Filtered by Subscriptions: Emerging Markets Economics Use setting Emerging Markets Economics
In the three years after a currency crisis, EMs almost always experience a collapse in imports, but the performance of exports is more mixed. Argentina looks similar to those economies that have seen little impact on exports. Turkey’s large manufacturing …
12th September 2018
The improvement in EM balance sheets over the past five years means that macroeconomic strains resulting from recent currency falls have been contained to Turkey and Argentina. Nonetheless, those EMs that have suffered large currency declines do not …
10th September 2018
The EM sell-off appears to have become more broad-based in the last few days, although there is little evidence that – outside Turkey and Argentina – the market turmoil is resulting in macroeconomic strains. The bigger concern over the next 12-18 months …
5th September 2018
The further fall in the EM manufacturing PMI in August adds to the signs that EM growth lost momentum in Q3. The surveys also show that price pressures are building in parts of the emerging world. … EM manufacturing growth continues to …
4th September 2018
The sell-off in EM currencies has cast the spotlight onto external vulnerabilities in the emerging world, although there are important nuances to take into account. In this Update, we take a closer look at these. In short, they generally paint Argentina …
31st August 2018
EM GDP growth appears to have been stronger over Q2 than it was in Q1. However, the monthly activity figures show that EMs were losing momentum at the end of Q2 and started Q3 on a weaker footing. … EMs start Q3 on weaker …
30th August 2018
Frontier financial markets have endured a torrid 2018, but this hasn’t been accompanied by a deterioration in the hard activity data. Admittedly, growth in the largest frontier economy, Nigeria, slowed in Q2. But that was due to weakness in the oil …
29th August 2018
The extent of the falls in EM currencies seen since April have generally been closely correlated with the degree of countries’ external vulnerabilities. On almost all measures, Turkey and Argentina stand out. Arguably, the Brazilian real has fallen …
24th August 2018
Asset prices in Turkey and Argentina have fallen dramatically in recent weeks, while the moves in other countries’ markets look similar to previous EM sell-offs over the past decade. It’s still very early to gauge whether there has been an economic hit, …
23rd August 2018
EM central banks continued to tighten monetary policy in August. Policymakers in Argentina and Indonesia raised interest rates to support their currencies amid fears of contagion from the crisis in Turkey. But elsewhere the shift towards tightening has …
21st August 2018
The main factor weighing on EM assets recently has been worries about contagion from the crisis in Turkey. But even if these fears subside, there are plenty of other reasons to be pessimistic about the outlook. … Turkey’s crisis just one of many threats …
17th August 2018
Both Turkey and Argentina have now suffered currency crises this year. In previous EM currency crises, economies experienced a sharp slowdown in GDP growth, averaging 5-6%-pts, and a rise in inflation, averaging 4-5%-pts, in the following couple of years. …
16th August 2018
Our Tracker shows that, in net terms, capital outflows from the emerging world eased in July, but the recent market turmoil suggests that the pace of outflows probably accelerated again in August. … Emerging Markets Capital Flows Monitor …
14th August 2018
EM currencies have come under pressure over the past few days as Turkey’s crisis has escalated, but history suggests that such sentiment-driven sell-offs tend to be short-lived. We wouldn’t expect the majority of EM central banks to react to the latest …
13th August 2018
Aside from the impact on a few small neighbouring countries, most notably Bulgaria, the direct risk of contagion from Turkey’s crisis to other EMs is fairly low. However, Turkey’s problems may add to the accumulating negative sentiment towards emerging …
10th August 2018
Early signs suggest that the first round of Washington’s tariffs on China had little effect on EM trade in July. Growing headwinds, however, suggest that export growth will slow in late 2018 and into 2019. … EM exports shrug off tariffs, but worrying …
9th August 2018
The recent slowdown in EM export volume growth has been driven by weaker demand from the euro-zone, as well as a number of idiosyncratic supply-side factors, notably a plunge in oil and agricultural production in parts of the emerging world. Although some …
6th August 2018
Inflationary pressures now seem to be building in many EMs. As a result, we think that the interest rate hikes seen in a few countries this week and that are likely next week will be followed by monetary tightening across a large part of the emerging …
3rd August 2018
The fall in July’s EM manufacturing PMI adds to the evidence that economies across the emerging world are starting to lose some steam, while the breakdown of the surveys showed that price pressures continued to build. … Further signs that EMs are losing …
1st August 2018
Our GDP Tracker suggests that aggregate EM growth was stronger over Q2 as a whole than it was in Q1, but there are early signs that momentum faded towards the end of the quarter. … EM growth starting to lose …
30th July 2018
The latest activity figures suggest that EM growth faltered a bit in the middle of Q2. Consumer spending slowed in April and May, while EM industry seems to have started to lose momentum. Forward-looking surveys suggest that things will continue to weaken …
27th July 2018
Market concerns over fragile balance sheets have forced policymakers in a number of frontier economies to take action over the past month. Strains in the balance of payments prompted the authorities in Pakistan and Tunisia to allow their currencies to …
25th July 2018
EM consumer spending growth looks set to be around two percentage points slower over the next decade compared with the previous one. Much of the slowdown will be due to Emerging Asia, especially China, but we also expect consumer spending in other major …
23rd July 2018
Our Capital Flows Tracker suggests that the escalation of global trade tensions has resulted in an acceleration of outflows from the emerging world. … Emerging Markets Capital Flows Monitor …
19th July 2018
The currency crises that rocked Argentina and Turkey in May and June raised fears that they would presage similar problems in other EMs. The fact that these then failed to materialise once again emphasises the point that financial vulnerabilities in the …
