Filtered by Subscriptions: Emerging Markets Economics Use setting Emerging Markets Economics
Emerging markets as a whole will increase their share of global GDP over the coming decades, with the largest expansions likely to come in EMs with rapid population growth (sub-Saharan Africa), those with manufacturing sectors that can drive productivity …
3rd June 2021
Markit’s aggregate emerging market manufacturing PMI dropped back in May as new virus waves took a toll on some countries, notably India, although they suggest that the manufacturing recovery in Central and Eastern Europe (CEE) continued strongly. …
1st June 2021
We forecast that emerging market (EM) equities will make further gains between now and end-2022 as the global economy recovers further. However, they have lost a bit of ground to developed market (DM) equities recently and we doubt they will perform much …
27th May 2021
EM exports are set to hit a new high in Q2, which will help to support economic growth, particularly in East Asia where virus cases are hitting domestic economies. While EM exports are likely to come off their current highs, they will probably stay at …
High-frequency data suggest that economies in Emerging Europe and parts of Latin America are over the worst of their latest virus outbreaks, but the worrying surge in virus cases in some Asian economies has hit activity. While more targeted restrictions, …
Remittances into EMs were surprisingly resilient last year and should continue to hold up over the coming quarters. The outlook is strongest in Mexico and parts of South East Asia, due to the recovery prospects for the US economy. In contrast, the risk of …
25th May 2021
Extended delays to vaccine supply from India to the Covax facility will keep rollout in many Frontier Markets stuck in first gear. Social distancing measures will have to stay in place for longer, holding back economic recoveries, and the risk of renewed …
21st May 2021
The severe waves of COVID-19 that afflicted Emerging Europe and Latin America earlier in the year are now subsiding and the near-term economic outlook there has brightened. But several Asian economies have become the focus of concern instead. India …
19th May 2021
The rise in global agricultural prices in recent months has sparked concerns about a surge in EM food inflation. While it would be remiss to dismiss these, we think the impact may not be as severe as feared because, crucially, domestic conditions tend to …
The major oil producers have seen the biggest gains in exports from the rally in commodity prices this year, although most of this windfall is likely to be saved which will limit the boost to economic recoveries. We expect that commodity prices will fall …
14th May 2021
High-frequency data suggest that outflows from India’s bond and equity markets have picked up in recent weeks as the country’s COVID-19 outbreak has worsened. At an aggregate level, though, outflows from EMs were moderate at the start of this month and, …
12th May 2021
While the high numbers of COVID-19 cases will drag on the recovery in many in EMs in Q2, there are – at least outside India – encouraging signs that the worst of the current waves may be over in most places. But so long as vaccine coverage remains low, …
6th May 2021
The impact of India’s COVID-19 crisis on other EMs through normal economic channels such as trade and financial links should be manageable. The more serious impact will come through delays to vaccine rollouts, particularly for countries in South Asia and …
5th May 2021
Markit’s EM PMI rose to a four-month high in April, but manufacturing sectors are likely to enter a softer patch in places facing large virus outbreaks. Meanwhile, supply chain disruptions are causing price pressures to build in parts of Asia and Central …
4th May 2021
The economic data for Q1 across many EMs look reasonably strong, but the latest COVID-19 outbreaks and the reintroduction of containment measures in some countries will weigh on underlying growth in Q2. The key exception is China, where activity should …
30th April 2021
Table of Key Forecasts Overview – The surge in virus cases across large parts of the emerging world and the slow pace of vaccine rollout mean that the headwinds facing the EM recovery are building. EM currencies are likely to see further falls against the …
28th April 2021
The broad-based improvement in EM goods trade balances over the past year is likely to unwind over the coming quarters as consumption patterns gradually normalise and oil prices recover further. But at the same time, a big build-up of external imbalances …
22nd April 2021
New COVID-19 cases have surged in the emerging world, with India, Emerging Europe and Latin America particularly hard hit. Social distancing measures have been tightened in many countries, which will weigh on activity. The early evidence suggests that the …
21st April 2021
With the notable exception of Turkey, the net capital outflows from emerging markets seen in February and March appear to have eased in recent weeks. Outflows may yet intensify over the coming quarters amid the backdrop of rising US Treasury yields, but …
15th April 2021
Virus outbreaks have taken a sharp turn for the worse across several large EMs – including India and much of Latin America – and look likely to hold back economic recoveries in Q2. The recent experience of Chile suggests that it will be a long slog for …
14th April 2021
A rise in US Treasury yields and tightening of external financial conditions could cause vulnerabilities in Turkey and a handful of smaller frontier markets to crystallise. However, most major EMs’ dependence on capital inflows looks limited. Instead, in …
12th April 2021
The mooted $650bn allocation of IMF Special Drawing Rights (SDRs) that looks close to being signed off would provide welcome relief to some smaller frontier markets such as Ghana and Kenya that still face very high foreign borrowing costs. But it won’t …
7th April 2021
Markit’s EM manufacturing PMI dipped last month, but the survey still paints a pretty positive picture of the sector’s recovery across the emerging world – with Brazil a notable outlier. In the meantime, supply chain disruptions are causing price …
1st April 2021
We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years . EM assets and currencies have come under pressure recently. (See …
The rapid re-opening of Israel’s economy since February has triggered a rebound in activity that looks stronger than had been widely anticipated. In particular, the recovery in hospitality and leisure spending has been faster than that which followed …
31st March 2021
