Prime Minister Modi’s party shifting to more populist policymaking. And the risk of fiscal slippage has eased following …
The Bank of Korea today cut interest rates by 25bps (to 3.25%), but tried to dampen speculation that it would cut rates at its final meeting of the year in November. With growth struggling and inflation low, we think it is too early to rule out another …
11th October 2024
China’s policy stimulus measures have generated large market moves but it is the fiscal element, which hasn’t been detailed yet, that has the potential to lift the economy. We’re not expecting a huge fiscal package and it may be less commodity-intensive …
10th October 2024
The Reserve Bank of India’s new-look MPC voted to keep the repo rate unchanged at 6.50% today as expected but struck a less hawkish tone in its communications, which included a change in the official policy stance to more neutral language. This …
9th October 2024
Wage growth remains strong across much of Latin America and Central Europe (CEE), and that has stalled the disinflation process in services in particular. This supports our view that, in general, central banks in these regions will keep policy tighter …
7th October 2024
