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The EM manufacturing PMIs for September suggest that industry across the emerging world performed better in Q3 than in Q2. That said, the index remains consistent with relatively weak growth in industrial production across most major EMs. … EM …
3rd October 2016
Our EM GDP Tracker suggests that, after accelerating for most of this year, EM growth was unchanged in July. We think that this pause in the EM recovery should prove to be temporary and we continue to expect EM growth to regain some momentum over the …
30th September 2016
Our CERI suggests that financial risks for the average EM are the lowest in over 20 years. Even so, there are pockets of vulnerability. The CERI is flashing warning signs in Egypt, Colombia, Venezuela, Argentina and most significantly, China. Problems …
29th September 2016
Emerging market policymakers have been in loosening mode in recent months, with our EM interest rate diffusion index showing that more EM central banks cut rates than hiked again in August. Rate cuts since the start of the year have been concentrated in …
21st September 2016
An increasing number of frontier markets are turning to the international bond markets as they look to paper over the cracks in their finances. Argentina got the ball rolling earlier this year when it sold US$16.5bn of dollar bonds, the largest amount …
The majority of governments in commodity-producing EMs are still in the process of adjusting to the new reality of lower commodity prices and are being forced to cut spending. Accordingly, while growth should accelerate in some of these EMs over the …
20th September 2016
Emerging market (EM) equities have fallen in recent weeks as investors’ reacted to mixed signals from FOMC members regarding the outlook for monetary policy in the US. … EM equities under fire, as attention turns back to …
15th September 2016
Emerging market consumer spending growth appears to have bottomed out in recent quarters, but the subsequent recovery will be slow going. While the immediate outlook is brightest in Emerging Asia and parts of Emerging Europe, spending growth in Brazil and …
13th September 2016
The sudden sell-off in EMs that started on Friday, triggered by hawkish comments from the head of the Boston Fed Eric Rosengreen, points to a turbulent period ahead for EM financial markets as the next Fed rate hike draws closer. But economic …
12th September 2016
We think that one-off disruptions explain most of the fall in EM exports in July. More timely data already suggest that EM export growth was stronger in August. … EM exports stumble, but recovery will …
9th September 2016
Our Tracker shows that total capital outflows from the emerging world edged up to around $42bn in August from $38bn in July, but they remain well below their peak at the turn of the year. And inflows to EM bond and equity markets have been strong and …
8th September 2016
The EM manufacturing PMI dropped back in August, but we aren’t too concerned: the fall was relatively modest and the survey remains well above its level a few months ago. What’s more, there are encouraging signs in some major economies that conditions in …
1st September 2016
Our EM GDP Tracker suggests that, after a brief pause in May, the recovery in EM growth resumed in June. The latest improvement has been driven by a pick-up in activity in Emerging Asia and Latin America. … Recovery …
30th August 2016
Political tensions have re-emerged in a number of frontier market economies in recent weeks, casting a shadow over the economic outlook. The outcome of the recent presidential election in Zambia has been disputed in court by the opposition, resulting in a …
25th August 2016
After a prolonged downturn, there are early signs that EM industry is finally starting to turn a corner. Our measure of EM industrial production growth picked up to 2.4% y/y in June, from 2.2% in May – the second consecutive month of acceleration. The …
18th August 2016
Yields on emerging market (EM) dollar-denominated government and corporate bonds have fallen even further in the past month as ultra-low returns in developed markets have boosted demand for riskier assets. A reassessment of the outlook for Fed policy …
11th August 2016
The slightly faster decline in EM exports recorded in June compared to May was due to price and currency effects that should prove short-lived. The recovery will continue over the coming months. … A pause, not a reversal, in recovery of EM …
The sharp rise in the aggregate EM PMI in July suggests that after a brief pause in Q2, the recovery in EM industry resumed at the start of the third quarter. The improvement was driven largely by China and Brazil, while the survey in Russia weakened. … …
1st August 2016
Our GDP Tracker suggests that the recent recovery in EM growth paused in May. Nonetheless, preliminary data from June have been more encouraging and we expect EM growth to regain some momentum over the course of this year. … Recovery in EM growth …
29th July 2016
The failed military coup in Turkey has sent local financial markets into a tailspin and re-focused investors’ attention on broader EM political risk. However, political stability in emerging markets has actually been improving over the past few decades. …
There is some evidence to suggest that countries are reaching “peak” industrialisation at lower rates of income than in the past. However, this doesn’t explain the recent slowdown in EM GDP growth, and is unlikely to be a brake on growth for the …
25th July 2016
22nd July 2016
Oil prices have been low for some time now, but the past month has brought further evidence that this new reality is starting to hit home in energy-exporting frontier markets. Recently-released data showed that growth in Saudi Arabia’s economy slowed to …
21st July 2016
Most EM central banks look set to maintain a loosening bias over the next couple of years. Nonetheless, there are a handful of emerging economies where inflationary pressures mean that interest rate hikes are on the cards. … What next for EM monetary …
20th July 2016
The decline of EM values slowed, in US$ terms, again in May. The volume of EM exports, which is more important from an economic standpoint, actually rose. … EM export slump gradually …
18th July 2016
