Filtered by Region: Emerging Markets Use setting Emerging Markets
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
1st March 2024
Mexico election campaign officially kicks off Today is the first official day of campaigning for Mexico’s election that takes place on 2 nd June. President López Obrador (Amlo) is barred from running but his anointed successor, Claudia Sheinbaum, is well …
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
Korea election: reform prospects in the balance President Yoon Suk-yeol has seen a rebound in his popularity in recent weeks, with an opinion poll published today showing an approval rating of 39% – up from a low earlier this year of just 29%. The …
Consumer resilience comes to an end The stagnation in Brazil’s GDP in Q4 and the decline in household consumption confirmed that the economy lost momentum sharply and, while we expect a pick-up in growth in the coming quarters, we’re now more confident in …
HCES underscores need to update CPI index The initial findings of the Household Consumption Expenditure Survey (HCES) for 2022-23 (the full report will be released in June) show a shift in consumption patterns since the previous survey from over a decade …
PMI bounces, but still looks like a soft start to 2024 Although South Africa’s manufacturing PMI jumped in February, the sector appears to have made a soft start to the year. We still expect growth to pick up over the rest of this year as loadshedding …
Turkey and Russia continue to show signs of resilience The manufacturing PMIs out of Central and Eastern Europe (CEE) generally ticked up last month, but still suggest that industrial sectors remained weak. In contrast, the increases in the PMIs in Turkey …
The February PMIs for economies in Emerging Asia edged down last month and were mostly inside contractionary territory. The outlook for manufacturing in the region remains poor in the near term, with high interest rates and weak foreign demand likely to …
This report was first published on Friday 1 st March covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Tuesday 5 th March. An encouraging improvement in services activity The PMIs are …
Aggregate EM growth softened towards the end of last year and we think it will remain weak in 2024. But there will be divergence at the country level with growth slowing in those economies that outperformed in 2023 and growth picking up in last year’s …
29th February 2024
Economies in Central and Eastern Europe ended 2023 on a weak note, but the outlook for this year looks brighter. Lower inflation and interest rates should support a recovery in domestic demand over the coming quarters. In contrast, Turkey’s economy has …
This page has been updated with additional analysis since first publication. Exceptional economic performance suggests no imminent rate cuts The GDP data for Q4 confirm that India’s economy ended last year with a bang. Looking ahead, we expect economic …
Even with Ras el Hekma deal, Egypt needs the IMF Headlines in the past week have been dominated by Egypt’s deal to sell the Ras el Hekma project to the Abu Dhabi sovereign wealth fund, ADQ, to provide crucial foreign currency inflows. But, even with this …
China’s economy has regained some strength recently. We expect this to continue over the coming months, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
This page has been updated with additional analysis since first publication. Economy re-accelerates in Q4 The pick-up in Turkish GDP growth to 1.0% q/q in Q4 was driven by a rebound in private consumption and suggests that aggressive monetary tightening …
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
28th February 2024
Romania’s large twin budget and current account deficits remain a key concern. One near-term risk is that fiscal policy stays very loose (or is loosened further), particularly in view of elections taking place later this year. This could cause risk …
Africa Chart Pack (Feb. 2024) …
Emerging Asia Chart Pack (February 2024) …
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
Today’s budget maintains a supportive fiscal stance, and contains major steps to revitalise the property sector. Spending to attract foreign visitors to Hong Kong and support businesses was stepped up too. Taken together, these measures should prevent the …
The $35bn deal struck between Egypt’s government and the Abu Dhabi sovereign wealth fund, ADQ, will go some way towards alleviating acute balance of payments strains and pave the way for an enhanced IMF deal to be signed off soon. A devaluation of the …
27th February 2024
Mexico’s President López Obrador’s cloak of fiscal prudence is being shed this year as Morena tries to bolster its support ahead of June’s election. As some of the factors supportive of the public finances in recent years also fade, the debt-to-GDP ratio …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
Following suggestions from South Africa’s Deputy Finance Minister David Masondo that an announcement will be made “very soon” regarding the country’s inflation-targeting regime, we have refreshed this Update that was first published last year. Talk of the …
Equities in Emerging Asia have outperformed those elsewhere in recent weeks, and we think that they’ll keep doing well during the rest of the year. Chart 1 shows that, while EM equities had a difficult start to the year (see blue bars, which show …
26th February 2024
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
Economic growth in the Middle East and North Africa will strengthen a little this year but is likely to come in well below consensus expectations. OPEC+’s output cuts should gradually reverse from the end of this quarter but will keep a lid on economic …
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Funding boost could be large, if banks do their part China’s housing market is still struggling . High frequency data suggest that sales in major cities have ticked up since the start of the year. And price declines eased slightly in January. (See Chart …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
Donald Trump’s previous tariffs did surprisingly little damage to China’s economy, but China may find it harder to shrug off the damage in a rematch. Mr Trump is threatening larger tariff increases if he is elected again. And the factors that cushioned …
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
22nd February 2024
Tunisia: threat of messy crisis and default builds Tunisia managed to meet a Eurobond repayment this week but only by draining its already-low FX reserves. In the meantime, steps were also taken towards deficit monetisation, taking Tunisia further down …
Growth pick up is likely to be short-lived Nigeria’s GDP growth rebounded to 3.5% y/y in Q4 but we doubt that this strength will last. Tighter monetary policy, coming alongside the pernicious effects of further weakness in the naira and ongoing struggles …
Inflation drops back, March rate cut in play The drop back in Mexico’s headline inflation rate to 4.5% y/y in the first half of February leaves Banxico on course to begin an easing cycle at March’s Board meeting. That said, the rise in core services …
New governor committed to the tight policy stance The hawkish statement accompanying the Turkish central bank’s decision to leave interest rates unchanged at 45.00% today supports our view that a shift to monetary easing remains some way off and we still …
Domestic demand to drive the recovery Poland’s activity data for January suggest that the reacceleration in wage growth at the start of this year supported domestic demand, while the export-orientated industrial sector struggled. We think that a further …
This page has been updated with additional analysis since first publication. Manufacturing and services activity likely to remain robust The flash composite PMI reading for February suggests that the economy continues to perform exceptionally well. …
Almost all major emerging market (EM) currencies have fallen against the US dollar so far this year, and we think they will remain under pressure until interest rate expectations in the US shift lower again. EM currencies have been no exception to the …
21st February 2024
The fiscal restraint shown by South Africa’s finance minister in today’s Budget was received positively in local financial markets, but the reality is that the government will struggle to meet its goals (indeed, it’s already doing so). And pressure on the …
An AI productivity boom. A Chinese structural slowdown. Aging workforces. In the coming decades, the global economy will be shaped by forces that will dictate which countries will make strides and which will stumble. Our Long Run Economic Outlook presents …
Rise in core inflation will give cause for concern to the SARB South Africa’s headline inflation rate picked up to 5.3% y/y in January and the rise in core inflation is likely to spook an already-hawkish SARB, possibly pushing the start of an easing cycle …
EM sovereigns have issued a record amount of FX debt at the start of this year, capitalising on a window created by the decline in US Treasury yields since October. The issuance has been concentrated among highly rated sovereigns and borrowing does not …
20th February 2024
Nigeria saw sluggish growth over the second half of last year, and the latest falls in the naira mean inflation is set to rise even further over the coming months, which should prompt the central bank to finally spring to action with large interest rate …
