Filtered by Region: Emerging Markets Use setting Emerging Markets
BJP on course for another big win The biggest (and most expensive) vote in history commenced today as India started voting in its general election. Almost a billion people are eligible so given the daunting logistical challenge, voting will take place …
19th April 2024
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
Gulf find itself in a bind if conflict escalates The ratcheting up of tensions in the Middle East between Iran and Israel over the past couple of weeks has raised concerns about a broader regional conflict. For now, though, it seems unlikely that the Gulf …
Aggregate EM GDP growth will enter a slower phase over the coming quarters. But the headline figure masks large variation in prospects at a country level, with many EMs experiencing a reversal of last year’s fortunes. While we expect the EM monetary …
The first Fed rate cut of this cycle is now looking like a second-half event and EM investors – and policymakers – are having to adjust to the delay. EM currencies have weakened as fears about policy constraints have spread, but how vulnerable are these …
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 …
This page has been updated with additional analysis since first publication. Inflation fall will not sway the SARB into interest rate cuts The larger-than-expected fall in South Africa’s headline inflation rate, to 5.3% y/y, in March will not be enough to …
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
Fiscally-fuelled improvement unlikely to last long Stronger-than-expected official GDP figures indicate that China’s economy gained momentum in Q1, thanks to policy support. But monthly activity data suggest that this policy-driven recovery is shaky. …
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
Inflation edges down and will remain low Saudi Arabia’s headline inflation rate slowed to 1.6% y/y in March on the back of weaker food and non-food inflation. While there’s likely to be a slight bump up in inflation in the second half of this year, the …
Further jump in inflation means tightening cycle likely to continue Nigeria recorded another acceleration in headline inflation to 33.2% y/y in March as the previous falls in the naira have continued to push up prices. And while the naira has staged a …
Inflationary pressures both domestically and in the US may keep government bond yields in emerging markets (EM) high for a while yet. But we think they will eventually fall later in the year. 10-year EM government bond yields have followed US Treasury …
12th April 2024
Spectre of former President Zuma worries ANC The big news in South Africa this week was a court decision allowing former president Zuma to stand in the May elections, which has added another level of uncertainty to the vote. Opinion polls suggest that his …
Strong US CPI puts further pressure on the RMB The stronger US CPI print on Wednesday pushed back expectations for Fed rate cuts. Most currencies depreciated against the US dollar as a result. But, while the offshore renminbi weakened 0.4% on Wednesday, …
How is Egypt’s policy shift one month on It’s now been just over a month since Egypt’s “ Super Wednesday ” policy shift and, while it is still early days, the signs so far are positive and this time might be different to past policy U-turns. After …
Oil price rally a headache for most in EM Europe... The price of brent crude oil continued to hover around $90pb this week, near its highest level in six months, as geopolitical tensions in the Middle East added to fears over oil supply. For most …
Is Yoon now a lame duck? President Yoon’s People Power Party (PPP) in Korea won just 108 of the 300 seats up for grabs in this week’s parliamentary election, down from 119 in the previous parliament. That left the Democratic Party (DP) and some smaller …
This page has been updated with additional analysis since first publication. The fall in headline consumer price inflation in March to a 10-month low will comfort policymakers and, looking ahead, we think headline inflation will reach the RBI’s 4% …
This page has been updated with additional analysis since first publication Credit growth plummets in a further sign of weak demand Bank loan and broad credit growth in China both decelerated sharply in March. (See Chart 1.)While we expect the PBOC to cut …
Encouraging signs for manufacturing sector The general election is a week away and manifestos have finally been released. The main opposition Indian National Congress (INC) party has now published its full manifesto, while the BJP published manifestos for …
This page has been updated with additional analysis since first publication . Export volumes remain strong Despite a larger-than-expected y/y fall in export values, export volumes climbed to record highs. Nonetheless, we still think export volumes will …
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 …
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 …
This page has been updated with additional analysis since first publication . Overinvestment will keep inflation below pre-pandemic average CPI inflation rose less than expected in March but is still trending upwards. We think an easing of food price …
Inflation stabilises, easing cycle is not that far away The stabilisation in Russian inflation at 7.7% y/y in March was in line with expectations and adds to evidence that inflation pressures have continued to cool in recent months. The month-on-month …
10th April 2024
Underlying services prices still providing cause for concern The slightly softer-than-expected Brazilian inflation figure for March of 3.9% y/y keeps the door open to 50bp interest rate cuts at the Copom meetings both next month and in June. But with …
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 …
BoT on hold, but cuts likely later in the year Thailand’s central bank (BoT) today resisted pressure from the government to loosen monetary policy, but with growth set to remain weak and inflationary pressures very subdued, we still think rate cuts are …
Taiwan will be one of the main beneficiaries of a lengthy global AI investment boom. We expect its economy to growth much faster over the rest of this decade than it did during the 2010s. It already appears that global excitement about the possibilities …
9th 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 …
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
Inflation eases even after currency plunge Egypt’s headline inflation rate slowed to 33.3% y/y in March despite the near 40% fall in the pound’s official exchange rate last month. That said, the effects of the currency fall will continue to feed through …
The EM team has taken over the podcast this week to highlight two of the biggest issues in emerging market investing. William Jackson talks to Shilan Shah about how emerging market economies will fare as fossil fuels are phased out in favour of green …
20th March 2024
Economy running hot in Q4, momentum continues into 2024 The 4.9% y/y rise in Russian GDP in Q4 was slightly below expectations but it followed an upwards revision to growth in Q3 (to 5.7%) and suggests that the economy continued to run hot at the end of …
5th April 2024
SA’s weak demand is holding back its recovery South Africa’s March PMI numbers were disappointing and support our view that, while the drags from loadshedding and austerity are easing, the recovery this year will be subdued. The ABSA/BER manufacturing …
Identifying pockets of risk amid the optimism The positive news on India shows no signs of abating. The final composite PMI reading for March released this week rose to a 90-month(!) high. (See Chart 1.) That was underpinned by strength in both the …
Fiscal risks building in parts of CEE The larger-than-expected 2023 budget deficit figures released across parts of Central Europe this week underline our concerns about the fiscal challenges facing the region, particularly in Hungary. The better news …
PBOC eases auto loan policy to stimulate demand On Wednesday, the PBOC scrapped the regulatory minimum down payment for car loans on all passenger vehicles, giving banks the freedom to offer higher loan-to-value ratios. This latest attempt by the central …
RBI policy pivot creeping closer The RBI kept the repo rate on hold at 6.50% today as expected but the more interesting aspect was the slight dialling down of its hawkish rhetoric. With inflation grinding down towards the central bank's 4% target, we …
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
This page has been updated with additional analysis since first publication. Extended pause likely until 2025 The National Bank of Poland (NBP) left its policy rate on hold at 5.75% today as it looked through the recent sharp drop in inflation in March. …
Easing cycle just around the corner Romania’s central bank left its policy rate on hold at 7.00% as expected again today but with inflation likely to fall further, a monetary easing cycle is probably just around the corner. We maintain our view that the …
The threat of an outright conflict between Iran and Israel is at its highest point since the war in Gaza began. A full-blown war would not only have major repercussions for Iran’s own economy, but the spillovers into oil markets could have a significant …
