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The falls in commodity prices over the past year have caused consumer spending to slow in many commodity-exporting countries, with Russia and Brazil being hit particularly hard. Only consumers in commodity exporters in Emerging Asia and the Gulf don’t …
6th August 2015
Emerging market (EM) currencies suffered more heavy losses in the past month and while further big falls are hard to justify over a medium term horizon, there could be more downside in the near term as we approach Fed“lift-off”. … Another bad month for EM …
4th August 2015
July’s PMIs, published earlier today, showed that manufacturers across much of the emerging world struggled last month. The one bright spot was Central Europe, where the surveys improved in spite of the escalation of the crisis in Greece early last month. …
3rd August 2015
EM growth slowed to its weakest pace since 2009 in May. But the aggregate data have been pulled down by problems in Russia and Brazil. In contrast, other parts of the EM world have seen a pick-up in activityin recent months. … EM growth dragged down by …
30th July 2015
Most EM currencies have fallen over the past month, with many now at or close to multi-year lows against the US dollar. For the majority of countries the economic impact of recent currency weakness is likely to be fairly small. But for those EMs with high …
27th July 2015
Frontier market currencies are having a difficult time, with only three of the 31 currencies that we follow gaining ground against the US dollar over the past month. The biggest decline has been in Myanmar, where the kyat is down by 10% against the …
So far in July, more EM central banks have hiked interest rates than have cut rates – the first time this has happened since December last year. We expect to see further policy rate cuts in a few more places before the end of the year, notably India and …
22nd July 2015
Exports from emerging markets continued to be dragged down in May by the impact of low commodity prices and the strength of the US dollar. But as these effects start to unwind over the second half of this year, EM export growth should gradually recover. … …
21st July 2015
The slowdown in EM growth should bottom out over the second half of this year, but we don’t foresee a significant rebound in 2016-17. … Still stuck in a …
14th July 2015
Despite a rebound in recent days, Chinese equities have slumped since the middle June. Still, the Shanghai Composite is some 90% higher than a year ago, and there is little sign that the sell-off has spread to other emerging markets (EMs). As such, we are …
10th July 2015
Recent events in China and Greece have generated plenty of gloomy headlines about the spillovers to emerging markets but so far the reaction in EM markets has been relatively limited. One reason could be that lots of bad news has already been priced into …
9th July 2015
June’s manufacturing PMIs suggest that the slump in manufacturing across the BRIC economies may be bottoming out. It’s a mixed picture across smaller EMs, with those in Central Europe doing well, but Emerging Asian manufacturers still struggling. … …
1st July 2015
EM growth continues to slow and, according to our GDP Tracker, is now at its weakest pace in almost sixyears. However, the slowdown has almost entirely been driven by further weakness in the BRICs. Incontrast, many small and medium-sized EMs have …
30th June 2015
This note summarises our key calls for emerging markets, emphasising where we differ from the consensus. Detailed projections (with specific numbers) are available in our regular publications on the respective regional services and also summarised in the …
Beyond a handful of economies in Emerging Europe, the direct links between Greece and the rest of the emerging world are limited. What matters for most EMs is not so much the crisis in Greece itself, but whether this triggers contagion and large-scale …
29th June 2015
The relief rally in Chinese equities prompted by additional policy stimulus has turned global sentiment around, but a sustained recovery in commodity prices will probably require hard evidence that the Chinese economy is picking up again. Fortunately, …
26th June 2015
The growing threat of a Greek exit from the euro-zone has cast a shadow over the outlook for European frontier markets. Admittedly, the reaction in financial markets has so far been muted. And the problems in Greece pose little threat to frontiers …
25th June 2015
With a Fed rate hike sometime this year now widely anticipated, we suspect that any volatility in EM markets when the Fed finally raises rates should prove short-lived. The much bigger risk for emerging markets is that US policymakers tighten policy more …
23rd June 2015
Most of the weakness in emerging market exports in recent months can be pinned on the impact of lower commodity prices and the strength of the US dollar. But there are lingering concerns surrounding the state of external demand. … Weak EM exports keep …
18th June 2015
Yesterday’s statement by US Fed officials suggests that the FOMC is still on course to raise interest rates at September’s meeting. EM financial markets have taken this in their stride today and, broadly speaking, we think this is justified. However, a …
Emerging market dollar-denominated government bonds have significantly underperformed their local currency counterparts since the end of April. However, this has generally been due to a surge in underlying US Treasury yields rather than increases in …
11th June 2015
The fall in oil prices hasn’t so far been the boon for household spending in the emerging world that might have been expected, but it does appear to have contributed to stronger private consumption in countries where fuel makes up a large share of …
8th June 2015
May’s manufacturing PMIs brought the first signs that the recent slump in manufacturing across the emerging world may be bottoming out. But there remain huge differences in performance. May’s improvement was in large part due to an uptick in India and …
2nd June 2015
The slowdown across emerging markets is showing no sign of easing, with our latest GDP Tracker suggesting that growth is now running at 3.7% y/y – its lowest rate since September 2009. Much of the weakness remains concentrated in the larger BRIC …
28th May 2015
First quarter GDP data that have so far been released by EMs have painted a pretty grim picture. In this Update we outline the three key themes that have emerged. … Taking stock of a grim …
27th May 2015
