Filtered by Region: Emerging Markets Use setting Emerging Markets
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency risks remain low, but fiscal vulnerabilities continue to lurk Financial vulnerabilities remained near …
Easing inflation and recent liquidity injections suggest a cut to policy rate next week Rupee weakness is not a major risk to policy outlook We expect 100bps of cuts this easing cycle, a more dovish view than the consensus The announcement of large …
EM GDP growth picked up in the second half of 2024 but faces headwinds in 2025 from tight policy at home and challenges abroad. Our growth forecasts generally sit below the consensus. Monetary easing will continue but, outside Asia, high inflation means …
28th January 2025
Our China Activity Proxy suggests that activity picked up in December, but that was only enough to drive a modest uptick over Q4 as a whole. The CAP indicates that the economy grew by just 4.4% in 2024, well below the official figure of 5.0%. As a result …
India’s outbound tourism market is poised to become one of the world’s largest over the coming years. The Maldives and the UAE are arguably the biggest beneficiaries, though Oman and Thailand are well placed to take advantage too. Other EMs – particularly …
27th January 2025
Trump ups the ante against Russia Comments by President Trump that he would tighten US trade and sanctions policy against Russia if Putin does not agree to negotiate an end to the war in Ukraine are likely to have been received with anger in Moscow. The …
24th January 2025
Nigeria becomes BRICS latest partner country We think Nigeria’s recent admittance as the BRICS’s latest “partner” member adds to the evidence that the government is trying to straddle the geopolitical divide between US- and China-led blocs. After being …
The Trump administration’s first week has given policymakers in Latin America – and Mexico in particular – plenty to fret about. Unsurprisingly, migration has been a major focus for President Trump so far. His inauguration speech mentioned “returning …
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
Having hit a record high, we expect the trade-weighted US dollar to climb further in 2025. While the short-term danger that a strong dollar poses to the world economy tends to be overblown, the bigger risk is that is worsens external imbalances which …
We held an online briefing yesterday on Mexico’s economy and how it may be impacted by the Trump administration. (Listen to the on-demand recording here .) This Update answers some the key questions that came up. How do you interpret the threatened 25% …
23rd January 2025
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
China’s surging exports have been gaining international attention, but concerns about overcapacity have focussed on “strategic sectors”. Far less acknowledged is the fact that China has been gaining significant global export market share across the board, …
22nd January 2025
We are pessimistic about the outlook for most emerging market assets in 2025, due to the effects of Donald Trump’s agenda, slowing Chinese activity, subdued commodity prices, and domestic challenges. Trump’s first day in office proved a decent one for …
South Africa’s activity data for November points to a strong end to last year, underpinned by the mining and retail sectors. We think GDP will expand by an above-consensus 2.3% in 2025. The retail sales data released today showed that the sector continued …
We think Trump’s trade policies will weigh on equity returns outside of the US, making 2025 a year of muted returns for emerging market (EM) equities. But we think it will still be a decent year for stocks in other developed markets (DMs). (See Charts 1 & …
Hopes that Finance Minister Nirmala Sitharaman will deliver a big fiscal package to get the economy out of its recent soft patch in the upcoming Union Budget are likely to be disappointed. Some more accommodative tax and spending measures are on the …
Inflation edges up but SARB to continue with cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 3.0% y/y, in December, combined with the recent recovery in the rand, supports our view that the SARB can continue with …
President Donald Trump for now at least appears to be in favour of the H-1B visa scheme, a key route for Indians to work in the US tech sector, but the scheme is a key source of friction among his supporters. If restrictions around H-1B visas are …
21st January 2025
Capital outflows from EMs have picked up again over the past few weeks amid a strengthening of the US dollar and broad increases in bond yields, but also country-specific issues – most notable declining optimism about the outlook for India’s economy and …
20th January 2025
Dovish SARB on the cards even with weak rand The rand’s recent weakness has raised worries in the market that the SARB’s easing cycle will slow. While the risks to our forecast for the repo rate are certainly tilted to the upside, we still think a …
17th January 2025
Israel & Hamas: an end to the war The ceasefire deal agreed between Israel and Hamas this week, if it sticks, would represent a major de-escalation in the region. It’s a multi-phase deal that will involve the exchange of hostages and prisoners, eventually …
Six months since its formation, South Africa’s Government of National Unity (GNU) has fostered a lot of goodwill in the market. Loadshedding is seemingly a thing of the past, logistics constraints have eased, and the fiscal position has improved. But …
16th January 2025
The Israeli cabinet’s decision to delay a vote on approving the ceasefire with Hamas adds a high degree of uncertainty as to whether it will take e ffect on Sunday, as intended. If a ceasefire can stick, it could lead to a sustained improvement in the …
