Filtered by Region: Emerging Markets Use setting Emerging Markets
RBI not ready to pivot yet The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation to remain above the 4% target for a few more months yet, we doubt the central …
8th February 2024
This page has been updated with additional analysis since first publication . Inflation set to rebound gradually but remain low CPI fell deeper into deflationary territory last month. But this was largely due to the usual volatility in food and tourism …
Economy rebounds strongly following war and sanctions shock Russia’s economy expanded by 3.6% over 2023 as a whole, marking a sharp rebound from a contraction of just 1.2% in 2022 (revised from 2.1%). The activity data for December suggest that the …
7th February 2024
Saudi Arabia’s economy contracted by 0.9% over the course of 2023 on the back of the Kingdom’s oil output cuts. But the recession ended in Q4 and we think that a gradual recovery will ensue over 2024 as fiscal policy is kept loose, interest rates are …
The large rise in the Brazilian government’s budget deficit, to 8.9% of GDP, over 2023 as a whole should partially reverse this year. But the key point is that the underlying sovereign debt dynamics are worsening. And unless the government pulls out all …
Rates on hold, March rate cut is in the balance The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and we think that an interest rate cut at the next meeting in March looks finely balanced. Our current assumption is that …
While the overall incidence of sovereign debt distress in the emerging world has fallen back since last year, sovereign debt distress in frontier markets hasn’t. And, if anything, things have taken a turn for the worse in recent weeks in some of the more …
Remittances are often an underappreciated source of foreign currency for India. While growth in remittances will slow in the next few years, they should remain an important source of external funding for the economy and help to keep the current account …
Surprise hike, tightening cycle may not be finished yet The Central Bank of Kenya delivered a surprise 50bp interest rate hike today, to 13.0%, suggesting that the MPC’s inflation fears are outweighing signs that exchange rate pressures are easing. With …
6th February 2024
Chile is frequently identified as one of the main beneficiaries of global efforts to put economies on a greener footing, but we doubt that the country will reap the full benefits of this trend. Chile is likely to struggle to substantially raise copper and …
January’s batch of PMIs showed that activity across non-hydrocarbon sectors in the Gulf eased a touch at the start of the year, but activity remains robust and will support the broader economic recovery in 2024. In contrast, the disruption in the Red Sea …
5th February 2024
The big takeaway from the first Federal Reserve, European Central Bank and Bank of England meetings of 2024 is that policymakers will not be pushed into cutting rates any time soon. Policymakers in China appear to be in a similarly cautious mood. The …
Headline inflation picks up, all eyes on new governor Headline inflation edged up slightly in Turkey to 64.9% y/y in January, and the m/m figure – a 6.7% increase on the back of a large minimum wage hike – looked even worse. The figures highlight the …
Naira plunges again, is the policy shift back? This week the naira dropped for a second time in eight months, contradicting months of claims by officials that the currency will witness a revival. The hope is that this new found policy pragmatism extends …
2nd February 2024
Milei’s shock therapy plan suffers another blow As expected, the IMF Board signed off on the seventh review of Argentina’s $44bn programme this week. This gives the country access to the next loan tranche of $4.7bn to support “authorities’ upfront policy …
EM Drop-In : We'll be discussing EM policy easing, debt risks and the outlook for bond yields in our monthly EM drop-in on Thursday 8th February . Register here . Ukraine aid deals ends a week of uncertainty Hungary dropped its veto against the EU’s …
Events in Egypt yesterday, including a large interest rate hike and comments that a disbursement of more IMF funding is close, suggest that a shift towards more orthodox policy is nearing. If a new, enhanced IMF deal is agreed, that will almost certainly …
TFP touted as key metric for Xi’s new growth model President Xi has spoken a lot in recent years about the need to foster “high-quality development” (HQD). There have been a raft of policy documents and state media editorials attempting to flesh out what …
Finance Ministry focuses on consolidation Despite the looming general election, we had expected the Interim Budget for FY24/25 to be a muted affair. In the event, the Finance Ministry showed even more restraint than had generally been anticipated. The …
Elevated inflation and hawkish RBI rhetoric suggest rates to be left on hold next week Policy pivot only likely when headline inflation is closer to 4% Rate cuts will materialise in second half of 2024, much later than in many other EMs We agree with …
While developed market central banks pontificate over the timing of rate cuts, the loosening cycle among emerging markets is well underway and gathering pace. But which EMs will be next to fire the starting gun on policy easing? And what does all of this …
1st February 2024
While the emerging market manufacturing PMIs for January generally edged up, we think that weak global demand will weigh on EM industry over the coming months. The good news is that price pressures remain in check, supporting our view that the EM easing …
Why has the Saudi gov’t changed Aramco’s policy? Aramco announced this week that it received a directive from the Saudi state to suspend plans to raise oil production capacity, but we don’t think this is a sign that actual output will remain low for …