Our Tracker suggests that capital outflows from the emerging world declined to their lowest level in a year in June. Admittedly, our estimate is clouded by some questions about the data from China, but the key point is that the large capital outflows seen …
14th July 2016
The structure of public finances across emerging markets has improved over the past couple of decades. As such, while EM governments that have experienced large blowouts in budgets can’t postpone fiscal adjustment indefinitely, most are now under less …
13th July 2016
Financial markets in the emerging world have sailed through recent headwinds stemming from a continued depreciation of the renminbi and the UK’s vote to leave the European Union. And the rally may not yet be over, given that one consequence of …
12th July 2016
EM growth is likely to accelerate over the second half of this year, but a downward shift in potential growth means the recovery could hit the buffers in 2017-18. … EM pick-up to prove …
7th July 2016
The fall in the aggregate EM manufacturing PMI in June suggests that growth probably weakened at the end of Q2. But there was some rare positive news from a handful of EM economies that have been struggling recently, including Russia, South Africa and …
1st July 2016
The past month has brought aggressive monetary easing in a handful of frontier markets, and we think others will follow suit over the rest of this year. Cuts in policy interest rates this month in Ukraine and Argentina, of 150bp and 450bp respectively, …
30th June 2016
EM financial markets are often hit hard during bouts of investor risk aversion, but most have come through the past few days in reasonable shape. Looking ahead, EMs are more likely to face acute sell-offs if market turbulence is triggered by concerns …
29th June 2016
Our GDP Tracker suggests that EM growth picked up for the third consecutive month in April, helped by an improvement in activity in Latin America and Emerging Europe. … EM recovery …
28th June 2016
There are already some signs that following the initial shock of the Brexit vote, financial markets in EMs are starting to stabilise. In this Update , we outline four common questions that we have been asked by clients today – and provide our answers. …
24th June 2016
The vote by the UK to leave the EU is already creating a flight to safety, with financial markets in EMs that have deeper and more liquid markets (Mexico), large current account deficits (South Africa), heavy foreign currency debt burdens (Malaysia), or …
A continued build-up of private sector debt in China is increasing financial risks. We don’t expect the sharp rise in credit to cause imminent problems, but we are concerned about sustainability in the medium-term. A messy unwinding of the Chinese credit …
23rd June 2016
EM growth has shown some signs of life in recent months. GDP data for Q1 showed a rise in aggregate growth for the first time since 2013 and our GDP Tracker suggests that the improvement continued in the early part of Q2. (See Chart.) The turnaround has …
22nd June 2016
Consumer spending in the emerging world finally looks to have turned a corner, thanks mainly to the bottoming-out of consumer recessions in Russia and Brazil. Spending in Central and Eastern Europe and Emerging Asia have continued to grow at a decent …
21st June 2016
Our Tracker shows that, having spiked at the start of this year, capital outflows from the emerging world have fallen to almost zero over the past couple of months. … Emerging Markets Capital Flows …
14th June 2016
A vote by the UK to leave the EU would likely cause ripples rather than shockwaves in the emerging world. Trade ties with the UK are too small to have a material impact on EM exporters. And while a handful of EMs with large current account deficits would …
10th June 2016
Financial markets in the emerging world have rallied in recent weeks as disappointing US employment figures for May caused investors to trim their expectations for the future pace of Fed tightening. Emerging markets (EMs) are likely to suffer bumps along …
9th June 2016
South Africa’s April output figures suggest that, after a disastrous Q1, the economy improved a touch going into Q2. But the country will still struggle to avoid a technical recession. … “Brexit” poses little risk to EM …
While the manufacturing PMIs rose in most EMs last month, the general picture is still of growth remaining rather tepid by past standards. Central Europe remains the bright spot with the PMIs there pointing to a strengthening in industry over the coming …
1st June 2016
Our GDP Tracker suggests that EM growth picked up for the second consecutive month in March, suggesting that fears of an imminent collapse continue to be misplaced. The latest rise was broad-based but was helped in large part by an improvement in …
27th May 2016
While we have consistently been among the most bearish forecasters of EMs over the past 4-5 years, the consensus has moved a long way in our direction over the past 12 months. Over the next year we suspect that it is now more likely that growth surprises …
23rd May 2016
Emerging market policymakers have been in tightening mode over the past year, but this reversed last month. Our EM interest rate diffusion index shows that more EM central banks cut rates than hiked in April – the first time in ten months that this has …
20th May 2016
Low commodity prices, slower growth and a string of elections have prompted a move towards reform in a handful of frontier market economies in recent months. But while these governments have made impressive starts, much of the hard work is still to be …
19th May 2016
Financial markets in Latin America have comfortably outperformed the rest of the emerging world in the past month. But with rising commodity prices unlikely to offer much more support, we doubt that they will remain the shining star in the months ahead. …
12th May 2016
Credit growth is slowing in most of the economies we have previously identified as being at risk from a rapid build-up of private sector debt. The exception is China, where aggressive stimulus has prompted a recovery in growth, but at the expense of …
The rate at which EM exports are declining slowed sharply in March. We expect that higher commodity prices and an improvement in China’s economy will see export values return to growth later this year. … EM export recovery …
11th May 2016
