Filtered by Region: Emerging Markets Use setting Emerging Markets
The Polish government’s white paper on Monday set out a scathing review of the previous government’s fiscal record and highlighted the challenges facing the public finances, but if we’ve learned anything from the report it is that the government will take …
30th April 2024
This report was first published on Tuesday 30 th April covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Monday 6 th May. A touch softer but recovery still intact, for now The …
José Raúl Mulino, the front-runner in Panama’s presidential election scheduled for Sunday, has pledged to reinvigorate growth. But as we’ve been arguing for some time, the economy’s time as Latin America’s growth star is coming to an end. If anything, …
29th April 2024
The policy shifts underway in Turkey, Nigeria, Argentina and Egypt have ticked a lot of the right boxes so far, but it will take years for the full economic benefits to materialise and require policymakers to remain committed to reforms. We’re most …
24th April 2024
The Central Bank of Nigeria’s (CBN) monetary policy reforms have injected a welcome dose of momentum back into the country’s policy shift. But the minutes to the latest MPC meetings also suggest that a slowdown in growth could prompt a (premature) shift …
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
This publication has been updated with additional analysis since the post-meeting press statement and press conference. MNB shifting down the monetary easing gears The communications accompanying the decision by the Hungarian central bank (MNB) to opt for …
23rd April 2024
The better-than-expected budget figures out of Argentina at the start of the year are undoubtedly good news and show that the fiscal adjustment is happening more quickly than we’d expected. That said, many of the factors that have helped to flip the …
South Africa’s upcoming general election looks likely to result in a much more fragmented parliament and mark a shift to coalition government. The lesson from elsewhere in the emerging world is that this can often lead to a worsening fiscal position. …
The UAE’s economy outperformed the other Gulf economies in 2023 and we think that this outperformance will continue this year. While we are still waiting for the full 2023 GDP data from the UAE, we can piece together the data from Abu Dhabi and Dubai, the …
A week spent visiting client s, contacts and friends in Beijing and Shanghai has underlined the extent of the pessimistic shift in sentiment within China. At first glance, China’s economy is doing fine . The streets of Beijing and Shanghai are bustling …
A weak labour market and high interest rates will continue to weigh heavily on Korea’s consumer sector this year. The poor prospects for consumer spending is one of the main reasons we think overall GDP growth will remain subdued. Korea’s recovery from …
22nd April 2024
Recent currency falls and higher oil prices are unlikely to put significant upward pressure on consumer prices across Asia. We continue to expect inflation in the region to remain low over the coming year. Consumer price inflation has fallen back sharply …
Investors are no longer pricing in a 50bp interest rate cut at the Brazilian central bank meeting next month, despite the forward guidance at the March meeting signalling such a move. While we think it’s too early to throw in the towel on a 50bp cut, a …
18th April 2024
The latest polls ahead of Mexico’s election on 2 nd June suggest that Claudia Sheinbaum, protégée of incumbent President Andrés Manuel López Obrador (Amlo), is likely to become the country’s next leader. She’s widely expected to continue with Amlo’s …
17th April 2024
South Africa’s latest hard activity data provided some encouraging signs that the economy may be turning the corner even if it comes too late to help the ANC’s hopes of keeping its majority in parliament after May’s election. With electricity outages …
Saudi Arabia has yet to be able to raise foreign direct investment towards its Vision 2030 goals, prompting a turn to the Public Investment Fund (PIF) to prop up investment spending. Unless the government makes major strides to improve the local business …
The recent bout of EM currency weakness may prompt (further) FX intervention, particularly in Asia, to stem currency volatility. Turkey’s central bank is likely to hike rates at its meeting next week and a hike is also now on the table at the Bank …
Local factors will determine the next moves by most of Asia’s central banks, not the actions of the US Fed. We expect policymakers in Thailand, Vietnam, the Philippines and Korea to lower interest rates later this year, regardless of whether the Fed cuts. …
16th April 2024
The Iranian strike over the weekend has been largely shrugged off by Israel’s financial markets and on its own is unlikely to have a major impact on the economy. The key uncertainty now is how Israel responds. An aggressive Israeli military response that …
15th April 2024
The Bank of Korea left its policy rate on hold today (at 3.5%), but kept open the possibility of rate cuts later this year. However, with inflation concerns continuing to linger, we are pushing back the timing of when we think the central bank will cut …
12th April 2024
While inflation fell further across Central and Eastern Europe (CEE) in March, we think that the recent run of good CPI news is largely over. We expect inflation to rise back above central banks’ target ranges in Hungary and Poland by end-2024 (to near …
11th April 2024
Nigeria’s authorities have ceased central bank deficit monetisation via the ways and means facility. But the government will struggle to finance its ambitious spending plans – particularly given the challenges of raising revenues. We suspect that the …
Capital flows into EMs have continued to rise in recent weeks, aided by robust global risk appetite. While yesterday’s strong US CPI release has clouded the outlook for Fed interest rate cuts and weighed on some EM currencies, we still believe booming …
The incidence of sovereign debt distress has continued to decline across the emerging world in recent weeks, driven mainly by an improvement in global risk appetite and the corresponding narrowing of credit spreads. But in some cases, things appear to …
10th April 2024