Inflation in Mexico has dropped back over the past year but rapid wage growth continues to fuel strong underlying price pressures and means that the headline rate won’t return to Banxico’s 2-4% tolerance band until late-2024. Coming alongside pushback …
While Latin American central banks seemed to act in unison when raising interest rates (albeit with Brazil a bit ahead of the pack), the raft of interest rate decisions in the region yesterday highlighted that, on the way down, policymakers have very …
South Africa makes a poor start to 2024 South Africa’s manufacturing PMI recorded a sharp drop in January as logistics problems and weak demand weighed on activity. We still expect growth to pick up over the course of this year, but this latest data …
CEE industry still struggling, input prices diverge in Turkey and Russia The manufacturing PMIs out of Central and Eastern Europe (CEE) for January remained soft and haven’t changed the broad picture that the region’s industrial sectors continue to …
Finance Minister Nirmala Sitharaman appears to have successfully demonstrated a long-term commitment of reining in the fiscal deficit in the Interim Budget announcement for FY24/25. There is always a chance of fiscal slippage as the general election …
This page has been updated with additional analysis since first publication. Manufacturing activity likely to remain robust The final manufacturing PMI reading for January suggests that activity got off to a strong start this year. Looking ahead, while …
Africa Chart Pack (Jan. 2024) …
31st January 2024
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 …
Inflation continued to fall sharply across Central and Eastern Europe at the end of 2023, but we think that the disinflation process is entering a more difficult phase in 2024 as demand is beginning to recover. While monetary easing cycles are likely to …
This page has been updated with additional analysis and charts since first publication. City’s recovery continues to disappoint Hong Kong’s growth picked up only marginally in Q4, underperforming most expectations. And although we foresee some further …
Soft annual figure suggests weak end to 2023 The weaker-than-expected 0.2% expansion in Polish GDP over 2023 as a whole suggests that the economy struggled at the end of the year. We think this weakness will prove temporary and that activity should …
2023 a poor year for the Kingdom’s economy, but the recession is over The flash estimate of Saudi Arabia’s GDP for Q4 of last year showed that the economy expanded by 0.4% q/q, the first positive outturn since the period a year before. We expect the …
This report was first published on Wednesday 31st January covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Thursday 1st February and the Caixin services and composite PMIs on Monday 5th February. Surveys starting to …
Economic growth in the Middle East and North Africa will strengthen a little in 2024 but is likely to come in well below consensus expectations. OPEC+’s cautious approach to oil policy will keep a lid on economic growth in the Gulf over the first half of …
30th January 2024
MNB errs on the side of caution The Hungarian central bank’s (MNB’s) communications following its meeting today confirm that the decision not to accelerate the pace of its easing cycle was due to the recent ratcheting up of tensions between the government …
Sharp slowdown increases chances of Banxico cut next week The sharper-than-expected slowdown in Mexico’s GDP growth, to just 0.1% q/q in Q4, is likely to be followed by continued sluggish growth over the coming quarters. At the margin, the data increase …
Saudi Arabia has cut oil output significantly over the past year or so but that hasn’t prevented global oil prices from falling. Despite Aramco’s announcement today that it is postponing plans to raise production capacity to 13mn bpd, we think looming …
This page has been updated with additional analysis since first publication. Regional recovery continues The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in January, but our regional measure …
The start of a slow recovery The meagre 0.2% q/q expansion in Czech GDP in Q4 confirms that the economy contracted over 2023 as a whole, and we think that this is likely to be followed by tepid growth this year. We maintain our below consensus GDP …
The EM monetary easing cycle began to broaden out late last year. Mexico’s central bank will probably be the next to cut rates later this quarter, and many Asian central banks will join the fray in April and May, which is sooner than most expect. India is …
29th January 2024
Bank of Ghana starts its easing cycle The Bank of Ghana kicked off its easing cycle with a 100bp cut, to 29.00%, today and an improving balance of payments position alongside further falls in inflation mean that more cuts are on the cards over the coming …
Were the EU to block Hungary’s access to funds (if it vetoes financing for Ukraine at this week’s summit), as reports on Sunday suggested, this would probably have a smaller direct impact on Hungary’s economy and financial markets than most would think. …
Takeaways from the SARB meeting The South African MPC’s fears expressed at this week’s meeting about an inflation resurgence look overdone. Even so, with fiscal risks high ahead of the election, officials will continue to tread cautiously. At the …
26th January 2024
Hungary skating on thin ice with new rate proposal The proposal by the Hungarian government this week to change the reference rate used to price bank loans risks undermining the central bank’s (MNB’s) independence and presents a further upside threat to …
PBOC is pushing on a string The 50bp cut to banks’ required reserve ratio (RRR) announced this week is the largest since 2021 and will free up around RMB1trn of liquidity when it comes into force on 5 th February. The move has improved investor sentiment …
Fall in inflation keeps another 50bp cut on the cards The slightly larger-than-expected decline in Brazilian inflation in the first half of this month, to 4.5% y/y, seals the deal on another 50bp cut in the Selic rate (to 11.25%) at next week’s central …
