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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
The green transition will deal a significant blow to EM oil producers that have failed to save their windfalls (Nigeria, Colombia, Angola), but boost the export revenues of economies such as Chile and South Africa that are endowed with the raw materials …
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 …
This page has been updated with additional analysis since first publication. Inflation continues to rise, tightening cycle now at risk of restarting The stronger-than-expected rise in Turkish inflation to 67.1% y/y in February adds to our concerns given …
The pick-up in the EM manufacturing PMI last month suggests that EM industry continued to strengthen in Q1. But while manufacturers have benefitted from strong demand in some economies (such as India, Turkey and Russia), the overall picture is that it …
1st March 2024
Turkish GDP growth continues to run hot Data released this week showed that Turkish GDP growth unexpectedly re-accelerated in Q4, which challenges the view that recent aggressive monetary tightening is rebalancing the economy. We published our initial …
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
Mexico election campaign officially kicks off Today is the first official day of campaigning for Mexico’s election that takes place on 2 nd June. President López Obrador (Amlo) is barred from running but his anointed successor, Claudia Sheinbaum, is well …
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
Korea election: reform prospects in the balance President Yoon Suk-yeol has seen a rebound in his popularity in recent weeks, with an opinion poll published today showing an approval rating of 39% – up from a low earlier this year of just 29%. The …
Consumer resilience comes to an end The stagnation in Brazil’s GDP in Q4 and the decline in household consumption confirmed that the economy lost momentum sharply and, while we expect a pick-up in growth in the coming quarters, we’re now more confident in …
HCES underscores need to update CPI index The initial findings of the Household Consumption Expenditure Survey (HCES) for 2022-23 (the full report will be released in June) show a shift in consumption patterns since the previous survey from over a decade …
PMI bounces, but still looks like a soft start to 2024 Although South Africa’s manufacturing PMI jumped in February, the sector appears to have made a soft start to the year. We still expect growth to pick up over the rest of this year as loadshedding …
Turkey and Russia continue to show signs of resilience The manufacturing PMIs out of Central and Eastern Europe (CEE) generally ticked up last month, but still suggest that industrial sectors remained weak. In contrast, the increases in the PMIs in Turkey …
The February PMIs for economies in Emerging Asia edged down last month and were mostly inside contractionary territory. The outlook for manufacturing in the region remains poor in the near term, with high interest rates and weak foreign demand likely to …
This report was first published on Friday 1 st March covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Tuesday 5 th March. An encouraging improvement in services activity The PMIs are …
Aggregate EM growth softened towards the end of last year and we think it will remain weak in 2024. But there will be divergence at the country level with growth slowing in those economies that outperformed in 2023 and growth picking up in last year’s …
29th February 2024
Economies in Central and Eastern Europe ended 2023 on a weak note, but the outlook for this year looks brighter. Lower inflation and interest rates should support a recovery in domestic demand over the coming quarters. In contrast, Turkey’s economy has …
This page has been updated with additional analysis since first publication. Exceptional economic performance suggests no imminent rate cuts The GDP data for Q4 confirm that India’s economy ended last year with a bang. Looking ahead, we expect economic …
Even with Ras el Hekma deal, Egypt needs the IMF Headlines in the past week have been dominated by Egypt’s deal to sell the Ras el Hekma project to the Abu Dhabi sovereign wealth fund, ADQ, to provide crucial foreign currency inflows. But, even with this …
China’s economy has regained some strength recently. We expect this to continue over the coming months, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
This page has been updated with additional analysis since first publication. Economy re-accelerates in Q4 The pick-up in Turkish GDP growth to 1.0% q/q in Q4 was driven by a rebound in private consumption and suggests that aggressive monetary tightening …
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
28th February 2024
Romania’s large twin budget and current account deficits remain a key concern. One near-term risk is that fiscal policy stays very loose (or is loosened further), particularly in view of elections taking place later this year. This could cause risk …
Africa Chart Pack (Feb. 2024) …
Emerging Asia Chart Pack (February 2024) …
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
Today’s budget maintains a supportive fiscal stance, and contains major steps to revitalise the property sector. Spending to attract foreign visitors to Hong Kong and support businesses was stepped up too. Taken together, these measures should prevent the …
The $35bn deal struck between Egypt’s government and the Abu Dhabi sovereign wealth fund, ADQ, will go some way towards alleviating acute balance of payments strains and pave the way for an enhanced IMF deal to be signed off soon. A devaluation of the …
27th February 2024
Mexico’s President López Obrador’s cloak of fiscal prudence is being shed this year as Morena tries to bolster its support ahead of June’s election. As some of the factors supportive of the public finances in recent years also fade, the debt-to-GDP ratio …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
Talk of the South African Reserve Bank’s inflation target being lowered has reared its head again. In this Update , we answer five key questions on what this could mean for the economy. In the near term, the adoption of a lower target would prompt us to …
Equities in Emerging Asia have outperformed those elsewhere in recent weeks, and we think that they’ll keep doing well during the rest of the year. Chart 1 shows that, while EM equities had a difficult start to the year (see blue bars, which show …
26th February 2024
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
Economic growth in the Middle East and North Africa will strengthen a little this year but is likely to come in well below consensus expectations. OPEC+’s output cuts should gradually reverse from the end of this quarter but will keep a lid on economic …
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Funding boost could be large, if banks do their part China’s housing market is still struggling . High frequency data suggest that sales in major cities have ticked up since the start of the year. And price declines eased slightly in January. (See Chart …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
Donald Trump’s previous tariffs did surprisingly little damage to China’s economy, but China may find it harder to shrug off the damage in a rematch. Mr Trump is threatening larger tariff increases if he is elected again. And the factors that cushioned …
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
22nd February 2024
Tunisia: threat of messy crisis and default builds Tunisia managed to meet a Eurobond repayment this week but only by draining its already-low FX reserves. In the meantime, steps were also taken towards deficit monetisation, taking Tunisia further down …
Growth pick up is likely to be short-lived Nigeria’s GDP growth rebounded to 3.5% y/y in Q4 but we doubt that this strength will last. Tighter monetary policy, coming alongside the pernicious effects of further weakness in the naira and ongoing struggles …
Inflation drops back, March rate cut in play The drop back in Mexico’s headline inflation rate to 4.5% y/y in the first half of February leaves Banxico on course to begin an easing cycle at March’s Board meeting. That said, the rise in core services …
New governor committed to the tight policy stance The hawkish statement accompanying the Turkish central bank’s decision to leave interest rates unchanged at 45.00% today supports our view that a shift to monetary easing remains some way off and we still …
Domestic demand to drive the recovery Poland’s activity data for January suggest that the reacceleration in wage growth at the start of this year supported domestic demand, while the export-orientated industrial sector struggled. We think that a further …
This page has been updated with additional analysis since first publication. Manufacturing and services activity likely to remain robust The flash composite PMI reading for February suggests that the economy continues to perform exceptionally well. …
