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Market concerns about sovereign debt risks across frontier markets have eased a touch in recent months. For our part, while we think that Egypt and Nigeria should be able to avoid default, Kenya faces a more challenging path to do so. And in the cases of …
23rd August 2023
China’s push to develop the BRICS bloc into a geo-political counterweight to the G7 is likely to be thwarted by the competing interests and priorities of other member states. Nonetheless, positioning ahead of this week’s BRICS summit will provide some …
21st August 2023
EM GDP growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and Emerging Europe will limit how far …
18th August 2023
The crises unfolding in Argentina, Russia, as well as in China’s property sector, this week may rumble on for some time. And in the case of China’s property downturn, there are likely to be spillovers to other EMs, particularly metals producers. But these …
15th August 2023
Emerging economies whose currencies have fallen by 15% or more against the dollar in a single day – as the Argentine peso did yesterday – have fallen into recession in more than 80% of cases in the last 30 years. Sovereign debt defaults occurred after …
The immediate global economic and market fallout from troubles at Chinese property developer Country Garden seems likely to be limited. Foreign exposure to China’s property sector has fallen sharply over recent years and policymakers should step in to …
14th August 2023
After a strong run since April, inflows into EM bond and equity markets have softened markedly in the past few weeks. Inflows into India, in particular, have weakened. Turkey continues to see sizeable foreign inflows, but these are only a fraction of the …
10th August 2023
Recent interest rate cuts in Brazil and Chile have fuelled talk of a broad-based EM easing cycle and we expect most EM central banks to start cutting rates in Q4 or Q1. We expect those with the highest policy rates (above 10%) to deliver 500bp or so of …
9th August 2023
The key points that stand out from the recent moves by central banks in Brazil, Chile and Hungary to cut interest rates are, first, how quickly policymakers have shifted from hawkish to dovish and, second, how they appear to be front-loading their …
3rd August 2023
The fall in the EM manufacturing PMI to a six-month low in July was mainly driven by a renewed drop in China, but the surveys generally remained downbeat across most EMs last month. We think EM industry will continue to struggle over the rest of this year …
1st August 2023
Risks to EM food supply have increased amid the likelihood of an El Niño, the end to the Black Sea grain deal and India’s rice export ban. Countries in the Middle East and Africa are the most vulnerable to lower grain supplies and many EMs (particularly …
28th July 2023
While the Fed and the ECB are set to hike interest rates this week, subsiding inflation means that the upcoming EM central bank meetings will tilt towards monetary easing . And we expect that the EM rate cutting cycle will broaden out over the course of …
24th July 2023
EM growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and Emerging Europe will limit how far …
20th July 2023
One way in which EMs may benefit from the fragmentation of the global economy into US- and China-aligned blocs is via “friend-shoring”. There appears to be evidence that the US is importing a higher share of goods from EMs, mainly Vietnam, Taiwan, Mexico, …
19th July 2023
The likelihood of an El Niño event in the second half of this year adds to upside risks to global inflation and downside risks to activity. For the advanced economies, higher prices of agricultural commodities could slow the decline in food inflation. But …
12th July 2023
Inflows into EM financial markets saw a further pick-up in the past month and are now at their highest level since late last year, driven by inflows into Turkey and India. Inflows to Turkey could be sustained if policymakers take further steps towards …
11th July 2023
The fading of China’s reopening rebound will weigh on recoveries in EMs like Thailand and Hong Kong whose tourism sectors depend heavily on Chinese visitors, but otherwise we think it presents relatively limited headwinds to the rest of the emerging …
6th July 2023
A significant number of EMs that were running large current account deficits last year – including much of Central and Eastern Europe (CEE), Peru and Chile – have seen dramatic improvements in their external positions. That limits the downside risks to …
5th July 2023
The widespread falls in the EM manufacturing PMIs for June suggest that industry continued to struggle in Q2 and we think further weakness lies in store. Taken together with the easing price pressures shown by the surveys, it looks like an EM monetary …
3rd July 2023
Table of Key Forecasts Overview – EM growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and …
29th June 2023
Central bank meetings this month suggest that we’re now on the brink of an EM monetary easing cycle. In China, the Loan Prime Rates were lowered in response to flagging growth. And elsewhere, some central banks whose tightening cycles were particularly …
27th June 2023
EMs will account for over half of global GDP within the next decade and almost 60% by 2050. India will become the world’s third-largest economy before 2030. More generally, EMs with rapid population growth, with potential to develop into manufacturing …
26th June 2023
Governments in Turkey and Nigeria have started to turn away from unorthodox economic policies in recent weeks, and in both cases currencies have been allowed to move closer to fair value. The key thing to watch next is whether central banks in both …
21st June 2023
EM goods exports held up relatively well at the start of the year but more recent data suggest that resilience is waning. With demand from advanced economies set to soften, the boost from auto exports likely to fade and gains in commodity prices likely …
16th June 2023
EMs experienced a strong first quarter as GDP growth picked up almost across the board, but growth is likely to have slowed in most major economies in Q2 and we think it will remain soft in Q3. We don’t expect a substantive recovery in EMs until much …
15th June 2023
