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Following a temporary reversal in Q3, EM inflation has started to fall again in the last few months. While this is set to continue, we think it marks the start of a second phase in the EM disinflation process – one that will be characterised by a much …
27th November 2023
Emerging Markets Chart Pack (November 2023) …
21st November 2023
In our flagship report on the neutral interest rate (R*), we argued that R* in developed markets will rise and be higher than is widely assumed. (The full report can be accessed here .) For most EMs, R* is also likely to be higher (with China being a …
20th November 2023
Sovereign debt risks across Frontier Markets have eased slightly since last quarter. But dollar-bond spreads in Ethiopia have jumped following its request for debt-service suspension earlier this week. And we think that the risk of default over the coming …
16th November 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
We think that bonds in Emerging Markets (EMs) will struggle in the next couple of months. Further ahead, though, we expect their yields to fall, as both “risk-free” rates and spreads drop. The yields of EM local-currency and dollar-denominated bonds have …
15th November 2023
This dashboard shows our latest forecasts for stock market indices, government bond yields and exchange rates for emerging economies. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about …
This dashboard shows our latest forecasts for policy rates across emerging market economies. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact …
This dashboard presents our inflation forecasts for emerging economies. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact sales@capitaleconomics.com … EM …
This dashboard presents our GDP growth forecasts for emerging economies. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact sales@capitaleconomics.com … EM GDP …
Flows out of EM bond and equity markets have eased since early October, but we think the recent dollar weakness which has helped to support capital flows into EMs is unlikely to continue. The good news is that current account deficits have narrowed in …
10th November 2023
Higher profitability has helped to boost EM banks’ financial positions over the past year and reduced the tail of weak banks that might struggle to cope with rising loan losses on their balance sheets. The overall EM picture looks strong, but pockets of …
7th November 2023
Most EM manufacturing PMIs for October were weaker than expected, largely driven by sluggish domestic and external demand. This weakness has, at least, resulted in input and output price components dropping back, which supports our view that the EM easing …
2nd November 2023
The AI revolution will make EM income convergence – or “catch-up growth” – harder as richer economies are better equipped to deploy the technology on a wide scale. It poses a particular headwind to the services-driven economic development path pursued by …
There has been a broad-based fall in foreign direct investment flows into the emerging world that, outside China, is mostly the result of a slowdown in global growth. FDI flows should stabilise over the coming year and, over the medium term, we think they …
1st November 2023
Higher bond yields will add to fiscal pressures in those EMs with particularly large public debt burdens and weak debt dynamics. Brazil, South Africa as well as Colombia and Mexico are the EMs from our analysis whose fiscal positions are the most …
26th October 2023
EM GDP has held up well this year, but we expect growth to disappoint in the coming quarters. Inflation has surprised to the upside recently, which will delay the start of interest rate cutting cycles in some places. But we still expect easing cycles to …
19th October 2023
Aggregate EM goods exports have struggled for momentum in recent months and, while there were more positive signs from some of the timely September trade data, we think that exports are likely to struggle as demand in advanced economies weakens. That …
18th October 2023
We’ve long argued that EMs were well placed to weather the Fed’s tightening cycle and episodes of rising US Treasury yields – and that has largely been borne out. And, as it happens, the latest sell-off in global bond markets has started to reverse over …
11th October 2023
Flows out of EM bonds and equity markets have intensified in recent weeks amid the sell-off in global bond markets, and an escalation of the conflict between Israel and Gaza would exacerbate this further. Nonetheless, the narrowing of current account …
10th October 2023
Rising food prices have already led to upside inflation surprises in parts of Asia, and central banks in the region are likely to ease policy later than their EM peers. But inflation should eventually resume its downward path and, once it does, policy …
5th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
Talk of “dollarisation” has recently re-emerged, despite broader moves in the EM world to challenge the hegemony of the US dollar. Indeed, the fact that Argentina is considering adopting the dollar underscores that the greenback will remain the currency …
3rd October 2023
The EM manufacturing PMIs for September were the proverbial mixed bag, but one commonality is that external demand remains fairly soft across the regions. Meanwhile, the further rise in the price components last month probably reflects the jump in oil …
2nd October 2023
Table of Key Forecasts Overview – Aggregate EM GDP held up better than we had expected over the first half of the year, but we think that a phase of softer growth lies in store over the coming quarters. Our near-term GDP growth forecasts lie below the …
28th September 2023
Financial risks generally look quite low in most major EMs as current account deficits have narrowed this year and banking sectors remain in strong shape. But there are some areas of weakness, including large currency risks in parts of Eastern Europe …
26th September 2023