17th July 2018
The size of the Trump administration’s latest proposed tariffs on imports from China – and the fact that neither side seems willing to back down – suggests that we’re moving towards a stage where trade tensions could begin to have discernible knock-on …
11th July 2018
The main impact for EMs so far from rising global trade tensions and risk aversion has been on financial markets rather than on economic growth. But the resulting tightening of financial conditions – along with the danger of an escalation towards a trade …
10th July 2018
The recent spate of rate hikes in the emerging world probably marks the start of a sustained tightening cycle over the next 18 months – the first such cycle since 2011. This has more to do with domestic economic conditions than recent currency weakness. …
5th July 2018
The tariffs imposed by China and the US on $34bn of each other’s imports – that will come into force on Friday – are likely to have a small, negative impact on most of the emerging world. But some EMs could see an offsetting, positive impact from a shift …
3rd July 2018
The small rise in the emerging market manufacturing PMI last month provides an early sign that the turbulence in financial markets has not (yet) had much impact on aggregate economic activity. … PMIs suggest most EMs weathering market …
2nd July 2018
Our GDP Tracker suggests that aggregate EM growth strengthened in the middle of Q2, but early indicators suggest that growth started to slow again at the end of the quarter. … Signs of a fresh slowdown in EM GDP …
29th June 2018
Emerging market dollar bonds have struggled over the past month, but those in frontier markets have typically fared much worse. Of course, risky assets in general have sold off amid fears of a global trade war. Among frontiers, spreads have ballooned in …
27th June 2018
A surge in sovereign foreign currency debt issuance over the past 18 months has made Argentina’s recent economic turmoil worse and has contributed to the tensions that have arisen in Bahrain’s financial markets over the last few days. There are also …
26th June 2018
There are signs that the sell-off in EM markets is starting to cause financial conditions to tighten in some economies beyond Turkey and Argentina. These include Mexico, Brazil and South Africa. If conditions continue to tighten over the coming weeks, the …
22nd June 2018
The latest hard activity figures suggest that EM growth held up well going into Q2, but that headwinds to the macroeconomic outlook are starting to build. The most recent trade figure show that EM export growth was slowing even before the latest fears of …
21st June 2018
Emerging market (EM) equities have been caught up in the more general sell-off in EM assets in the past month, with the MSCI EM Index dropping by about 3% in local currency terms. Even if recent headwinds abate, there are other reasons to think that the …
20th June 2018
The details of the Trump administration’s threat to step up its trade conflict with China are not yet clear, but one notable feature is that the market fallout for the emerging world has been greater than in previous episodes in which fears of …
19th June 2018
The recent rise in global trade tensions comes at a time when EM export growth has already started to slow. Higher oil prices will provide a boost to export growth in value terms in the next few months, but this will quickly fade. In the meantime, …
15th June 2018
History suggests that the sell-off in EM currencies over the past couple of months could be large enough to push central banks in Mexico, Brazil and South Africa to raise interest rates – although the scale of any tightening is likely to be much smaller …
14th June 2018
Despite the market turmoil of recent weeks, problems in Turkey and Argentina look to be isolated incidents, with our capital flows Tracker giving no indication of large or widespread capital outflows from EMs as a whole. … Emerging Markets Capital Flows …
There are already signs that the large EM oil exporters are responding to higher oil prices by scaling back austerity, which will help to drive stronger growth this year. But it’s notable that higher oil prices haven’t led to a further loosening of …
7th June 2018
Fears that a reduction in the size of the Fed’s balance sheet will somehow reduce the amount of dollars available to EMs to finance their external liabilities is grounded in a fundamental misconception about how monetary economics works. A rise in US …
6th June 2018
The aggregate EM manufacturing PMI nudged down in May, but the more interesting story lies in the regional divergences, with readings in Latin America and Emerging Europe dropping but those in Asia holding up reasonably well. … PMIs point to regional …
1st June 2018
Frontier financial markets have been among the main victims of the recent EM sell-off. The Argentine peso has been by far the worst performing frontier currency, falling by around 17% against the dollar. The central bank was forced to hike interest rates …
31st May 2018
The recent turmoil in EM financial markets has invoked comparisons to the debt crises of the 1980s and 1990s but these look wide of the mark. Those crises had their roots in large external financing vulnerabilities but – Turkey and Argentina aside – the …
30th May 2018
Our EM GDP Tracker suggests that growth stabilised in Q1 and early signs point to growth having picked up at the start of Q2. The recent market stress is likely to push a handful of economies (notably Argentina and Turkey) towards recession, but we do not …
29th May 2018
The Argentine Peso and Turkish Lira came under fire this month, prompting policymakers in both countries to aggressively hike interest rates. The two currencies have firmed a bit, but are still down by over 15% on the month. Other EM currencies also …
25th May 2018
Warnings that the market turmoil in EMs over the past few weeks could presage a spate of crises similar to the late 1990s look overdone. A more sober assessment reveals three key points. … Why there’s less to the EM sell-off than meets the …
24th May 2018
The sell-off that has gripped EM financial markets over the past few weeks has raised parallels with the Taper Tantrum that occurred almost five years ago to the day. However, economic and financial vulnerabilities have declined in recent years and are …
21st May 2018
So far, there is little evidence that the sell-off in EM financial markets has fed through into a broader tightening of financial conditions. As a result, it is unlikely to have much impact on EM GDP growth. The exceptions are, unsurprisingly, Argentina …
17th May 2018