Most emerging economies have made a weak start to the year. The Q1 GDP data released so far point to a slowdown in aggregate EM economic growth and early activity data for April suggest that this has carried on into Q2. The largest EMs, in particular, are …
22nd May 2015
Despite a recent rebound, low oil prices are posing a challenge for many frontier markets. Low oilprices were one factor that led the IMF to cut its 2015 growth forecast for Sub-Saharan Africa, andwe believe that the Fund is still overly optimistic. …
20th May 2015
Several factors help explain why the dollar value of exports from emerging markets fell sharply in March, including lower commodity prices, the strength of the US dollar and distortions in China’s trade data. But the incomplete data so far available for …
19th May 2015
Although underlying Treasury yields have risen since the end of March, dollar-denominated corporate bond yields have fallen in all emerging market regions, owing to a sharp fall in credit spreads. We think these spreads will remain low even if Treasury …
15th May 2015
While it isn’t hard to find EMs that have been hurt by the slowdown in China, identifying winners from the positive aspects of its rebalancing – such as rapid growth in household spending – has proved much harder. Nevertheless, there are at least some …
14th May 2015
The outlook for consumers has remained bright in large parts of the emerging world. In particular, consumption looks set to grow strongly in Central Europe and Emerging Asia over the coming months. In contrast, consumers in Russia and parts of Latin …
13th May 2015
The sell-off in the bond market in developed economies that grabbed the headlines over the past few weeks has also hit emerging markets but, so far at least, it does not provide much cause for concern. If bond yields continue to rise, governments in those …
12th May 2015
According to our GDP Tracker, EM growth has now fallen to a low last seen in the aftermath of the 2008-09 global financial crisis and, prior to that, the 2001-02 Argentine crisis. However, the causes of the latest downturn are very different from previous …
11th May 2015
Manufacturers across the emerging world appear to have continued to struggle in April, according to the latest PMI data. The slowdown was driven by weakness in the larger BRIC economies. Meanwhile, although PMIs also dropped back in some of the smaller …
5th May 2015
Our GDP Tracker suggests that EM growth has dropped below 4% y/y for the first time since the global financial crisis, and only the second time in almost 15 years. What’s more, with China’s slowdown taking its toll on other EMs, growth is likely to weaken …
1st May 2015
EM growth appears to have sunk to a post-crisis low of around 4% y/y in the first quarter of this year, driven in large part by a deepening downturn in the BRICs. China has grabbed most of the headlines over the past few weeks, although we suspect that …
23rd April 2015
There is a good chance that emerging market GDP, measured in dollar terms, will fall this year. But while this will weigh on investors’ dollar-denominated returns and could raise debt burdens in EMs with large dollar liabilities, for most EMs it won’t …
21st April 2015
The effects of slower growth in China are already rippling across the emerging world. Indeed, while China’s economy is still growing by anywhere between 5–7% y/y depending on whose numbers you choose to believe, imports from all but a handful of EMs are …
20th April 2015
Emerging market equities have delivered strong returns in the past month, outperforming their developed market counterparts. A confluence of factors is probably responsible. This includes signs of stabilisation in commodity prices at lower levels, an …
17th April 2015
Although EM exports contracted less sharply in February, the improvement was almost entirely down to a surge in China’s exports, which have been distorted by shifts in the timing of Chinese New Year. More timely data suggest that exports plunged again in …
16th April 2015
We have been warning about the dangers stemming from rapid credit growth in several EMs for a while. In this Focus we revisit the possible lessons from history. Three points stand out – with potentially ominous implications for China, Brazil, Korea, …
15th April 2015
The wave of EM policy loosening that was triggered by the drop in oil prices at the end of last year is now reaching an end. However, it won't be until 2016 that most central banks move into tightening mode, and the shift will be gradual. … Window for …
14th April 2015
The recent strength of the dollar has thrust EM dollar debts into the spotlight, but data on the subject tend to be misunderstood. In this Update, we answer three questions that we have been asked by clients in recent weeks in order to provide some …
8th April 2015
The latest PMI data suggest that manufacturing activity across the emerging world slowed further last month, driven mainly by weakness in some of the larger EM economies. By contrast, manufacturers in Mexico and Central Europe continued to record a strong …
3rd April 2015
The recent run of poor data from around the emerging world is likely to set the tone for the rest of this year. Brazil’s struggles look set to continue, Russia is likely to slip deeper into recession and a property slowdown will continue to weigh on …
2nd April 2015
The prospects for the four largest emerging economies – Brazil, Russia, India and China – are starting to diverge. The outlook for India is improving and, despite a recent run of poor data, we think the risks of a hard landing in China are actually …
27th March 2015
Our GDP Tracker suggests that EM GDP growth has remained stuck at just over 4.0% y/y in recent months – a low not seen since the aftermath of the global financial crisis. However, the aggregate figure mask increasing divergences at a country-level. Growth …
25th March 2015
The hardest hit EM currencies over the course of this year have been those of the economies with low domestic savings rates. In the absence of reforms to address this frailty, the currencies of low-saving economies – notably, Brazil, Turkey and South …
20th March 2015
The rally in EM currencies following the conclusion of yesterday’s FOMC meeting has proved to be short-lived, with markets seemingly focussing on the fact that the Fed has paved the way for a June rate hike as opposed to the downward revision to its …
19th March 2015
Fears over the outlook for emerging markets have resurfaced over the past few days, with the latest concerns focusing on the impact that a strong dollar will have on EM balance sheets. In our view, much of the doom and gloom is overdone. For most EMs, …
17th March 2015
