Filtered by Region: Emerging Markets Use setting Emerging Markets
Saudi Arabia’s Crown Prince Mohammed bin Salman’s (MbS) ultimate succession to become king is inevitable and a formality. Having been the de-facto leader of the Kingdom for several years it may not result in much of a deviation in economic policymaking. …
1st July 2024
PMI still weak, but at least its improving South Africa’s manufacturing PMI remained weak in June but improving electricity supply conditions and reduced political uncertainty should support a modest pick-up in activity. That said, the economy is in a …
Surveys likely understate health of manufacturing sector This report was first published on Monday 1 st July covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Wednesday 3 rd July. …
This page brings together our analysis of how Donald Trump's return to the White House will affect the outlook for emerging economies. Use the Table of Contents on the right to navigate. All of our analysis on the election, including the implications for …
28th June 2024
Supply-side reform won’t fix consumer weakness This week, the government published guidelines on creating “new consumption scenarios” with the aim of “coordinating the expansion of domestic demand while deepening supply-side structural reforms”. We’ve …
Further economic weakness in Korea Korea’s economy weakened markedly in May. Data published today show that retail sales fell by 0.2% m/m last month, a second consecutive monthly fall. With the labour market cooling and high interest rates weighing on …
More to plunge in inward FDI that meets the eye The Q1 2024 Balance of Payments data released this week has refocused attention on the slump in net foreign direct investment (FDI) inflows. In the four quarters to Q1, net FDI inflows dropped to US$26.5bn, …
China’s economy has regained some momentum in recent quarters and should continue to do relatively well in the near-term. Consumers remain cautious, and a slew of policy measures aimed at supporting the ailing property sector has done little to boost new …
Rates on hold again, but a dovish tilt Mexico’s central bank left rates unchanged at 11.00% today, but there was a surprising dovish shift in the Board’s communications – despite the post-election fall in the peso. A small reduction in the policy rate …
27th June 2024
Egypt needs to adapt to keep the lights on Daily blackouts in Egypt have returned as gas shortages intensify and, while the government can afford to spend its way out of the issue for now, climate risks require a permanent shift in strategy. Temperatures …
Monday marks the 30 th anniversary of the introduction of Brazil’s currency, the real, as part of a stabilisation plan (the Plano Real ) which successfully tamed runaway inflation. For other EMs facing similar problems, most notably Argentina, the key …
CNB cuts by larger-than-expected 50bp, but delivers hawkish guidance The decision by the Czech National Bank (CNB) to deliver another 50bp cut to its policy rate today, to 4.75%, was a dovish surprise to most analysts (although not ourselves). That said, …
The Emerging Markets Economic Outlook contains analysis and forecasts for the seven emerging regions we cover: China, India, other Emerging Asia, Latin America, Emerging Europe, the Middle East & North Africa and Sub-Saharan Africa. It also contains …
Overview – Growth in Sub-Saharan Africa is set to accelerate over the next couple of years, helped by a more favourable external environment as well as falling inflation and interest rates. But tight fiscal policy will constrain the recovery and our …
Rates on hold, CBRT sticks to hawkish message The decision by the Turkish central bank (CBRT) to leave its main policy rate on hold again today, at 50.00%, was widely expected, and the continued hawkish communications support our view that interest rate …
A strong end to Q2 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional growth strengthened at the end of Q2, with our regional-weighted measure of sentiment rising to a two-year high in June. …
Will hype around AI continue to fuel a US stock market rally? How are elections and monetary policy shaping the path for bond yields? What will drive the dollar through the rest of 2024 and into 2025? Our Global Markets economists held this special …
26th June 2024
Slightly softer inflation print won’t ease Copom’s concerns The slightly lower-than-expected Brazilian inflation figure, of 4.1% y/y, for the first half of June won’t change the picture that the central bank’s easing cycle is over – for this year at …
Bank Al-Maghrib joins the EM rate cutters Morocco’s central bank, Bank Al-Maghrib (BAM) announced this afternoon that it has cut its key policy interest rate by 25bp, to 2.75%. We expect that the Bank will continue to tread cautiously, as the governor has …
25th June 2024
Overview – China’s economy is on course to expand by 5.5% this year, buoyed by policy support and strong exports. But we remain less sanguine about the medium-term outlook. Domestic Demand – A ramp up in fiscal spending should boost domestic demand in …
Prime Minister Modi begins his third term with a weakened mandate, but an economy that is primed to grow by 6.5-7% per year between 2024 and 2026. That would put India on course to become the world’s third largest economy within the next couple of years. …
Growth in the Gulf economies is likely to pick up in the coming quarters, particularly as oil output starts to rise from October. We think non-oil sectors will continue to grow strongly. But the outlook will become more challenging from 2025 as oil prices …
Emerging Asia Chart Pack (June 2024) …
Are signs of recovery sustainable? Is inflation receding enough for more central banks to join the global easing cycle? Do upcoming elections pose a risk to the economic outlook? Our senior economists for held two special briefings on Monday, 1st …
24th June 2024
Nearly all major emerging market (EM) currencies have fallen against the US dollar so far this year, but we think the downside for most of these currencies is limited from here. While most EM currencies are starting the week on a strong note, they have a …
