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The outcomes of the EM central bank meetings over the past 48 hours or so underscore the point that, while the EM monetary easing cycle is likely to continue over the coming quarters, it will no longer be led by Central Europe and Latin America. Central …
20th June 2024
After a strong start to the year, aggregate EM GDP growth will slow over the coming quarters. Within this there will be regional variation, with Emerging Asia the outperformer and Latin America the laggard. While we expect the EM monetary easing cycle to …
The authorities in several major emerging markets, including Egypt, Argentina and Nigeria, have taken important policy steps recently that may allow them to ease restrictions on access to foreign currency. But we don’t think that this is the start of a …
13th June 2024
Net capital inflows into EMs have climbed back into positive territory in recent weeks, driven by a sharp rise in foreign investors’ purchases of Turkish government debt. This strength could continue if investor confidence in the country’s policy shift is …
11th June 2024
Elections in South Africa, India, and Mexico have generated sizeable reactions in their financial markets over the past week or so, highlighting the potential for electoral surprises to generate short-term volatility. This Update takes stock of the …
7th June 2024
Aggregate EM GDP growth remained strong in Q1, though we still expect a slowdown later this year. At a regional level, Emerging Asia will lead the pack, however there are tentative signs that recoveries in parts of Central and Eastern Europe and Latin …
6th June 2024
The EM manufacturing PMI remained at a three-year high in May but the picture is becoming increasingly nuanced at a country level. Meanwhile, the PMIs also showed price pressures rose again last month, matching the signs of recent strength seen in other …
3rd June 2024
The sharp drop in frontier market sovereign dollar bond spreads this year has caught many by surprise. We think there’s a case that the bond rally may have gone too far in Argentina, Ecuador and Tunisia. But the decline in spreads in some frontiers, …
24th May 2024
Some of the structural problems in China’s economy have their roots in its excessively high savings rate (and underconsumption). For many other EMs, savings rates are also a problem but for the opposite reason – they’re too low . This is particularly so …
21st May 2024
Aggregate EM GDP growth will enter a slower phase over the coming quarters. But the headline figure masks large variation in prospects at the country level, with many EMs experiencing a reversal of last year’s fortunes. While we expect the EM monetary …
20th May 2024
India is benefitting economically from maintaining its historical non-aligned stance in response to tensions between the West and Russia, and Iran to a lesser extent. But notwithstanding a potential universal tariff on all US imports under a second Trump …
16th May 2024
Overseas loans by Chinese banks peaked in late 2021 and have since been curtailed in response to increased debt problems among EM borrowers. While these strains are partly a consequence of global shocks, they have also underscored some flaws with China’s …
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
We expect total returns from both US dollar-denominated, and especially local-currency (LC), emerging market (EM) sovereign bonds to trump, in general, those from US Treasuries in the next couple of years. Dollar-denominated and LC EM sovereign bond …
Capital flows into EM bonds and equities have fallen to their lowest in six months as investors have pared back expectations for Fed interest rate cuts. However, even with these moves, we remain more dovish than the market on the Fed and so believe there …
13th May 2024
The persistent strength in core services inflation in some EMs outside Asia raises the chances that central banks cut interest rates by less than the consensus expects this year, not least because it comes amid a strengthening of the US dollar and …
9th May 2024
The EM manufacturing PMI for April showed that industry continued its strong start to the year through to the beginning of Q2. At a regional level, the narrative was largely unchanged: India remains the star performer, while industry in Central Europe …
2nd May 2024
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. EM risks ease further, but fiscal risks remain acute Higher US bond yields and a stronger dollar have put some EM …
30th April 2024
This interactive dashboard allows you to explore all of our forecasts and key data for emerging economies. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right of each …
All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those …
29th April 2024
Our proprietary indicators provide a reliable and easy-to-interpret way to assess the risk that a country will experience a currency, banking or sovereign debt crisis within the next two years. This dashboard was last updated on 30th October 2024. If …
The policy shifts underway in Turkey, Nigeria, Argentina and Egypt have ticked a lot of the right boxes so far, but it will take years for the full economic benefits to materialise and require policymakers to remain committed to reforms. We’re most …
24th April 2024
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
Aggregate EM GDP growth will enter a slower phase over the coming quarters. But the headline figure masks large variation in prospects at a country level, with many EMs experiencing a reversal of last year’s fortunes. While we expect the EM monetary …
18th April 2024
The recent bout of EM currency weakness may prompt (further) FX intervention, particularly in Asia, to stem currency volatility. Turkey’s central bank is likely to hike rates at its meeting next week and a hike is also now on the table at the Bank …
17th April 2024