Although EM growth held up well in H1, growth will disappoint over the coming quarters. Recent upside inflation surprises have pushed back the timing of rate cuts in some places, but we expect the EM monetary easing cycle to broaden out in H2. Strong wage …
22nd September 2023
The rise in oil prices, and upwards revision to our 2024 oil price forecast, will have only a small impact on EM inflation and won’t stop it from falling further. The much bigger upside risks to our inflation and interest rate forecasts stem from core and …
19th September 2023
We think emerging market (EM) equities in Asia will outperform those in EMEA and Latin America over the next couple of years, although we doubt they’ll do better than developed market (DM) equities. EM equities have struggled this year, at least judging …
15th September 2023
EM governments’ budget deficits have narrowed and their debt-to-GDP ratios have fallen since the height of the pandemic. But some of the tailwinds that have supported an improvement in fiscal health are set to unwind. Among the major EMs, debt dynamics …
13th September 2023
The G20 summit which concluded yesterday in New Delhi supported our view that the global economy is fracturing into US and China-led blocs, and that India still leans to the former. While the statement was light on explicit policies, calls to increase …
11th September 2023
Having remained resilient over the past months, inflows into EM bonds and equity markets have turned negative in recent weeks. Inflows into Turkey have weakened despite August’s sharp interest rate hike and while India has continued to see notable …
8th September 2023
Excluding China, aggregate EM GDP growth held up surprisingly well in Q2. That said, we think growth will weaken in most major economies in Q3 and remain subdued over the coming quarters before a modest recovery takes hold in the second half of 2024. Our …
6th September 2023
EM industry strengthens, but export demand weak The manufacturing PMIs for August pointed to pick-ups in activity in some of the major EMs. But external demand remains soft, which continues to weigh heavily on some of the more export-oriented economies in …
1st September 2023
Despite the slowdown in EM GDP growth in Q2, there’s little sign that labour markets are softening. Wage growth remains alarmingly strong across much of Latin America and Central Europe (CEE). That supports our view that, while central banks in these …
29th August 2023
Efforts by the BRICS group to demonstrate an image of unity and cooperation were on full show at this week’s summit, but – aside from membership expansion – policy proposals were light and not overly ambitious. And while there’s a broader question about …
25th August 2023
Market concerns about sovereign debt risks across frontier markets have eased a touch in recent months. For our part, while we think that Egypt and Nigeria should be able to avoid default, Kenya faces a more challenging path to do so. And in the cases of …
23rd August 2023
China’s push to develop the BRICS bloc into a geo-political counterweight to the G7 is likely to be thwarted by the competing interests and priorities of other member states. Nonetheless, positioning ahead of this week’s BRICS summit will provide some …
21st August 2023
EM GDP growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and Emerging Europe will limit how far …
18th August 2023
The crises unfolding in Argentina, Russia, as well as in China’s property sector, this week may rumble on for some time. And in the case of China’s property downturn, there are likely to be spillovers to other EMs, particularly metals producers. But these …
15th August 2023
Emerging economies whose currencies have fallen by 15% or more against the dollar in a single day – as the Argentine peso did yesterday – have fallen into recession in more than 80% of cases in the last 30 years. Sovereign debt defaults occurred after …
The immediate global economic and market fallout from troubles at Chinese property developer Country Garden seems likely to be limited. Foreign exposure to China’s property sector has fallen sharply over recent years and policymakers should step in to …
14th August 2023
After a strong run since April, inflows into EM bond and equity markets have softened markedly in the past few weeks. Inflows into India, in particular, have weakened. Turkey continues to see sizeable foreign inflows, but these are only a fraction of the …
10th August 2023
Recent interest rate cuts in Brazil and Chile have fuelled talk of a broad-based EM easing cycle and we expect most EM central banks to start cutting rates in Q4 or Q1. We expect those with the highest policy rates (above 10%) to deliver 500bp or so of …
9th August 2023
The key points that stand out from the recent moves by central banks in Brazil, Chile and Hungary to cut interest rates are, first, how quickly policymakers have shifted from hawkish to dovish and, second, how they appear to be front-loading their …
3rd August 2023
Timely insight into balance of payments risks in major EMs. We use real-time data on foreign portfolio flows into bond and equity markets to construct these interactive charts. If you can't see the full interactive experience, including all of the charts …
The fall in the EM manufacturing PMI to a six-month low in July was mainly driven by a renewed drop in China, but the surveys generally remained downbeat across most EMs last month. We think EM industry will continue to struggle over the rest of this year …
1st August 2023
Risks to EM food supply have increased amid the likelihood of an El Niño, the end to the Black Sea grain deal and India’s rice export ban. Countries in the Middle East and Africa are the most vulnerable to lower grain supplies and many EMs (particularly …
28th July 2023
While the Fed and the ECB are set to hike interest rates this week, subsiding inflation means that the upcoming EM central bank meetings will tilt towards monetary easing . And we expect that the EM rate cutting cycle will broaden out over the course of …
24th July 2023
