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The value of EM exports fell at the sharpest rate in more than five years in January. The timing of Chinese New Year was partly to blame, and an improvement is almost guaranteed in February, given the strength of the rebound in China's exports last month. …
12th March 2015
The fall in emerging market currencies since the beginning of this year has picked up pace this month. Two main forces appear to have been at work. First, the depreciation of the euro has led the currencies of countries in Central and Eastern Europe (CEE) …
11th March 2015
Most EM currencies have weakened substantially against the US dollar this year. For a few EMs with large dollar debts, such as Turkey, this could lead to financial strains. And the impact of currency weakness on inflation may cause headaches for …
10th March 2015
The fragile five have been whittled down to three as economic reforms have helped to reduce the vulnerability of the Indian rupee and Indonesian rupiah to the recent bout of emerging market currency weakness. But the Brazilian real, Turkish lira and South …
9th March 2015
Our updated Capital Economic Risk Indicator (CERI) reports that the overall level of emerging market (EM) risk remains at a decade low, but that concerns remain about a handful of countries. Venezuela already appears to be suffering an economic crisis, …
5th March 2015
The latest PMI data suggest that manufacturing growth across the emerging world remained stable, yet sluggish, in the first couple of months of this year. Some of the larger EMs are still struggling but activity in smaller EMs with export-oriented …
4th March 2015
Our GDP Tracker suggests that aggregate EM GDP growth has dropped to just 4.0% y/y – a low not seen since the aftermath of the global financial crisis in 2009. Much of the latest slowdown appears to have been caused by weakness in Russia. In contrast, …
26th February 2015
The impact on EMs of a Greek exit from the euro-zone would depend on the extent to which policymakers in Europe were able to limit the wider financial fallout. A “managed” exit would create significant problems for the handful of EMs with strong financial …
20th February 2015
Inflation across the emerging world has been heading in different directions in recent months. In Latin America and Emerging Europe it has risen, led by increases in regulated prices in Brazil and the pass-through from a much weaker rouble exchange rate …
19th February 2015
Concerns about the rapid growth of private sector debt in EMs have resurfaced in recent days. Our view remains unchanged: fears that a debt crisis will engulf the entire emerging world are overdone but financial risks are building in several places, …
17th February 2015
The “stripped” spread of the JP Morgan EMBI Global Index, which includes the dollar denominated debt of 61 emerging market governments, is still around 430bp despite falling slightly in recent weeks. This is close to its level at the end of 2003, even …
12th February 2015
The value of EM exports continued to fall in annual terms in December, with oil producers faring especially poorly. The early signs are that Asia's manufacturing-oriented economies will report weak trade figures for January, but this will be due in large …
The US dollar’s recent strong run has raised concerns that EMs with large holdings of dollar-denominated debt will come under pressure. Indeed, India’s central bank governor, Raghuram Rajan , has gone so far as to warn that borrowing in US dollars “is …
11th February 2015
Today’s decision by the People’s Bank of China to lower reserve requirements underlines the current heightened risk of policy surprises in the EM world. We continue to think that any further surprise moves are more likely to be directed towards looser …
4th February 2015
The latest PMI data suggest that manufacturing activity across the emerging world was stable, but still sluggish, at the start of this year. However, while manufacturers in the BRIC economies are struggling, there are tentative signs that those in …
3rd February 2015
Our GDP Tracker suggests that aggregate EM GDP expanded at a modest pace of just over 4% y/y in November as the BRIC economies continued to disappoint. Meanwhile, the latest activity figures provide more positive signs from some of the smaller EMs. … …
30th January 2015
The fact that the mounting concerns about Greece’s future within the euro-zone have had only a limited impact on financial markets across the emerging world appears to reflect the belief that problems in Greece should be contained. Some EMs are more …
29th January 2015
The collapse in global oil prices will provide a boost to most economies in the emerging world. However, it will come at the cost of weaker growth in the Middle East, and deep recessions in Russia and Venezuela. Accordingly, the net impact on overall EM …
28th January 2015
Lower oil prices should provide a welcome boost to incomes, and hence consumption, in large parts of the emerging world. We are particularly upbeat about the outlook for consumers in China, India, the Philippines and Central Europe. At the other end of …
23rd January 2015
The programme of asset purchases announced by the European Central Bank (ECB) earlier today was larger than had been expected only a few days ago, but fears that it could fuel destabilising inflows to emerging economies seem overdone. … ECB QE and what …
22nd January 2015
Having been in tightening mode at the end of 2014, a number of EM central banks have surprised markets by loosening monetary policy since the start of the year, with policymakers in Romania, India, Egypt and Peru all cutting interest rates. With the drop …
16th January 2015
The value of EM exports fell in annual terms for the first time in almost a year in November as the slide in oil prices dragged on exports from energy producing EMs. The further slump in oil prices since then will put additional pressure on energy …
15th January 2015
In general our forecasts for both EM growth and inflation over 2015-16 are below consensus expectations and for the BRIC economies in particular we are notably more downbeat than the rest of the market. But there are a few countries, mainly in Asia, where …
14th January 2015
Since the end of November, the renminbi has depreciated slightly against the US dollar. However, the real effective exchange rate of China’s currency has continued to appreciate sharply, as the renminbi has strengthened against most other currencies. …
13th January 2015
The sharp fall in oil prices will provide a welcome boost to growth in the majority of emerging economies in 2015, but at the cost of slower growth in much of the Middle East and deepening crises in a handful of EMs, notably Russia and Venezuela. The net …
