Filtered by Subscriptions: Emerging Markets Economics Use setting Emerging Markets Economics
We estimate that the current wave of globalisation is responsible for around a third of the pick-up in global per capita income growth since 1990. Almost all of that reflects an improvement in productivity growth in emerging economies. For advanced …
10th October 2019
History shows that waves of globalisation are driven by both technology and policy, but protectionist shifts alone tend to end them. In some cases, like in the 1970s, a moderate pushback by policymakers can cause globalisation to stall. But the experience …
8th October 2019
If faced with a steep downturn, most EM central banks would be able to cut interest rates substantially in order to cushion their economies. Interest rates in a handful of countries are close to the zero bound, but these are typically economies with …
4th October 2019
Aggregate emerging market growth is likely to stabilise at close to 4% y/y in the coming quarters, but within this several different economic cycles are playing out. The recent resilience in Central Europe and, importantly, China, is unlikely to last. But …
3rd October 2019
The rise in the EM manufacturing PMI to a six-month high in September adds to our view that EM growth is stabilising, even as advanced economies continue to lose momentum. The EM manufacturing PMI rose from 50.4 in August to 51.0 in September. While it …
1st October 2019
The weakest balance sheets in the emerging world are concentrated in the Frontier Markets and, as a result, balance of payments crises occur more regularly. This lies behind Venezuela’s crisis, but also a growing inflation problem in Zimbabwe and (to a …
30th September 2019
The recent stabilisation in EM GDP growth has come alongside further evidence that solid consumer spending is helping to offset weakness in industry. We expect this trend to continue in the coming months. Our Tracker suggests that EM GDP expanded by …
27th September 2019
Rising tensions in the Middle East present a significant upside risk to our oil price and inflation forecasts, and could force a handful of EM central banks to abandon easing cycles or even hike interest rates. But a majority of central banks would …
26th September 2019
EM capital outflows persisted last month and, with the US-China trade war unlikely to abate, we think that they will continue in the coming quarters. However, the scale of outflows should remain modest, which in turn should limit the macroeconomic …
25th September 2019
For all the talk of a global slowdown, the incoming data from the emerging world have been encouraging. Having bottomed out in Q2, GDP growth held steady at around 3.5% y/y at the start of Q3. EM manufacturing growth picked up, while exports stabilised. …
20th September 2019
EM exports stabilised in July and August but, with the latest round of US-China tariffs yet to feed through and global growth subdued, we expect EM export growth to remain weak in the coming quarters. While the dollar value of EM exports in the three …
18th September 2019
Capital controls can be an effective tool if policymakers are able to plug loopholes and address the underlying economic vulnerabilities that initially resulted in pressures on the financial account. But this looks unlikely in EMs such as Argentina and …
12th September 2019
We expect EM currencies to come under further pressure over the coming quarters, but the falls are unlikely to be on the same scale as the ones which ended previous easing cycles. As a result, most EM central banks are likely to cut interest rates further …
5th September 2019
The last few weeks have been kinder to EM financial markets than the start of August, when equities and currencies slumped as the US-China trade war ramped up again. Even so, neither has performed particularly well, and we think that the stage is set for …
The rise in the EM manufacturing PMI for August is further evidence that the slowdown in EM GDP growth has bottomed out. But the surveys remain consistent with sluggish growth, and we continue to expect most EM central banks to loosen policy over the …
3rd September 2019
Besides Argentina, EM sovereign debt risks are most acute in the smaller frontier markets. Investors have, rightly in our view, become more concerned about Lebanon’s public finances. And the experience of Argentina suggests that the country’s bond spreads …
30th August 2019
The raft of GDP figures published in the last few weeks suggest that, having slowed over most of the past year, aggregate EM growth ticked up in Q2. But activity is still soft and we expect that EM growth to remain weak over the next 12-18 months. Almost …
29th August 2019
Argentina political developments sparked sharp falls in EM currencies over the past month, but this wasn’t enough to deter policymakers from continuing their easing cycle. Central bankers in Turkey, India, Brazil, Russia, Mexico, Thailand, and the …
21st August 2019
After a relatively calm first half of 2019, EM capital outflows probably picked up significantly in August as US-China trade tensions escalated. And outflows are likely to remain larger over the second half of the year, putting EM currencies under …
The US-China trade war, which has now been running for over a year, has exerted an increasingly large drag on EM exports. But other factors including weak global demand have been bigger drivers of the slump in EM exports. With the global economy set to …
20th August 2019
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 85% of cases in the last 25 years. Sovereign debt defaults occurred after roughly half …
13th August 2019
The falls in EM currencies today suggest that the South African rand, Turkish lira and many of those in Latin America will remain in the firing line if, as we think likely, concerns about Argentina’s debt continue to build. So far at least, there’s little …
12th August 2019
The latest phase of the trade war is likely to have a relatively limited direct impact on EM exports. But with the US and Chinese policymakers upping the ante, the indirect effects via a hit to confidence, tighter financial conditions and weaker …
6th August 2019
The falls in EM currencies in this latest leg of the trade war have been large compared with previous episodes. If this turbulence continues, a few EM central banks (e.g. in Indonesia and Mexico) would probably postpone interest rate cuts and one or two …
5th August 2019
The manufacturing PMIs for July suggests that growth in EM industry remained soft at the start of Q3, with activity in Emerging Europe weakening sharply. The surveys also provide further evidence that price pressures are easing, supporting our view that …