The economic data out of the emerging world for Q1 look reasonably strong, but worsening COVID-19 outbreaks and a shift towards policy tightening are creating headwinds for some EMs. Activity in Central Europe, Brazil and the Philippines is already …
Particularly weak recoveries lie in store for tourism-dependent emerging markets, including much of Africa, parts of the Middle East (e.g. Jordan), and South East Asia (e.g. Cambodia). A lacklustre rebound in tourism could add to balance of payments …
29th March 2021
The raft of EM central bank decisions over the last couple of weeks suggests that the door has largely closed on further rate cuts and that the balance will shift (slightly) towards hikes over the coming months. But this has more to do with domestic …
26th March 2021
EM exports have continued to rise sharply in recent months and this strength may persist for a little while yet. But the big tailwind to some of the Asian economies from strong demand for electronics will turn into a headwind in the coming quarters, which …
24th March 2021
The latest crisis engulfing Turkey will make it harder for the country to roll over its external debts, with the banking sector particularly vulnerable. If Turkey’s crisis worsens, it may cause wobbles in a few EM currencies, but there are reasons to …
22nd March 2021
The recent rise in EM sovereign bond yields will, if sustained, make public debt problems in some countries even worse. Those with large local currency debts may ultimately turn to financial repression policies, which might improve debt dynamics but at …
18th March 2021
EM financial markets have been hit this month by the rise in US Treasury yields, which has re-ignited some concerns about a re-run of the Taper Tantrum. So far, capital outflows from EMs have been relatively small. And financial conditions across the …
16th March 2021
Portfolio outflows from several EMs have intensified over recent weeks as fears over a re-run of the “Taper Tantrum” appear to be playing on investors’ minds. But outflows are currently much smaller than they were in 2013 and, even if there were a …
15th March 2021
Recent currency falls and rises in inflation have all but guaranteed interest rate hikes in Turkey and Brazil next week, and Russia’s central bank is likely to lay the groundwork for tightening too. More broadly however, low inflation and still-large …
11th March 2021
The rise in US Treasury yields poses a risk for those EMs with large external financing needs such as Turkey as well as some smaller frontier markets, and could force central banks in these countries to tighten monetary policy. The accompanying rise in EM …
10th March 2021
While further market turmoil is a risk over the coming quarters, the likelihood of outright banking, sovereign debt and currency crises among the large EMs is low. More acute vulnerabilities lie in some of the smaller frontier markets. Regular readers …
5th March 2021
A fresh allocation of IMF Special Drawing Rights (SDRs), if implemented, would provide a welcome boost to the depleted foreign exchange reserves of some distressed frontier economies. But an allocation wouldn’t address underlying dire debt dynamics, …
3rd March 2021
February’s manufacturing PMIs released across the emerging world were the proverbial mixed bag but, taken together, generally point towards solid EM industrial production growth in the next month or two. There are signs under the hood of supply …
1st March 2021
A global shortage of semiconductors is disrupting auto production, and – among EMs – it could hit exports from Central Europe and Mexico in particular. But some of the lost revenue should be made up once shortages ease. Meanwhile, strong semiconductor …
26th February 2021
Despite the rise in EM bond yields over the past week, EM financial conditions remain very loose. Most central banks are likely to look through the accompanying sell-off in currencies (indeed, some may welcome weaker exchange rates). But these moves do …
President Biden’s fiscal plan would support the US economy but the positive spillovers to emerging markets via trade are likely to be surprisingly limited. We doubt the Fed would move more quickly to reduce stimulus in response, and external financing …
25th February 2021
The outlook for emerging markets has improved in recent weeks, but we still expect a relatively slow and bumpy economic recovery over the next 12-18 months. The raft of Q4 GDP data released so far have been encouraging . Despite tighter social distancing …
24th February 2021
We still expect emerging market (EM) “risky” assets and currencies to make further gains this year, despite growing concerns about another “taper tantrum”. EM assets and currencies have made significant gains since their troughs last year. And we think …
23rd February 2021
While the mood in EM financial markets has soured a little of late, from an economic standpoint, the past month has brought several positive developments. First, Q4 GDP data released so far have generally been better than expected. Recoveries have been …
Israel’s rapid vaccination programme has allowed the government to set out plans to re-open the domestic economy in the coming weeks and may offer some lessons for other countries. The speed at which the restrictions will be lifted is the most striking …
19th February 2021
Taken alone, prolonged restrictions on international travel would do little to hinder the global recovery since overseas tourism is a small share of world GDP and some of the lost spending would be made up. But the aggregate masks a wide range of effects. …
18th February 2021
The latest rise in the price of oil – and our view that it will increase further this year – could push current account and budget balances into surplus in many of the EM producers. It should ease any concerns about dollar pegs in the Gulf, although we …
17th February 2021
We do not expect a re-run of the 2013 “taper tantrum”, in which EM assets went into a tailspin and some EM central banks were forced to hike policy rates. But even if there were a similar period of turmoil, the fallout for EMs would be less severe. The …
16th February 2021
The recovery in many emerging markets after the Global Financial Crisis was characterised by concerns about destabilising capital inflows, overheating, and asset price bubbles. This recovery is likely to be more gradual, external imbalances are unlikely …
12th February 2021
Net portfolio inflows into many emerging markets reached multi-year highs towards the end of 2020, which allowed a handful of central banks to lean against the wind and accumulate FX reserves. That said, early data suggest that net portfolio inflows have …
10th February 2021