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EM GDP growth has started to slow and will be weaker than most expect in the coming quarters. Domestic strains are growing following previous policy tightening and external headwinds are building, regardless of how the US-China trade war develops. … A …
18th January 2019
Weak EM trade data at the end of last year is a sign of things to come in 2019. We expect that the combination of lower commodity prices and slower global economic growth will cause the US dollar value of EM exports to fall later this year. … EM Exports: …
16th January 2019
China’s government is loosening fiscal policy to cushion the slowdown and it looks like a handful of economies, mainly in East Asia, will also loosen the purse strings this year. However, more EMs are actually likely to tighten fiscal policy, which will …
15th January 2019
2018 was marked by currency crises in Turkey and Argentina, but the risks of large currency adjustments elsewhere in the emerging world have diminished. Meanwhile, sovereign debt risks appear to be rising. … Sovereign debt risks …
11th January 2019
Having experienced capital inflows of almost $150bn in 2017, we estimate that EMs suffered capital outflows of around $70bn in 2018. Our Tracker suggests that the pace of capital outflows eased sharply towards the end of the year. … Emerging Markets …
9th January 2019
The fall in the EM manufacturing PMI last month was fairly broad-based and supports our view that growth in the emerging world as a whole will slow this year. … PMIs point to further …
2nd January 2019
Growth in frontier economies eased over the course of 2018 and we expect activity to be soft in 2019. At a regional level, we think that growth will slow further in frontier economies in Emerging Asia and Emerging Europe next year – the latter will be led …
21st December 2018
EM GDP growth lost momentum over the second half of 2018 and we expect this to continue next year as growth in Emerging Asia, notably China, and Emerging Europe weakens. … EMs set for weaker growth in …
19th December 2018
In this Update we discuss the key implications of EM elections scheduled for 2019. Votes in Ukraine and Argentina – where opposition candidates could put IMF deals at risk – probably pose the greatest risk to local financial markets. Elsewhere, India’s …
18th December 2018
EM growth has slowed over the course of 2018 and our GDP Tracker suggests that aggregate growth fell to its weakest pace in two years in Q4, at around 4.0%. 2019 is unlikely to be better. We expect slower growth across large parts of the emerging world …
14th December 2018
We think 2019 is likely to be a year in which EM growth slows, and by more than most expect, while asset prices fall. In this Focus , we outline our key calls for next year. … Key calls for EMs in …
13th December 2018
The yield of the JP Morgan EMBI Global has edged up over the past month as a whole, despite a slump in underlying Treasury yields. We expect this pattern to be repeated next year. … EM dollar bond yields likely to rise even …
11th December 2018
Our Tracker suggests that, in Q4, capital outflows from EMs are on course to be the largest since “Trumpflation” in early 2017. But the pace of outflows did at least ease a little in November. … Emerging Markets Capital Flows Monitor …
The agreement between OPEC and other major oil producers to cut oil production is likely to act as a headwind to growth across EM oil producers next year. The Gulf economies will suffer the biggest drag on economic growth, whereas the hit elsewhere is …
10th December 2018
Most of the major EMs have ample fiscal firepower. This is particularly true in Asia and we think fiscal policy is likely to be loosened in much of the region next year, which should cushion slowdowns in growth. Fiscal space is much more limited in a …
6th December 2018
The ‘cease fire’ in the US-China trade war has reduced a risk for Asian EMs that are integrated into Chinese supply chains. But the potential fallout was always likely to be pretty small. The sharp fall in oil prices, meanwhile, supports our view that …
5th December 2018
The aggregate EM manufacturing PMI edged up in November, which adds to the evidence that EM GDP growth has steadied in Q4 after a slowdown in Q3. The improvement has been driven by the BRIC economies, while manufacturing in the rest of the emerging world …
3rd December 2018
Frontier market dollar debt markets have been rattled in recent months. Part of this is due to the fall in oil prices, which helps to explain the widening of spreads in Venezuela and Nigeria. But that’s not the whole story. Investors seem to be …
30th November 2018
Aggregate EM economic growth slowed to its weakest rate in over a year in Q3, but the data for October provide early signs that growth has started to stabilise in Q4. … EM growth slowed in Q3, but stabilising in …
29th November 2018
The latest fall in oil prices means EM inflation is likely to rise more slowly. While we still expect a majority of EM central banks to hike interest rates, lower energy inflation may delay tightening in a few countries, including Hungary, Colombia and …
28th November 2018
The recent drop in oil prices will help Turkey’s balance of payments adjustment and should boost the terms of trade and growth in large EM oil importers including South Africa and India. The obvious losers are the oil producers, although the fall in …
26th November 2018
The fall in oil prices over the past couple of months will drag down fuel inflation across the emerging world, but it probably won’t be enough to prompt policymakers to slow the pace of monetary tightening. After all, the impact of weaker fuel inflation …
22nd November 2018
A rise in inflation and higher interest rates mean Turkey and Argentina are likely to experience deep recessions over the next couple of quarters. However, whereas the fall in the lira should help to mitigate the downturn in Turkey, the decline in the …
20th November 2018
The very early evidence suggests that EM GDP growth steadied at the start of Q4, as stronger export growth offset a slowdown in consumption. But activity is likely to weaken over the course of 2019. … EM growth holding up in early Q4, but set to …
16th November 2018
EM export growth remained strong in September, and probably picked up in October. But we think that a combination of escalating tariffs, lower commodity prices, and weaker economic growth in developed markets will cause export growth to slow sharply in …
14th November 2018