Our China Activity Proxy suggests that economic growth weakened in May on the back of a fall in services activity. Industry also slowed, following months of outperformance. We doubt this marks the start of a downturn just yet – fiscal stimulus and strong …
Domestic demand driving the recovery The Polish activity data for May were a mixed bag with retail sales bouncing back, while industry suffered a renewed contraction. With domestic demand likely to stay strong over the coming months, we maintain our …
In the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing previews upcoming US PCE inflation data, outlines the fiscal challenges facing the next UK Chancellor and explains how Chinese manufacturing …
23rd June 2024
Bond buying redux PBOC Governor Pan Gongsheng this week again flagged the PBOC’s plans to start buying and selling government bonds and again argued that this wouldn’t constitute QE. (See our earlier discussion of the issue here .) The purpose of the new …
21st June 2024
SA: GNU stability will face reform challenges The announcement that a Government of National Unity (GNU) has been formed in South Africa, led by the ANC and DA has triggered a rally in local financial markets. But this may prove to be the easy part; …
Space for interest rate cuts narrows across CEE The Hungarian central bank’s decision to opt for a smaller 25bp interest rate cut at its meeting this week fits into a broader theme of policymakers in several parts of the EM world moving towards a slower …
Latin American assets have generally underperformed those elsewhere of late, in part driven by rising risk premia on the region’s assets. We think these risk premia may rise further over the coming year or so, given our downbeat view on economic growth in …
The G7 loan to Ukraine announced last week and the narrowing window to approve a new debt relief package once the payment suspension with private creditors ends in August has shone the spotlight on Ukraine’s large external financing needs. This Update …
20th June 2024
The outcomes of the EM central bank meetings over the past 48 hours or so underscore the point that, while the EM monetary easing cycle is likely to continue over the coming quarters, it will no longer be led by Central Europe and Latin America. Central …
Overview – We expect economic growth in most countries in Asia to slow in the second half of 2024, as tighter fiscal policy, high interest rates and weaker global growth all weigh on demand. Inflation is back to target in most countries and likely to …
Lebanon on verge of being drawn into the war Skirmishes between Hezbollah and Israeli forces have intensified, culminating in Israel’s approval of an “offensive” into Lebanon this week. Not only does this threaten to exacerbate Lebanon’s prolonged …
After a strong start to the year, aggregate EM GDP growth will slow over the coming quarters. Within this there will be regional variation, with Emerging Asia the outperformer and Latin America the laggard. While we expect the EM monetary easing cycle to …
Overview – Prime Minister Modi begins his third term with a weakened mandate, but an economy that is primed to grow by 6.5-7% per year between 2024 and 2026. That would put India on course to become the world’s third largest economy within the next couple …
BI hints at rate cuts, timing dependent on currency Bank Indonesia today left interest rates unchanged (at 6.25%), but hinted at possible rate cuts later in the year, provided that the rupiah stabilises against the US dollar. The central bank’s dovish …
No room for rate cuts this year The Brazilian central bank kept the Selic rate unchanged at 10.50% and with the headline inflation rate set to rise further in the coming months, we see no room for a resumption of the easing cycle this year. The decision …
19th June 2024
The European Commission’s recommendation to open the Excessive Deficit Procedure (EDP) against Poland, Hungary and Slovakia for breaching the EU’s fiscal rules won’t force a drastic change in policymaking, nor will it deal with the structural factors …
The Monetary Policy Report released by Chile’s central bank today alongside the communications to yesterday’s policy meeting suggest that the easing cycle over the next few quarters will be stop-start. We now expect a pause at the central bank’s next two …
Inflation unchanged, GNU means rate cuts later this year more likely South Africa’s headline inflation rate was unchanged at 5.2% y/y in May and, while still some way off the 4.5% mid-point of the SARB’s target range, the formation of a government of …
Easing cycle slows again, limited room for rate cuts in H2 The communications accompanying the decision by the Hungarian central bank (MNB) to cut its base rate by a smaller 25bp today, to 7.00%, were fairly hawkish and support our view that the base rate …
18th June 2024
Overview – Growth in the Gulf economies is likely to pick up in the coming quarters, particularly as oil output starts to rise from October. We think non-oil sectors will continue to grow strongly. But the outlook will become more challenging from 2025 as …
The Third Plenum may conclude with a pledge of comprehensive reform in areas spanning the private sector, manufacturing, innovation, social security, economic management and more. That may excite hope of substantial change but, in the Party’s eyes, it has …
Korea’s economy rebounded strongly last quarter but there are already signs it is losing momentum, and we expect growth to struggle over the coming year. Export growth is likely to ease a little, but the main drag will come from weaker domestic demand, …
Demand picks up while supply-side falters May’s activity data were a mixed bag with an uptick in retail sales and slowdown in industrial production partially reversing the recent trend of strength on the supply side and weaker demand. Consumer spending …
17th June 2024
Inflation rises further, another rate hike likely in July The further rise in Russian in inflation to 8.3% y/y in May was stronger than expected, and means that an interest rate hike at the central bank’s next meeting in July now looks all but certain. …
14th June 2024
Nigeria: Food price rises put focus on government A recent surge in food prices in Nigeria presents real risks to the optimistic tone that the authorities are trying to strike on the inflation outlook. Tackling the structural impediments to food …
