Filtered by Region: Emerging Markets Use setting Emerging Markets
We think Asian currencies will generally continue to rise against the US dollar over time, albeit perhaps not quite as quickly as they have lately. A lot of attention has focused lately on the rally of the Japanese yen. But it’s worth taking note of the …
21st August 2024
Capital flows into EMs reversed course during the bout of market turmoil earlier this month. But the decline was no larger than that seen in other risk-off periods this year and inflows have since rebounded sharply, in line with the broader recovery in …
Inflation plunge seals the deal on a rate cut in September The larger-than-expected decline in South Africa’s headline inflation rate, to 4.6% y/y, in July strengthens the case for the SARB to start its easing cycle with a 25bp cut to 8.00% at its next …
Bank Indonesia today left its policy rate unchanged at 6.25%, but the central bank’s dovish commentary supports our view that rates will be cut before the end of the year. Today’s decision was correctly predicted by all 30 analysts polled by Reuters, …
The South African Reserve Bank’s (SARB’s) new “supercore” inflation measure adds yet another piece of evidence that price pressures are being brought under control. We think the SARB should now be confident that it can start its interest rate cutting …
20th August 2024
The prevailing view that, over the medium term, Colombia will maintain its position as Latin America’s fastest-growing major economy looks overly optimistic in light of the collapse in its savings and investment rates. GDP growth is more likely to come in …
CBRT staying the course The Turkish central bank (CBRT) left its main policy rate unchanged again today, at 50.00%, and offered little sign that it will soon start an easing cycle. While most other analysts expect monetary loosening to start in Q4, we …
The rapid expansion of commercial bank lending in Saudi Arabia has raised the risk of an increase in non-performing loans and heightened the exposure of the banking sector to both the real estate market and global risk appetite. But, Saudi banks are …
After a summer of extraordinary economic, market and political developments, what can investors expect through the end of 2024? Our senior economists held this special briefing all about the risks we’re watching in the final months of the year. During …
The protests that have swept several EMs in recent weeks are likely to have a longer-lasting economic impact in countries with weak balance sheets and/or where they lead to a major shift in policy. To us, that suggests that the economic hit from recent …
Brazilian assets have generally underperformed other EMs so far this year, but measures of risk premia still appear low to us, especially given concerns over public finances. While bonds may offer large gains by end-2025, our downbeat view on commodity …
Israel’s economy slowed more than expected in Q2 as weak investment and supply constraints continued to hold back activity. A ceasefire to halt the conflict in Gaza would clearly be positive for the near-term growth outlook, but we doubt the economy would …
19th August 2024
Poland the region’s star in Q2 Perhaps the standout feature of the data released in the region this week was the strength of Polish GDP in Q2. Output expanded by a bumper 1.5% q/q, its fastest pace since Q1 2022. (See our initial take here .) The data …
16th August 2024
Corporate borrowing still growing at a decent clip China’s July credit data came in weaker than expected on Wednesday. In particular, despite the PBOC cutting the loan prime rate last month, net new bank loans to the real economy turned negative for the …
Mpox fears rising on the continent This week, the WHO declared mpox a global public health emergency amidst a surge in cases in parts of Africa. Beyond the human tragedy, there may be disruption of economic activity in the region, with tourism impacted …
Further political uncertainty in Thailand Today’s election by Thailand’s parliament of Paetongtarn Shinawatra as prime minister is unlikely to draw a line under the country’s mounting political instability. Paetongtarn’s father Thaksin and aunt Yingluck …
Regulator comes under fire in Adani Group saga The Adani Group/Hindenburg Research saga took a new twist this week, 18 months after the publication by the US short-seller alleging “brazen stock manipulation and account fraud over the course of decades” …
It has been three months since policymakers unveiled plans to encourage SOEs to buy unsold homes from developers. Progress has so far been slow, not least because participation is voluntary and the incentives for firms to take part are lacking. But the …
Strong domestic demand means BanRep likely to maintain the pace of easing The Colombian economy isn’t nearly as weak as the meagre 0.1% q/q rise in headline GDP in Q2 would suggest; there was a large drag from net trade while domestic demand remained very …
15th August 2024
Inflation finally on the way down Nigeria’s headline inflation rate eased to 33.4% in July, the first time it had slowed in 19 months, as the passthrough from previous naira falls has finally started to faded. With inflation having now peaked, we think …
EM goods export growth has accelerated over the past year despite a slowdown in economic growth in DMs. We think this is being driven by three structural factors: Chinese overcapacity, the AI revolution and friendshoring. These will continue to shape …
Inflation likely to ease as 2025 approaches Saudi Arabia’s headline inflation rate was unchanged at 1.5% y/y in July, but we expect that the headline rate will ease back over the remainder of this year and potentially fall back below 1% y/y by early 2025. …
Deceleration eases with growth nearing turning point After slowing in Q2, economic momentum appears to have stabilised somewhat last month, with a pick-up in consumer spending and services activity largely offsetting a slowdown in investment and …