There are clearly many ways in which tensions between Iran and Israel could escalate and push up oil prices following the Iranian drone strike at the weekend. But the risk that a conflict involving Iran disrupts oil production in the Gulf states is much …
15th April 2024
Capital flows into EMs have continued to rise in recent weeks, aided by robust global risk appetite. While yesterday’s strong US CPI release has clouded the outlook for Fed interest rate cuts and weighed on some EM currencies, we still believe booming …
11th April 2024
The incidence of sovereign debt distress has continued to decline across the emerging world in recent weeks, driven mainly by an improvement in global risk appetite and the corresponding narrowing of credit spreads. But in some cases, things appear to …
10th April 2024
Table of Key Forecasts Overview – GDP growth across most of the emerging world will fall short of consensus expectations this year. But there will be key bright spots such as India and Taiwan. While disinflation is likely to proceed more slowly from here …
3rd April 2024
The rise in the aggregate EM manufacturing PMI to a three-year high in March was largely driven by strength in Asian industry, with activity elsewhere weaker. While slower growth in DMs should weigh on activity in the months ahead, strength in domestic …
2nd April 2024
GDP growth will come in below consensus in most EMs this year, with the notable exceptions of India and Taiwan. Although stubborn wage growth means the pace of disinflation is likely to slow from here, we think the EM monetary easing cycle will broaden …
22nd March 2024
We hosted an online briefing to discuss EM financial risks in more detail. Watch the recording here . Our risk indicators are presented as an interactive EM dashboard on our website here . The past few years have sharpened investors’ focus on assessing …
20th March 2024
Capital inflows into EMs have picked up in recent weeks on the back of an improvement in risk appetite. This may set the tone for the rest of the year, particularly once the Fed begins to cut interest rates. Since the publication of our previous Capital …
18th March 2024
We expect the divergence in growth prospects observed in EM Q4 GDP data to be a running theme over the next couple of quarters too. Specifically, we think that some of last year’s outperformers, including Brazil and Mexico, will struggle as one-off tail …
14th March 2024
EMs will account for over half of global GDP within the next decade and almost 60% by 2050. Headlining this, India will become the world’s third-largest economy as soon as 2026. More generally, EMs with rapid population growth, the potential to develop …
11th March 2024
This year is a particularly busy one for elections in the emerging world, and these votes raise the risk of fiscal giveaways that worsen public debt dynamics. We think the risks are greatest in Tunisia, followed by South Africa and Romania. Elsewhere, …
7th March 2024
The Egyptian central bank has announced steps to tackle its economic crisis, including a large devaluation and a bumper interest rate hike. But will it be enough? Economists from our Emerging Markets team held this special 20-minute briefing on whether …
6th March 2024
The green transition will deal a significant blow to EM oil producers that have failed to save their windfalls (Nigeria, Colombia, Angola), but boost the export revenues of economies such as Chile and South Africa that are endowed with the raw materials …
4th March 2024
The pick-up in the EM manufacturing PMI last month suggests that EM industry continued to strengthen in Q1. But while manufacturers have benefitted from strong demand in some economies (such as India, Turkey and Russia), the overall picture is that it …
1st March 2024
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
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
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
Capital inflows into EM bonds and equities have fallen sharply since January after the Fed pushed back expectations of the timing of rate cuts. The good news is that current account deficits in EMs have narrowed over the past year, meaning many EMs have …
14th February 2024
A key point that stands out from the raft of EM central bank decisions over the past couple of weeks is that policymakers are focussed much more on domestically-generated price pressures than the Fed. We expect a pivot towards monetary easing in the …
12th February 2024
We think that EM equities will deliver better returns in the next couple of years than they have since the pandemic. Returns are likely to be lower than those we expect from US equities but similar to those from other DM equities. We expect equities in EM …
9th February 2024
While the overall incidence of sovereign debt distress in the emerging world has fallen back since last year, sovereign debt distress in frontier markets hasn’t. And, if anything, things have taken a turn for the worse in recent weeks in some of the more …
7th February 2024
While the emerging market manufacturing PMIs for January generally edged up, we think that weak global demand will weigh on EM industry over the coming months. The good news is that price pressures remain in check, supporting our view that the EM easing …
1st February 2024
The EM monetary easing cycle began to broaden out late last year. Mexico’s central bank will probably be the next to cut rates later this quarter, and many Asian central banks will join the fray in April and May, which is sooner than most expect. India is …
29th January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
Wage growth remains soft across much of Emerging Asia, supporting our view that the region’s central banks will start monetary easing cycles sooner than most expect. Wage pressures have softened elsewhere in the emerging world in recent months, although …