NBP keeps rates on hold, probably for the whole year The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and the inflation backdrop is likely to prevent the restart of the easing cycle for some time. We don’t expect …
The ceasefire reportedly agreed between Israel and Hamas is likely to have significant consequences for some countries in the region, notably Israel itself as well as Jordan and Egypt. But the possible disinflationary impact for the rest of the world via …
15th January 2025
Inflation continues to accelerate The rise in Russian inflation to 9.5% y/y in December is likely to be followed by an increase to more than 10% early this year. The central bank has set a high bar for further tightening but we think the balance remains …
Easing cycle to stay on pause amid inflation and fiscal risks The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, amid continued concerns about the inflation outlook and the direction of fiscal policy post-election. We …
Increase in inflation may push CBN to deliver one last 25bp hike The further rise in Nigeria’s headline inflation rate, to 34.8% y/y in December, raises the risk that the central bank pushes ahead with one last interest rate hike at their next meeting in …
For so long the darling of global investors, India’s economy and financial markets have hit a sticky patch of late. What can policymakers do to get the economy out of its funk? And can markets make a roaring comeback? Just ahead of the all-important 1 st …
The debt swap that kicked off in November and extends to 2028 reduces the risk of near-term defaults by local government financing vehicles, which would be destabilising for financial markets. But it is not a lasting solution for China given it only …
Mexico is once again bracing for trade protectionism in the US. And while it staved off tariffs in the first round of the trade war, on balance we don’t think it’s in as strong a negotiating position this time round. We’ve written extensively on what a …
14th January 2025
EM sovereign FX debt issuance surged over the past year and at the start of 2025, albeit with many sovereigns returning to global markets and issuing at high interest rates. Borrowing does not look excessive and there’s unlikely to be a further sharp rise …
Poland’s public debt dynamics are more favourable than many of its peers. But the sharp widening of the budget deficit, coupled with the decision to leave austerity measures until next year and beyond, suggests that it will be challenging to get the debt …
The Brazilian real plunged in 2024, due to fiscal risks. While we suspect that further piecemeal austerity measures will prevent another leg down in the currency, with investors’ fiscal fears unlikely to be fully addressed and Brazil’s terms of trade set …
13th January 2025
This new interactive dashboard combines the key takeaways and most insightful charts from our extensive research into demographic trends and their economic and fiscal consequences. The central theme is that ageing populations are an acute challenge for …
Trump softening his expectations on the war? Expectations for an imminent end to Russia’s war in Ukraine once Trump takes office as US President on 20 th January took a knock this week, following an FT report and recent comments from officials suggesting …
10th January 2025
Copom to press ahead with more hikes despite fall in inflation The fall in Brazil’s headline inflation rate in December, to 4.8% y/y, coupled with the rebound in the real over the past couple of weeks, won’t be enough to stop Copom following through with …
Mozambique and the return of Mondlane Post-election unrest in Mozambique threatens to re-escalate with Daniel Chapo set to be inaugurated as the country’s next president on Wednesday and opposition leader Venâncio Mondlane returned to the country this …
Uptick in underlying inflation consistent with demand recovery Headline CPI inflation fell last month but this was driven by weather-related volatility in food prices. More important is that core CPI and PPI both picked up, adding to signs that policy …
9th January 2025
Brazil’s recent period of rapid growth is likely to come an end this year. Sovereign debt concerns will almost certainly rumble on, but further piecemeal austerity measures will probably prevent another rise in bond yields or leg down for the real. In a …
8th January 2025
We think Nigeria’s interest rate hiking cycle is over. The CBN is likely to be confident that moderating petrol prices and a more stable naira will quickly see the disinflation process resume. Still, we think the CBN will be wary of the inflationary risks …
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
Donald Trump’s second term could redraw the global geopolitical map. A sustainable “Grand Bargain” with China, warmer relations with Russia, or a breakdown in the relationship between the US and its traditional allies could each reshape supply chains and …
The latest inflation figures out of Turkey have given us more encouragement that the disinflation process is underway and that the central bank could lower interest rates towards 30% by year-end. Even so, real interest rates will need to be kept …
Brazil’s public finances have been in the headlines for all the wrong reasons over the past month. But while an extreme case, the combination of a large budget deficit and limited political will to rein it in isn’t unique to Brazil. Indeed, Mexico, …
The further slump in net foreign direct investment (FDI) inflows into India last year seems in large part a reflection of still-high global interest rates. One implication therefore is that the slump will reverse now that global monetary policy is being …
Turkey’s shift back to macro orthodoxy made it a key EM success story last year, with inflation falling, the currency holding up and its financial markets delivering outsized returns. But the job of restoring stability is far from complete and 2025 is …
6th January 2025