Although the MSCI Emerging Markets (EM) Index has recovered a little in the past couple of weeks, it is still below its level a month ago, and we suspect that it will fall much further by the end of next year. … EM equities likely to remain on the …
Our Tracker suggests that, in net terms, capital outflows from the emerging world picked up to about $100bn in the three months to October, the largest since “Trumpflation” in early 2017. But the pace of outflows appears to have eased more recently. … …
13th November 2018
The large current account deficits in Turkey and Argentina that precipitated currency crises this year are now narrowing and external positions are in decent shape in most major EMs. But there are a handful of countries, such as Romania and the …
7th November 2018
Strains in the balance of payments of some EMs last quarter seem to have been driven mainly by a decline in flows to bond markets. These flows now seem to have stabilised, but financial conditions have tightened beyond the usual suspects of Turkey and …
6th November 2018
The run of consecutive declines in the EM manufacturing PMI came to an end at the start of this quarter, thanks to an improvement in the surveys across the BRIC economies. Moreover, the breakdown of the PMI showed that the slump in EM exports this year …
2nd November 2018
Our EM GDP Tracker suggests that growth eased in Q3 on the back of weakness in Emerging Europe and Latin America. This seems to be due to a slowdown in consumer-facing sectors rather than industry. … EM growth eases in …
30th October 2018
Classic EM crises have caused waves, but have rarely triggered global downturns. And in any case the current risk of a 1980s-style EM crisis is low. The bigger risk is of a China ‘hard landing’ which could result in a painful slowdown in global growth …
29th October 2018
A handful of the more vulnerable Frontier Markets, including Ukraine, Pakistan and Bahrain, have received (or are close to getting) IMF or bilateral funding, but external risks remain a key concern. For one thing, meeting the conditionality of these …
26th October 2018
Price pressures have continued to strengthen in the emerging world. Our aggregate EM inflation measure jumped from 3.8% y/y in August to 4.2% y/y in September, its fastest pace since early 2016. The rise has occurred across all EM regions and the drivers …
23rd October 2018
Higher oil prices have weighed on consumer conditions in the emerging world recently, but while the impact of higher energy inflation is set to fade in the months ahead, we still expect consumer spending to weaken over the next year or so. In most cases, …
19th October 2018
The collapses in the Turkish lira and Argentine peso last quarter have caused bank and sovereign debt risks, respectively, to mount in those countries. Meanwhile, financial vulnerabilities are brewing in a handful of other countries. … Turkey and …
17th October 2018
Our Tracker suggests that capital outflows from the emerging world remained small last month, and flows into EM bond and equity markets have recovered as the crises in Turkey and Argentina have eased. However, the more recent rise in US treasury yields …
15th October 2018
Agreements signed in recent weeks indicate that the US may be willing to de-escalate trade disputes in order to achieve face-saving deals. Elsewhere, growing economic headwinds suggest that EM export growth will slow over the coming months. … USMCA shows …
12th October 2018
Economic growth has held up far better than financial markets in the emerging world over the past few months. But while some countries will continue to do well, EM growth in aggregate is now slowing and will continue to decelerate over the coming year. … …
9th October 2018
The rise in oil prices to $85pb brings most major oil producers’ budgets close to balance (and in a few cases a large surplus) and could open the door for fiscal policy to be loosened in a few countries in the Gulf. However, if the rise in oil prices is …
3rd October 2018
The fall in September’s EM manufacturing PMI painted a gloomy picture and adds to the mounting evidence that growth in parts of the emerging world faltered in Q3. What’s more, data at the granular level suggest that EM export growth continued to slow. … …
1st October 2018
EM inflation increased to its highest level in more than a year and a half in August, and we think that this has further to run over the coming months. One consequence is that the monetary policy in much of the emerging world is likely to tighten. … EM …
28th September 2018
Having picked up last quarter, activity data for July suggest that aggregate EM GDP growth weakened at the start of Q3. More timely survey and hard data for August paint a mixed picture, but overall it looks like EM growth is shaping up to be softer in Q3 …
27th September 2018
Sovereign balance sheets in most of the large emerging economies are in reasonable shape, but those in a few of the smaller Frontier Market economies are very fragile. And investors’ concerns have ratcheted up in recent weeks. The political importance …
26th September 2018
The raft of Q2 GDP data released over the past month or so showed that aggregate EM GDP growth was actually a little stronger in Q2 than in Q1. However, more timely hard activity data for July and survey data for August suggest that EMs have lost some …
21st September 2018
Even though emerging market (EM) assets generally weakened again over the past month, and some have now fallen a very long way, we still forecast that there is considerably more pain to come. … Trouble for EM assets probably far from …
20th September 2018
The latest EM auto sales figures echo survey data and financial indicators in suggesting that economic disruption following recent market turbulence has so far been contained to Turkey and Argentina. Other economies – even those that suffered significant …
19th September 2018
EM exports have shrugged off trade tensions in recent months, but US tariffs due to take effect later this month will add to headwinds. Softer commodity prices and weaker global growth will also weigh on exporters across the emerging world. … EM exports: …
18th September 2018
Last month’s currency crises in Turkey and Argentina triggered broad-based weakness in EM financial markets, but our Capital Flows Tracker suggests that aggregate outflows were relatively modest. … Emerging Markets Capital Flows Monitor …
13th September 2018
In previous EM currency crises, real interest rates have increased (on average) by around 10.5%-11.0%-pts in the following year and remained more than 6.5%-pts above pre-crisis levels over the subsequent two years. In Argentina, real interest rates are …