South African economy looks to have recorded a pick-up in growth in Q2, but the recovery is operating at two speeds with retail sales and manufacturing on the up, while the mining sector remains a weak spot. Nonetheless, with easing electricity shortages …
14th August 2024
Jordan’s economy has been among the hardest hit from the indirect spillovers of the war in Gaza. While severe balance of payments of strains are likely to be avoided, GDP growth will suffer as the key tourism sector has taken the brunt of the impact. And …
Strong second quarter will dampen expectations for rate cuts The larger-than-expected pick-up in Polish GDP growth in Q2, to 1.5% q/q (from 0.8% in Q1), suggests that the risks to our forecast for GDP to expand by 3% over the year as a whole are now …
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
13th August 2024
Credit growth starts to recover, private demand still weak Broad credit growth ticked up in July, while bank loan growth only slowed a touch. (See Chart 1.) We expect a continued acceleration in government bond issuance to support a further expansion of …
Economy slows in Q2, but headline inflation rises further The slowdown in Russian GDP growth in Q2, to 4.0% y/y, suggests that the economy has lost a bit of momentum. But overheating pressures remain alive and the increase in inflation to 9.1% y/y in July …
9th August 2024
Domestic factors outweigh global turmoil Idiosyncratic factors seemed to play a bigger role than the recent global financial market turmoil in driving African markets this week. But while the fall in oil prices may be overdone, African producers should …
Heightened US recession worries have helped unwound some of the stretched positions in high-carry EM currencies, resulting in their exchange rates moving closer to their “fair values” (judging by our models). While our base case is still for a US soft …
Food prices drive up inflation but domestic demand remains weak Consumer price inflation ticked up in July, but this was entirely due to a weather-related rise in food price inflation. Producer price deflation was unchanged. While a ramp-up in fiscal …
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. US growth …
Easing cycle continues despite peso weakness Mexico’s central bank opted to reduce its policy rate by 25bp, to 10.75%, at today’s meeting and the statement generally retained the moderately dovish tone from the last one. We think further rate cuts are …
8th August 2024
US recession risks yet to derail export outlook The recent batch of weaker-than-expected US data rattled global markets this week. But it hasn’t significantly altered China’s economic outlook. Admittedly, the risk of a US recession, which would hurt …
Rise in inflation leaves Banxico decision on a knife edge The rise in Mexico’s headline inflation rate, to 5.6% y/y in July, alongside the weakness in the peso means that Banxico’s interest rate decision later today will be a very close call between a cut …
Sell-off’s hit to oil likely to be reversed Fears of a US recession have rattled global financial markets earlier in the week, and those in the Middle East weren’t spared. We think the spillover into the oil market has gone too far, though, and it raises …
This report has been updated with additional analysis and a chart and table of key figures. Inflation falls despite subsidy cuts Egypt’s headline inflation slowed from 27.5% y/y in June to 25.7% y/y in July, its lowest rate since December 2022. And this …
The recent market turmoil didn’t move the needle for the MPC today: it continued to strike a hawkish tone as the majority of members voted to keep the repo rate unchanged at 6.50%. But with inflation set to fall back towards the RBI’s 4% target over the …
RBI could ease policy by year-end The recent market turmoil didn’t move the needle for the MPC today: it continued to strike a hawkish tone as the majority of members voted to keep the repo rate unchanged at 6.50%. But with inflation set to fall back …
Protests that originated in Kenya have spread to neighbouring Uganda and as far afield as Nigeria. The common theme of a weak economic backdrop, endemic corruption and fiscal fears means the region is ripe for further unrest. Growth is likely to see a …
7th August 2024
Exports to stay robust, helped by NEER depreciation Growth in export values slowed last month, but this was mainly due to lower export prices. Export volumes remained near record highs. We expect outbound shipments to stay strong for a while, not least …
25bp cut likely to be followed by more easing The Central Bank of Kenya delivered a 25bp cut to its policy rate, to 12.75%, at its meeting today as it embarked on long-trailed easing cycle and, with inflation set to fall further from here, additional cuts …
6th August 2024
The UAE’s economy has been the strongest performer in the Gulf over the past year or so and a robust non-oil sector should help the UAE retain its crown as the fastest growing economy in the region. Recently-released Q1 GDP data from Abu Dhabi and Dubai …
The outbreak of political violence and the sudden resignation of Prime Minister Sheikh Hasina has rocked Bangladesh today. But provided that peace and stability is restored relatively soon, the economy is unlikely to suffer major long-term effects. Sheikh …
5th August 2024
Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those …
Non-oil sectors in the Gulf continue to cool This response has been updated with additional analysis, including of Qatar's PMI. July’s batch of PMIs were softer across the board, adding to signs that activity in private non-hydrocarbon sectors in the Gulf …
Disinflation process underway, but it will take time The large fall in headline inflation in Turkey in July will provide some comfort to the central bank that the disinflation process remains on track, although it will take time for policymakers to be …
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Nigeria turns back to Ways and Means facility Nigeria’s government raised the limit of its Ways and …
2nd August 2024
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Tensions in the Middle East rising after Israeli strikes The rocket strike on the Israeli-occupied …
