Filtered by Region: Emerging Markets Use setting Emerging Markets
EU announces new tariffs on China The immediate macroeconomic impact of the EU’s new tariffs on EV imports from China announced this week are likely to be fairly small. As we noted here , the EU imported 440,000 EVs (€9bn) from China over the past year. …
14th June 2024
Credit growth bottoming out thanks to fiscal support Bank loan growth in China was the slowest on record in May, but accelerated government bond issuance helped broader credit growth edge up. Fiscal loosening should support further gains in the near term. …
Still a bright future in Europe China protested the European Commission’s (EC) imposition of additional tariffs on Chinese-made EVs this week but, if the EU goes no further, China’s government is likely to see this as a good outcome. The European tariffs, …
Morocco: riding the EV wave Morocco’s domestic auto industry has boomed over the past decade and is drawing investment from major firms in Europe and China. With plans to more than double output in the coming years, the sector is likely to provide a …
13th June 2024
The authorities in several major emerging markets, including Egypt, Argentina and Nigeria, have taken important policy steps recently that may allow them to ease restrictions on access to foreign currency. But we don’t think that this is the start of a …
With economic activity strengthening across Emerging Europe and inflationary pressures resurfacing in several countries, we think that the scope for monetary easing in the region this year is relatively narrow. Our interest rate forecasts in most …
This page has been updated with additional analysis since first publication. Inflation cooler than most expected Consumer price inflation came in cooler than most expected last month, which should reassure the RBI as it considers when to begin its easing …
12th June 2024
This page has been updated with additional analysis since first publication. Producer prices will likely fall again soon due to overcapacity Producer prices picked up for the first time in eight months and consumer price inflation held steady in May. We …
We think that China’s “tech” equities could resume their rally, but that they’re unlikely to see anything like the gains their developed market peers have. China’s tech sectors fared better than most of its equities today, falling only a little amid a …
11th June 2024
Rise in services inflation takes rate cuts off the table The rise in inflation in Brazil to 3.9% y/y in May and, more importantly, the re-acceleration in underlying core services inflation means we no longer expect a rate cut at the Copom meeting next …
Net capital inflows into EMs have climbed back into positive territory in recent weeks, driven by a sharp rise in foreign investors’ purchases of Turkish government debt. This strength could continue if investor confidence in the country’s policy shift is …
The ramp-up in public capital expenditure in the last five years has helped to ease some of the bottlenecks that had previously acted as a constraint on India’s economy. Despite the Modi government’s weakened electoral mandate, there are good reasons to …
Although we expect equities in general to fare well over the next year or so, we think that falls in most commodity prices will weigh on the energy and materials sectors. That would be bad news for stock markets with big energy/materials exposure and …
10th June 2024
Mexican President-elect Claudia Sheinbaum’s strong environmental credentials mean that a shift away from fossil fuels and towards renewables is likely during her tenure. We doubt that she’ll fully open up the energy sector to private investment and think …
The State Bank of Pakistan (SBP) kicked off its easing cycle today with a 150bps rate cut, and while further cuts are likely, ongoing negotiations with the IMF for a new long-term loan deal mean that the pace of further loosening is likely to be …
The elections that have concluded in major emerging economies over the past couple of weeks have been notable for several reasons: Mexico elected its first female president, Narendra Modi secured an historic third term as Prime Minister of India, albeit …
Inflation hits slowest pace in over a year Egypt’s headline inflation dropped back from 32.5% y/y in April to 28.1% y/y, the lowest outturn since the start of 2023. Inflation is likely to rise again in June and July due to government price hikes, …
ANC’s unity government talks likely to be fraught South Africa’s post-election uncertainty continued this week, with the ANC outlining its desire for a government of national unity with a broad range of opposition parties. This looks like a non-starter, …
7th June 2024
CBRT reserves on the rise The rebound in Turkey’s FX reserves in the past two months, alongside the sharp reduction in the central bank’s FX swap programme, has taken the CBRT’s net FX position into positive territory for the first time in four years. …
CBR sounds hawkish, rate hike becoming more likely Russia’s central bank (CBR) left its key policy rate on hold at 16.00% but delivered a much more hawkish message at today’s meeting. Inflation concerns are likely to persist for some time and we think the …
Equities up at the end of an extraordinary week The dust is settling on an extraordinary week for domestic politics and financial markets. Equities rallied on Monday (See Chart 1) following the release of election exit polls at the weekend pointing to a …
Weak growth to prompt Thailand rate cut We expect the Bank of Thailand to start its easing cycle on Wednesday. The economy is certainly in need of support. Although GDP returned to growth in the first quarter of the year, output was still only 1.7% above …
The RBI kept the repo rate on hold at 6.50% today as expected but, notably, two of out of the six MPC members voted for a cut. With inflation likely to continue falling over the coming months, we maintain our long-held view that the easing cycle will …
RBI still on course for August rate cut The RBI kept the repo rate on hold at 6.50% today as expected but, notably, two of out of the six MPC members voted for a cut. With inflation likely to continue falling over the coming months, we maintain our …
This page has been updated with additional analysis since first publication. Exports set to remain robust in the near-term Export values rose y/y at the fastest pace since April 2023, with export volumes also picking up. We think exports will remain …