Inflows into EM financial markets have held up well over the past few weeks, with particularly strong inflows into local equities. That said, if we are right that a renewed period of global risk aversion lies in store, we suspect that these inflows will …
9th June 2023
A handful of EM central banks were quick out of the blocks to tighten monetary policy in 2021 and one of the key lessons of the past year or so is that underlying inflation pressure is still proving incredibly hard to beat. The fight against inflation …
8th June 2023
A version of this report was published as an opinion piece in the Financial Times on Wednesday 7 th June Signs that newly re-elected Turkish president Erdogan is willing to move away from unorthodox economic policies has led to an increase in investor …
7th June 2023
The manufacturing PMIs for May suggest that EM industry has, in aggregate, strengthened in Q2. Nonetheless, with the surveys pointing to further weakness in key DM trading partners, EM industry is likely to struggle in the second half of this year. The …
1st June 2023
Recent gains in the US stock market have been unusually narrow, and we don’t think the conditions are yet in place for a broad-based rally. A striking fact about the recent gains in US equities is that they have been driven by a remarkably small number of …
31st May 2023
Financial risks across the major EMs look relatively well contained for the time being but there are some areas of weakness. Most immediately, following President Erdogan’s election victory the prospect of continued unorthodox policymaking in Turkey …
The results of elections in major EMs over the past month have increased macroeconomic policy risks. Most notably in Turkey , President Erdogan now has the edge ahead of a second-round presidential election run-off next week. Hopes of an opposition …
25th May 2023
EM labour markets have shown relatively little sign of adjustment in response to the recent weakening of growth. That’s likely to keep wage growth uncomfortably strong in Central Europe and Latin America. In turn, we think this will limit the scale of …
24th May 2023
Over the past couple of weeks we have held a series of roundtable discussions with clients across Asia and North America on the outlook for EMs. In this Update we provide our thoughts on the recurring questions that we received, including on China’s …
19th May 2023
Having picked up sharply in April, inflows into EM bond and equity markets have weakened in the past few weeks. Inflows into India and Turkey remained strong over the first half of the month, but in the latter this is likely to reverse after the …
16th May 2023
Sovereign debt risks are back in focus as some frontiers appear to be drifting closer to default. We remain most concerned about default risks in Tunisia and Pakistan, particularly in light of this week’s unrest and IMF deals now appear further away. Debt …
12th May 2023
Most EM central banks have drawn their monetary tightening cycles to a close now and, if history is any guide, it looks like the conditions will be in place for an easing cycle to start from around July/August. EM central banks were quick off the mark to …
10th May 2023
The manufacturing PMIs for April suggest that industrial activity softened in most EMs last month and that external demand generally remained weak. The one crumb of comfort is that price pressures eased further last month. The aggregate Emerging Market …
4th May 2023
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
Click here to read the full report. We think the economic recovery in China will support further gains in the country’s equity market. Despite some renewed evidence that China’s economy has been recovering more strongly than most anticipated in the first …
3rd May 2023
Inflows into EM bond and equity markets have picked up sharply in the past month, with flows into Asian equity markets looking particularly strong. That said, if we right that the dollar will rebound, we suspect that these inflows will drop back. That’s …
27th April 2023
EM central banks have, in general, remained in hawkish mood over recent weeks. Tightening cycles have continued in Mexico, Colombia and South Africa in response to high inflation, while policymakers in Egypt and Pakistan among others have raised …
24th April 2023
The economic impact of the Oxford malaria vaccine, which has now been approved by regulators in Ghana and Nigeria, will depend on the pace and breadth of the rollout and how long immunity lasts for. But it could potentially have a large positive impact on …
20th April 2023
Our dataset on inflation expectations across EMs shows some encouraging falls recently and supports our view that, with EM inflation likely to fall further, monetary easing cycles will start in the coming months. However, inflation expectations remain …
19th April 2023
The increasingly diverse array of creditors to debt-distressed EM governments – and the difficulties in getting China and Western lenders to see eye to eye – is already gumming up sovereign debt restructurings. And despite some positive noises from the …
17th April 2023
The raft of EM CPI figures out this week show that headline inflation is, in aggregate, finally starting to fall significantly, and we expect it to decline further in the coming months. But core inflation is easing relatively slowly, and remains …
13th April 2023
Table of Key Forecasts Overview – Aggregate EM GDP growth will be much stronger this year than last, but that’s almost entirely a result of China’s reopening rebound. Growth in most other EMs will be weaker and will generally disappoint consensus …
4th April 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . The manufacturing PMIs for March made for pretty downbeat reading in most EMs and the outlook for the coming months remains lacklustre. One source of …
3rd April 2023
In the wake of the surprise move by OPEC+ to cut oil production, we held a special online briefing about the decision’s economic and market implications – as well as what this signals about global politics. Economists from across our Macro and Commodities …
Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . The broad message from the recent spate of EM central bank meetings is that policymakers are still focussed on reining in inflation even as the global …
31st March 2023