Media reports that Brazil’s government is already seeking to water down the latest fiscal rule (which has been in place for less than a year) reinforces the point we made when the rule was first unveiled that the Lula administration would be unable to hit …
9th April 2024
Oman and Bahrain both recorded sharp increases in their government debt-to-GDP ratios in the second half of the last decade, but while Oman’s public finances have improved dramatically since then, Bahrain’s have not. In Bahrain, significant tightening …
8th April 2024
El Ni ño is causing severe drought across much of southern Africa, which is likely to weigh on GDP, push up inflation and strain balance sheets. South Africa has also suffered water shortages, albeit more as a result of creaking infrastructure than low …
4th April 2024
Taiwan’s chip industry has invested heavily in making its facilities resilient to earthquakes. Disruption to production is unavoidable when a large earthquake strikes, but firms are usually able to return to close to full operating capacity within days if …
3rd April 2024
The more cautious tone of the Monetary Policy Report released by Chile’s central bank today confirms that policymakers have been spooked by the inflation surprises at the start of the year and has prompted us to nudge up our year-end rate forecast to …
After a very weak 2023, Saudi Arabia’s economy should see a modest recovery this year as the Kingdom’s non-oil economy sustains its strong momentum and more than offsets the drag from the extended oil output cuts. Last month, the General Authority for …
The rise in the aggregate EM manufacturing PMI to a three-year high in March was largely driven by strength in Asian industry, with activity elsewhere weaker. While slower growth in DMs should weigh on activity in the months ahead, strength in domestic …
2nd April 2024
The strong showing for the opposition in Turkey’s local elections on Sunday highlights the extent of voter frustration with high inflation and we think that it should be interpreted as a positive for investors by strengthening policymakers’ commitment to …
This report was first published on Monday 1 st April covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Wednesday 3 rd April. More signs of a cyclical upturn Sizeable rises in the …
1st April 2024
The South African Reserve Bank left its repo rate unchanged at 8.25% for a fifth consecutive meeting today and the continued hawkish rhetoric from Governor Kganyago supports our view that rate cuts will only happen after May’s election. Even then, a …
27th March 2024
The Central Bank of Sri Lanka today cut interest rates by a further 50bps and hinted at further rate cuts to come. With inflationary pressures under control and the economic recovery struggling, more policy easing is likely before the end of the year. …
26th March 2024
We think Emerging Market (EM) dollar bond yields will fall in general by the end of this year, thanks both to lower US Treasury yields and, in some cases, narrower spreads. But the sovereign dollar bonds of some EM economies, such as South Africa and …
20th March 2024
South Africa’s latest hard activity data show that the economy continued to struggle at the start of 2024, which will hardly help the ANC’s hopes of keeping its majority in parliament after May’s election. That said, we still think that easing electricity …
Capital inflows into EMs have picked up in recent weeks on the back of an improvement in risk appetite. This may set the tone for the rest of the year, particularly once the Fed begins to cut interest rates. Since the publication of our previous Capital …
18th March 2024
Vladimir Putin secured a record victory in Russia’s presidential election over the weekend. The focus now will be on whether this emboldens Putin to devote more resources to the war effort, whether policymakers push through unpopular non-war fiscal …
Donald Trump’s threat to impose a blanket 10% tariff on all US imports would hit Vietnam hard. But provided they were accompanied by a 60% tariff on all imports from China (as Trump has also threated), then Vietnam should benefit from a new round of Trump …
We expect the divergence in growth prospects observed in EM Q4 GDP data to be a running theme over the next couple of quarters too. Specifically, we think that some of last year’s outperformers, including Brazil and Mexico, will struggle as one-off tail …
14th March 2024
The devaluation of the Nigerian naira earlier this year appears to have brought it much closer to fair value, which will help to put the balance of payments on a more stable footing. The key now is for the CBN to allow the naira to move in line with …
13th March 2024
Turkey’s balance of payments figures for January showed that the current account deficit continued to narrow, but the drop in capital inflows in recent months is a concern and it appears that this forced the central bank to sell FX reserves. This adds to …
12th March 2024
EMs will account for over half of global GDP within the next decade and almost 60% by 2050. Headlining this, India will become the world’s third-largest economy as soon as 2026. More generally, EMs with rapid population growth, the potential to develop …
11th March 2024
Out of negative territory but set to remain low CPI inflation turned positive last month for the first time since September, thanks to temporary factors such as the volatility in food and tourism prices around Lunar New Year. But persistent overcapacity …
This year is a particularly busy one for elections in the emerging world, and these votes raise the risk of fiscal giveaways that worsen public debt dynamics. We think the risks are greatest in Tunisia, followed by South Africa and Romania. Elsewhere, …
7th March 2024
The announcement of an agreement over a new IMF package for Egypt, coming on the back of the rate hike and devaluation earlier today, represents a shift towards more orthodox policymaking. While it is still early, Egypt now appears to be on the path out …
6th March 2024
The sharp narrowing in Colombia’s current account deficit last year to its lowest level since the aftermath of the Global Financial Crisis looks encouraging, but it was entirely a result of the weakness of domestic demand. As the economy recovers, the …
4th March 2024
Morocco’s improving balance of payments position and the sharp slowdown in inflation should provide the central bank, Bank Al-Maghrib (BAM), with the confidence to take the next step toward a fully floating dirham. We think the currency will appreciate …