Overview – Activity strengthened across Emerging Europe in Q1 and we expect this to be sustained over the coming quarters, with GDP growth in most economies exceeding consensus expectations in 2024. This is likely to be accompanied by renewed inflation …
6th June 2024
UAE emerges as clear winner from OPEC+ decision The decision by OPEC+ to keep oil production lower this year means that GDP growth across the Gulf will be a little weaker than we had previously expected. However, the UAE came away from the meeting the …
Aggregate EM GDP growth remained strong in Q1, though we still expect a slowdown later this year. At a regional level, Emerging Asia will lead the pack, however there are tentative signs that recoveries in parts of Central and Eastern Europe and Latin …
Activity softens slightly, but still running hot Russia’s economy appears to have had a slightly softer start to Q2, with industrial production and retail sales growth both slowing in April. Still, the latest indicators for May have remained strong and …
5th June 2024
Rates on hold until 2025 Poland’s central bank (NBP) left its policy rate on hold at 5.75% today and policymakers are likely to maintain fairly hawkish communications as inflation rebounds in the second half of the year. We don’t expect the easing cycle …
Narendra Modi will begin his third term as India’s Prime Minister with a weakened mandate and that will make the passage of contentious economic reforms more difficult. But he will still be able to work as the head of a stable coalition, and the broader …
4th June 2024
Q1 pick-up likely to be followed by weaker Q2 The sharp pick-up in Brazil’s GDP growth to 0.8% q/q in Q1 is a temporary rebound from a weak patch in the second half of last year and doesn’t mark the start of a strong recovery. Still, the pace of economic …
Modest contraction in Q1, shows 2024 growth likely to be muted at best South Africa’s economy contracted by 0.1% q/q in the first quarter of the year and the latest evidence suggests that fragility has continued into Q2. A less acute drag from …
This response has been updated with additional analysis of the UAE's May release. Gulf continues to lead the way as Egypt shows positive signs May’s batch of PMIs showed that private non-oil sectors have remained a point of strength in the Gulf economies …
Global demand is giving a bigger boost to China’s economy than we had anticipated this year and foreign tariffs will make little difference to aggregate export performance in the near term. We now think that China’s economy will expand 5.5% this year as a …
The recent weakness of wage growth in Korea seems at odds with the country’s low unemployment rate. But a closer look at the data suggests that the unemployment rate is overstating the health of the labour market and, on top of that, compositional changes …
The EM manufacturing PMI remained at a three-year high in May but the picture is becoming increasingly nuanced at a country level. Meanwhile, the PMIs also showed price pressures rose again last month, matching the signs of recent strength seen in other …
3rd June 2024
Our initial response to Claudia Sheinbaum’s victory in Mexico’s presidential election can be found here . We also held a Drop-in earlier today. This Update summarises the key points that we discussed and answers some of the client questions that we …
Elections in South Africa, India, and Mexico have generated sizeable reactions in financial markets. Those moves may not last – often the immediate reaction to political events proves overdone – but they highlight the potential for electoral surprises to …
The decision by OPEC+ to keep oil production lower over the rest of this year means that oil sectors in the Gulf will grow more slowly than we had previously anticipated and we have revised down our GDP growth forecasts for this year and next. The …
Russia outperforming, CEE continues to struggle The manufacturing PMIs for May show a divergence in the region, with conditions improving slightly in Czechia and Russia’s economy continuing to boom. But industry weakened sharply in Poland and Turkish …
Inflation surprises to the upside, bumpy disinflation lies ahead The stronger-than-expected rise in Turkish inflation to 75.45% y/y in May (consensus 74.8%) is slightly disappointing. It had looked like price pressures were easing in recent months, but …
Modi on the brink Narendra Modi appears well on course for a third consecutive term as India’s Prime Minister according to exit polls that project another big parliamentary majority for the BJP. Admittedly, exit polls have a patchy track record in India …
2nd June 2024
What to watch after Mexico’s election Mexicans head to the polls on Sunday to elect thousands of local officials, a new congress and the country’s next president. We have covered the macroeconomic implications of the election in several pieces – all of …
31st May 2024
South Africa’s looming coalition talks Two days have passed since South Africa’s polling day and, with over 70% of votes counted, the ANC’s vote share is set to be fall well short of a majority. A coalition with one of the larger opposition party now …
Russian tax hikes: important but not large enough The tax hikes announced by the Russian finance ministry this week will help to plug the hole created by the growing military budget, but won’t deliver the scale of fiscal tightening needed to stop the …
Government spending set to reaccelerate The official PMIs for May published today were disappointing. Taken at face value, they imply that the improvement in economic momentum earlier this year has stalled. One reason appears to be that government …
Our View: We expect equities to outperform most other assets as a bubble fuelled by AI-enthusiasm continues to inflate, supported by a backdrop of resilient economic growth and monetary easing cycles In particular, we expect US equities to continue to …
This page has been updated with additional analysis since first publication. Economy booming on eve of election The GDP figures for Q1 confirm that India’s economy slowed a touch at the start of the year but was nonetheless still booming on the eve of the …
Acceleration in growth, with rebalancing under the surface The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply. This offers signs that …