1st August 2019
The recent rally in frontier sovereign dollar bonds is unlikely to be sustained (see Chart 1) and we expect spreads to widen in Argentina, Ukraine and parts of the Middle East. We have raised concerns before about weak balance sheets in Bahrain and Oman. …
30th July 2019
Having slowed sharply in Q1 and at the start of Q2, it looks like EM GDP growth strengthened a little in May and June. Even so, with China’s slowdown set to resume and the global economy more generally faring poorly, aggregate EM growth will remain very …
26th July 2019
Economic and financial vulnerabilities remain low across much of the emerging world. But banking sector vulnerabilities are high in Turkey and China. And we are now explicitly forecasting a sovereign debt default in Argentina. Sovereign debt risks are …
24th July 2019
Early signs suggest that aggregate EM growth strengthened in Q2. (See Chart 1.) Our GDP trackers point to a recoveries across most of the emerging world. The rebound seems to have strongest in Emerging Europe where Turkey’s recession probably eased in …
19th July 2019
The US-China trade war truce, coming alongside Mercosur countries and Vietnam securing trade deals with the EU, has eased some of the worst fears about protectionism. But it’s far from certain that these trade deals will clear legislative hurdles. And …
18th July 2019
Net capital outflows from emerging markets look to have persisted last month, suggesting that the US-China trade war continued to weigh on investor sentiment. The truce announced at the late-June G20 meeting should have eased investors’ worries, but we …
17th July 2019
Emerging market (EM) equities have continued to recover from their sharp falls in May, but we do not think that they are out of the woods this year. Expectations for EM corporate earnings seem to be based on assumptions about the outlook for the global …
Table of Key Forecasts Overview – EM GDP growth has slowed sharply and, while it should bottom out soon, growth will remain very weak. Indeed, our forecasts lie below the consensus across much of the emerging world. China – China’s economy has stabilised …
8th July 2019
EM investment growth probably slowed to its weakest rate in twenty years in early 2019, although most of that seems to be related to tighter financial conditions and low commodity prices rather than the trade war. While there are signs that investment is …
5th July 2019
The further fall in the EM manufacturing PMI last month suggests that EM growth slowed in Q2 and the forward-looking components of the survey point to a weak start to the third quarter. The EM manufacturing PMI fell to a five-month low of 49.9 in June, …
1st July 2019
EM GDP growth slowed in Q1 to rates only seen a handful times in the last two decades. And while there are signs of a turnaround in some of the worst-performing economies, growth in the emerging world as a whole is likely to remain subdued over the next …
28th June 2019
Frontier financial markets have made gains over the past month, but have generally underperformed their emerging market counterparts. The performance of equity markets has been mixed. And currencies in most cases have only edged up against the dollar. …
27th June 2019
EM GDP growth slowed to just 3.3% y/y in Q1, its weakest pace since the first half of 2016, and our Tracker suggests that it remained sluggish in Q2. Growth should pick up a little in the second half of the year. Large commodity producers, such as Brazil, …
21st June 2019
Financial markets have come round rapidly in the last few weeks to our view that EM monetary policy will be loosened further this year. But EM loosening cycles have much more to do with weak domestic growth and low inflation than the prospect of interest …
20th June 2019
The upcoming meeting between Presidents Trump and Xi at the G20 summit has raised hopes of a US-China trade deal but, as things stand, we think it is more likely that the trade war will ultimately escalate further. And either way, EM exports are likely to …
19th June 2019
Hopes that much looser monetary policy, particularly in the US, will prevent more weakness in the global economy have supported emerging market (EM) assets recently, but we doubt that this will last. … Monetary easing unlikely to drive a sustained …
With EMs such as Argentina, Ukraine and Ecuador having recently agreed IMF deals, and others (Turkey) still looking vulnerable to a crisis, this Update looks at what happens to countries after bailouts. In the first year, sovereign bonds tend to rally and …
18th June 2019
African Swine Fever has already pushed inflation in China up markedly and, if the disease spreads further, it could also add around 0.3%-pts to inflation in parts of Asia and Eastern Europe. The impact on trade flows is likely to be limited. But it does …
13th June 2019
The recent escalation of the US-China trade war appears to have resulted in net capital outflows from EMs in May – the first time that has happened since January. With the trade war likely to intensify and global risk appetite set to deteriorate, further …
There is growing attention on sovereign debt risks in some EMs. Vulnerabilities seem to be most acute in Argentina as well as in some of the smaller economies in the Middle East and Africa such as Lebanon, Zambia, Bahrain and Oman. … Where are sovereign …
6th June 2019
The $10pb fall in global oil prices over the past couple of weeks will improve the terms of trade for major EM oil importers, such as India, and will help to provide some relief for countries with weak balance of payments positions, such as Turkey and …
5th June 2019
The fall in the headline EM manufacturing PMI in May provides further evidence that EM GDP growth weakened in Q2. On a more a positive note, the surveys indicate that inflation is easing. … EM manufacturing slowdown continues in …
3rd June 2019
US tariffs on imports from Mexico would have major repercussions for Mexico’s economy, but any spillovers on other EMs through trade links are likely to be small. For the rest of the emerging world, the more important implications stem from what it means …
Sovereign dollar bond spreads widened much further in frontier markets than in other EMs over the past month on the back of concerns over fragile balance sheets. … Balance sheet fears escalate in frontier …
30th May 2019
Aggregate EM economic growth slowed to its weakest pace since the first half of 2016 in the first quarter of this year. Much of the weakness was concentrated in commodity-exporting EMs. The early signs suggest that EM growth remained soft at the start of …
24th May 2019
