Filtered by Subscriptions: Emerging Markets Economics Use setting Emerging Markets Economics
While the yields of emerging market (EM) local-currency (LC) and dollar-denominated sovereign bonds have dropped back in recent weeks, we expect them to resume their rise before long . After trending up for most of this year, the yields of 10-year LC …
31st May 2022
Recently-released Q1 GDP figures showed that most EMs performed well at the start of this year, but headwinds are growing. Lockdowns are dealing a heavy blow to China’s economy and spillovers from the war in Ukraine will weigh on Emerging Europe in …
26th May 2022
Upside surprises to inflation coupled with a hawkish Fed have prompted aggressive monetary policy responses by central banks across the emerging world over the past month. Policymakers in Czechia , Romania, Chile and Egypt raised interest rates by more …
23rd May 2022
Net capital outflows from EMs appear to have picked up over the past few weeks amid the general risk-off mood in global financial markets. This is a worrying development for countries with fragile external positions, notably Turkey and some smaller …
18th May 2022
Higher food and energy prices go some way to explaining the rise in headline inflation rates across the emerging world, but this is only part of the story. Core inflation has also jumped in many EMs, especially in Emerging Europe and Latin America. This …
16th May 2022
There has been plenty of doom and gloom surrounding the outlook for frontier economies over recent months, particularly Sri Lanka and Tunisia. But there are some places where we hold more upbeat views. Frontier economies in the Gulf will benefit from high …
12th May 2022
The strong dollar and spill-overs from the war in Ukraine have caused sovereign debt risks to escalate in some frontier markets. But most large EMs have far stronger public sector balance sheets, mitigating much of the risk of the “classic” emerging …
11th May 2022
While a stronger dollar is generally regarded as a headwind for EMs, we think it will only be a minor one for most major EMs, particularly compared with the headwinds from weakness in China, spillovers from the war in Ukraine, and domestic monetary …
6th May 2022
Having surged over the past two years, there are signs that EM exports may now have passed their peak. That will weigh on economic growth, particularly in parts of Asia. Manufacturers in the emerging world have been among the main beneficiaries from the …
4th May 2022
Table of Key Forecasts Overview – Lockdowns in China and spillovers from the war in Ukraine will slow the EM recovery and growth is likely to be weaker than most expect. Recession risks are rising in Emerging Europe in particular. On the flipside, …
28th April 2022
Many EMs have started the year on a solid footing, but challenging months lie ahead. While high inflation is likely to weigh on consumption, spillovers from lockdowns in China and the war in Ukraine are likely to exacerbate supply shortages and hamper …
25th April 2022
The perfect storm of surging commodity prices due to the war in Ukraine and the hawkish shift by major DM central banks has pushed a few frontier markets to the brink of sovereign default . Sri Lanka has already announced the suspension of debt payments …
22nd April 2022
China and private bondholders have become increasingly important creditors to governments of many frontier markets, including some of those that are now finding themselves in debt distress. This is likely to make any debt restructuring talks more complex …
20th April 2022
The war in Ukraine and the start of the US Fed’s hiking cycle have exposed macro imbalances in some frontier economies, but do not appear to have had a significant impact on capital flows into many of the major EMs. In any case, most EMs should be able to …
14th April 2022
Most EMs are not heavily dependent on Russia or Ukraine for their domestic food supplies, but there are key pockets of vulnerability due to large wheat, corn and vegetable seed/oil exports to Turkey, most of the Middle East and North Africa and parts of …
13th April 2022
While yield curves have inverted in a number of emerging markets (and look likely to do so in several others in the coming months), they don’t have a good track record in predicting recessions in the emerging world. In most EMs, we think that growth will …
6th April 2022
Higher oil prices will boost government revenues in the major EM energy producers, but many other EMs will face a fiscal cost via fuel subsidy programmes. While these costs are likely to be small in most cases, there are a few countries of concern, …
4th April 2022
The broad-based fall in March’s manufacturing PMIs shows that the war in Ukraine is starting to take its toll on EM industry, particularly in Emerging Europe, while China’s lockdown is hitting industry there. The surveys provided signs that external …
1st April 2022
As a result of the Russia-Ukraine war and the Fed’s hawkish pivot, we have tweaked our forecasts for most major emerging market (EM) assets. The big picture, though, is that we still think EM equities will generally make small gains over the remainder of …
30th March 2022
The tightening of global financial conditions since the onset of the Fed’s hiking cycle and the war in Ukraine has caused sovereign dollar bond spreads to widen significantly in several frontier markets, with default risks in Sri Lanka and Tunisia …
Activity in large parts of the emerging world has rebounded following the easing of Omicron waves, but the war in Ukraine has caused the growth outlook for most EMs to worsen again. While commodity producers across the Gulf and parts of Latin America …
24th March 2022
Our proprietary Financial Conditions Indices suggest that global financial conditions have recently been as tight as they were during the China hard landing fears of 2015 and point to GDP growth staying below trend. Our new CE Interactive dashboard …
23rd March 2022
The war in Ukraine will have several economic repercussions for the emerging world. We have lowered our aggregate EM GDP growth forecast for 2022 by 1%-pt, to 3.2%. Russia aside, the biggest downward revisions have been to other Emerging European …
For the most part, EMs are well placed to withstand rising US interest rates, but there are pockets of vulnerability where external financing needs are significant. Among the large EMs, Turkey (unsurprisingly) stands out, and current account risks are …
22nd March 2022
Major oil producers are among the main beneficiaries of the rise in commodity prices due to the war in Ukraine. As a result, we’re becoming less concerned about Colombia’s external vulnerabilities. In most other EMs however, external positions are likely …
17th March 2022