9th January 2015
The latest PMI data suggest that manufacturing activity across the emerging world was steady, but still relatively sluggish, at the end of last year. Manufacturers in some of the non-BRIC EMs, such as Mexico, continued to perform well supported by …
6th January 2015
The currencies of many emerging economies have sold off recently, due to general US dollar strength and, in some cases, declining oil prices. While our forecast that oil prices will remain low suggests that there is little scope for the currencies of oil …
18th December 2014
The turmoil in Russia and broader weakness in EM financial markets has brought a subdued end to the year. For 2014 as a whole, the latest data point to aggregate GDP growth of less than 5% for the third successive year. And it seems that the “new normal” …
16th December 2014
The slump in oil prices and renewed falls in EM currencies over the past month have rekindled fears over the outlook for emerging markets. In this Focus we outline the ten key issues that we think will shape the outlook for EM investors in 2015. … Ten key …
12th December 2014
Since the end of October, emerging market dollar-denominated corporate bonds have performed much worse than comparably-rated US corporate bonds. This has been the result of increasing credit spreads amid concerns that the significant rise in the …
11th December 2014
The recent modest recovery in EM exports stalled in October as global growth lost some momentum and sharp falls in commodity prices added to difficulties facing commodity exporters. More timely data suggest there has been no improvement in November. … …
10th December 2014
The sharp falls in EM equities over the past day or so have rekindled fears of a crisis across the emerging world. While several EMs do look vulnerable to the effects of low oil prices and a stronger US dollar, many of the headlines ignore the growing …
9th December 2014
An increase in external debt has raised concerns that the emerging world faces a rough ride over the coming years as the dollar strengthens. However, our updated Capital Economic Risk Indicator (CERI) suggests that a strong dollar is unlikely to trigger a …
8th December 2014
The US Fed is set to begin raising interest rates in the first half of next year, casting renewed uncertainty over the outlook for EM currencies. But big and necessary adjustments in many currencies have already taken place, and there is no guarantee Fed …
5th December 2014
The period of sluggish EM export growth over the past few years is only partly linked to the weak state of global demand. Another key factor is that the wave of globalisation over the previous decade, which pushed up trade flows, has come to an end. As a …
4th December 2014
The latest PMI data suggest that manufacturing activity across the emerging world has improved in recent months, supported by a pick-up in some of the smaller EM economies. That being said, EM manufacturing growth is still relatively sluggish. … Smaller …
3rd December 2014
Our GDP Tracker suggests that having sunk to a five-year low in August, EM growth edged up a little in September. The pick-up appears to have been driven by smaller EMs in Central Europe and Asia. In contrast, growth in the larger BRIC economies has …
28th November 2014
Policymakers in several EMs – notably China – have surprised the markets with unexpected rate decisions over the past month or so. In this Update we identify the EM central banks that are most likely to spring further surprises in the months ahead. In …
26th November 2014
There is little reason to think that the decision by the People’s Bank of China to lower interest rates will trigger a spate of copycat responses from other EM central banks. China’s capital account is closed, so the impact on flows to and from other EMs …
24th November 2014
Monetary policy is heading in differing directions across the emerging world. Several economies in Central and Eastern Europe, Asia (notably China) and Latin America have lowered interest rates in recent months and are likely to keep policy supportive for …
The Bank of Japan’s decision to boost asset purchases just as the ECB edges towards QE has rekindled concerns about negative spillovers from developed world monetary policy to the emerging world. The evidence that QE fuels global capital flows is weaker …
21st November 2014
Recent falls in commodity prices have left some emerging market (EM) economies in a tailspin. The S&P GSCI, an index of commodity prices, has fallen by more than 20% since its June peak, largely due to declines in oil and agricultural prices. All other …
20th November 2014
The performance of equities has been lacklustre in emerging markets since the end of September and noticeably worse than in developed markets. As a result, the return so far this year from the MSCI Emerging Markets Index in dollar terms has been less than …
13th November 2014
There are encouraging signs that the credit bubbles that had been building in a handful of major EMs are now deflating. But this process has only just begun – and the modest slowdown in credit that we’ve seen so far has already had a marked impact on GDP …
EM export growth picked up in September, continuing the sluggish recovery seen since the start of this year. However, the improvement remains concentrated in a handful of EMs, with commodity producers in particular still struggling. What’s more, more …
12th November 2014
Having slowed sharply in the first half of the year, consumer spending across the emerging world has continued to weaken in recent months. Among the regions, Emerging Asia is the only place where consumption growth appears to be stabilising. … Emerging …
6th November 2014
October’s PMI data suggest that EM manufacturing growth stabilised last month. Some of the smaller, export-driven EMs, particularly those in Central Europe as well as Mexico, are performing well. But manufacturers in parts of Asia appear to have lost …
4th November 2014
Our GDP Tracker suggests that EM growth slowed to a five-year low of 4.1% y/y in August, due in large part to a further downturn in the BRIC economies. Preliminary data suggest that growth may have stabilised in September, but this is unlikely to do much …
30th October 2014
Most of the emerging world should take the end of QE3 in its stride. The link between QE and capital flows to EMs has often been exaggerated. And while some EMs look vulnerable as US rates move up, it’s far more likely that growth in the major EMs will be …
29th October 2014
Although the US economy has emerged as a bright spot of the uneven global recovery, its imports from EM economies have not picked up anywhere near as much as would have been expected based on past form. It is now a familiar story, but it is commodity …
24th October 2014