Financial markets in Central Europe have been hit hard by the contagion from the war in Ukraine, but spill-overs to other EMs have been limited so far. If the war were to result in a sustained period of risk aversion and capital outflows, this could cause …
10th March 2022
The war in Ukraine has triggered renewed outflows from EM financial markets as risk aversion has taken hold, but there are few signs of severe financial contagion. And even if outflows were to intensify over the coming months, the macroeconomic fallout in …
8th March 2022
The rise in commodity prices caused by the war in Ukraine will push up EM inflation and there are further upside risks from weakening currencies and potential supply chain disruptions. In terms of the policy response, central banks that are focused on …
3rd March 2022
One immediate effect of the war in Ukraine will be to push Russia several places down the league table of the world’s largest economies. However, the impact on the global economy over the long run will depend to a large extent on its political and …
2nd March 2022
February's manufacturing PMIs point to decent industrial growth last month and support our view that the impact from Omicron waves on EM industry will be limited. However, the surveys suggest that supply chains remain stretched. And looking ahead, the war …
1st March 2022
The war in Ukraine and the ratcheting up of sanctions on Russia will have knock-on effects on the rest of the emerging world mainly through its impact on supply chains and commodity prices. Some EMs (e.g. Gulf oil producers) stand to benefit from higher …
Large Omicron waves have caused activity to weaken in many EMs in Q1, but the good news is that mobility appears to bounce back quickly once outbreaks subside. As a result, the economic hit is likely to be small and short-lived. Instead, high inflation …
22nd February 2022
The threat of sanctions has weighed on Russia’s stock market recently, but even if tensions abated we wouldn’t expect it to make big gains over the next couple of years. Russia’s equities have been volatile lately, but the big picture is that the tensions …
18th February 2022
With FX debt burdens relatively low in most major EMs, the risk of debt crises triggered by rising US interest rates and a stronger dollar looks limited. Vulnerabilities are generally limited to frontier markets and the usual suspects like Turkey and …
After a series of aggressive interest rate hikes, tightening cycles in parts of Emerging Europe and Latin America may now be nearing an end. But inflation concerns mean that policy rates will remain above their neutral level there for some time. In …
17th February 2022
Net capital outflows from emerging markets have intensified over the past month as growing tensions between Ukraine and Russia and the prospect of tighter global monetary policy have caused risk appetite to sour. The external environment will remain …
15th February 2022
Rising inflation has put major DM central banks under pressure and interest rate expectations have risen. But most emerging markets look relatively well placed to weather a period of DM policy tightening. Current account deficits are generally small or in …
11th February 2022
If oil prices were to remain at their elevated levels, they could push current account and budget balances into surplus in many of the EM producers. It would also ease any concerns about dollar pegs in the Gulf, although we think the currencies of Angola …
8th February 2022
Financial conditions have continued to tighten in Latin America and Emerging Europe and will likely remain restrictive throughout the year, weighing on activity in both regions. Meanwhile, although they have tightened too, conditions in Asia generally …
4th February 2022
Sovereign dollar bond spreads have widened significantly in several Frontiers over the past couple of months, driven largely by country-specific factors. There are reasons to be hopeful that outright sovereign defaults can be avoided in Ukraine and Ghana, …
3rd February 2022
January’s PMIs suggest that, while industry in China, Brazil and Mexico is struggling, manufacturers elsewhere in the emerging world have started 2022 on a solid footing, despite the surge in virus cases. The surveys provided some signs that supply …
1st February 2022
Table of Key Forecasts Overview – Growth across much of the emerging world will be weaker this year than last, with Emerging Europe and China in particular likely to fall short of consensus expectations. The EM monetary tightening cycle will continue, …
28th January 2022
The latest activity figures suggest that the EM recovery held up reasonably well at the end of last year, although China’s economy was struggling for momentum. While Omicron virus waves are likely to dampen activity this quarter, the impact will probably …
27th January 2022
With the notable exception of Turkey, net capital outflows from emerging markets have eased over the past month. However, the global backdrop for EMs this year will be challenging, particularly for those countries where external vulnerabilities are high …
19th January 2022
The shift to current account surpluses in Indonesia and South Africa suggest that these economies may be better placed to weather any fallout from rising US interest rates than in the past. But current account deficits have become an increasing cause for …
18th January 2022
The Omicron variant of COVID-19 is causing new virus cases to surge in the emerging world. (See Chart 1.) Many EMs are reporting record daily cases or that new infections are rising sharply. South Africa ’s experience offers some hope – cases are now …
14th January 2022
In this Update , we take a look at the key political events that are scheduled across the emerging world over the coming year and outline their possible implications for economic policy and growth . Table 1 gives a summary of the major events taking …
13th January 2022
December’s PMIs suggest that EM manufacturers ended last year on a firm note, with headline indices rising in much of Emerging Europe and Emerging Asia. Encouragingly, input and output price components dropped back in many EMs, suggesting that inflation …
4th January 2022
While many central banks have continued to tighten monetary policy over the past month, the People’s Bank of China (PBOC) has gone in the opposite direction. We think the easing cycle in China has further to run, and that this will contribute to a further …
22nd December 2021
Foreign investors have been net sellers of EM assets for much of this year and tighter monetary policy in the US and a stronger dollar suggest that the environment for EMs next year will remain challenging. The good news is that most major EMs should be …
20th December 2021
