Filtered by Region: Emerging Markets Use setting Emerging Markets
Poland-Ukraine relations show some cracks The dispute that escalated this week between Poland and Ukraine shows how Poland’s ruling PiS party is hoping to capitalise on nationalism, and public fatigue over the war, ahead of elections next month. Poland, …
22nd September 2023
Inflation falls, but Banxico in no rush to cut Mexico’s headline inflation rate came in a little weaker than expected at 4.4% y/y in the first half of September while services inflation remained elevated. Coming alongside strong wage growth and the …
Although EM growth held up well in H1, growth will disappoint over the coming quarters. Recent upside inflation surprises have pushed back the timing of rate cuts in some places, but we expect the EM monetary easing cycle to broaden out in H2. Strong wage …
Efforts to boost foreign investment are failing In March, the government launched a year-long “Invest in China” campaign to shore up sagging foreign investment. As part of these efforts, it set out 24 measures in August to improve the business environment …
Gov’t achieves long-stated aim of bond inclusion Almost a year on from a high-profile snub , JP Morgan announced on Friday that it would be including Indian local-currency bonds in its GBI-EM Global Diversified Index for the first time. Inclusion will …
Overview – Brazil and Mexico will outperform others in the region this year, but that’s likely to flip on its head in 2024 as they slow – and by more than most expect – while the Andean economies recover. Central banks across the region will continue to …
21st September 2023
Is Egypt set for the polls before year-end? Reports that Egypt’s presidential election, originally scheduled for 2024, could be held before the end of this year may help to explain the recent policy paralysis with regards to the pound. The National …
The South African Reserve Bank left interest rates on hold today at 8.25% and continued to emphasise that inflation risks remain tilted to the upside, suggesting that it is in no rush to begin loosening policy. Indeed, the SARB is likely to be a …
Although high “carry” emerging market (EM) currencies have held on to most of their gains during the greenback’s recent rally, we still think the outperformance of these currencies is likely to reverse over the coming quarters amid growing headwinds for …
CBRT sticks to the course with 500bp hike Turkey’s central bank delivered a 500bp interest rate hike at today’s meeting, to 30.00%, providing further encouragement about policymakers’ commitment to tackling the inflation problem. A lot more tightening …
Early signs of a recovery Poland’s retail sales and industrial production figures for August suggest that the economy may be at the early stages of a recovery, but we still expect overall GDP growth to be relatively tepid in the near term. We think that …
BCB not opening the door to larger cuts The Brazilian central bank’s (BCB’s) 50bp cut in the Selic rate (to 12.75%) and accompanying statement are likely to dash hopes that policymakers will up the pace of the easing cycle, at least in the short term. The …
20th September 2023
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in a sharp slowdown in 2024. Inflation …
The weeks leading up to Taiwan’s presidential election in January could be marked by another rise in tensions with China. The most likely outcome of the vote is another DPP presidency. While Lai Ching-te would be a new pair of hands, his election wouldn’t …
Inflation rises, but SARB to stand pat tomorrow The small rise in South Africa’s headline inflation rate to 4.8% y/y in August partly reflected a fresh pick-up in core price pressures, but we doubt that this will prompt the SARB to restart its tightening …
India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, a surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a severe El Niño and …
Our China Activity Proxy (CAP) suggests that, after a period of stagnation, China’s economy has returned to growth recently, with output finally surpassing its previous high in August. Policy support is being stepped up, which should underpin a further …
The rise in oil prices, and upwards revision to our 2024 oil price forecast, will have only a small impact on EM inflation and won’t stop it from falling further. The much bigger upside risks to our inflation and interest rate forecasts stem from core and …
19th September 2023
Investor nerves in recent weeks have been tested by two opposing inflation concerns. The first is that China is on the cusp of a deflationary spiral that will pull down the rest of the global economy. The second is that resurgent energy prices will lead …
18th September 2023
There’s a lot of uncertainty about how much impact monetary tightening has had in the global economy so far, but in Central and Eastern Europe (CEE) the hit to households has already been significant and we estimate that almost all of the impact from …
Argentina: Devaluation triggers inflation jump This week’s inflation data from Argentina made for a grim reading. Consumer prices rose by 12.4% m/m in August on the back of last month’s devaluation , pushing inflation to 124% y/y – the highest rate since …
15th September 2023
Russia seeking closer friendship with North Korea The strengthening relationship between President Putin and North Korean leader Kim Jong Un was on show this week but we doubt the discussions will yield any meaningful benefits for Russia’s economy or …
Recent data show Sri Lanka’s economy is now rebounding strongly from last year’s political and economic crisis. We expect the recovery to continue over the coming months, helped by the sharp drop in inflation, lower interest rates, a recovery in tourism …
Property controls have been substantively relaxed in recent weeks. The big announcements came on the last day of August. But there has since been plenty of easing at the local level too. At least ten large cities have lifted all home purchase …
CBR delivers another large hike, more tightening still in the pipeline Russia’s central bank (CBR) raised its policy rate by 100bp, to 13.00%, at today’s meeting and with the ruble likely to remain under pressure and inflation pressures to keep building, …
G20 summit exceeds low expectations T he G20 managed to deliver a joint statement at its summit in New Delhi, which was deemed as something of a foreign policy triumph for Prime Minister Modi given the uncertainty ahead of the event. This owed much to …
This page has been updated with additional analysis and charts since first publication. Economy regains momentum as consumers step up Although a slight uptick in activity was expected, the August data turned out to be even better than anticipated. Fiscal …
We think emerging market (EM) equities in Asia will outperform those in EMEA and Latin America over the next couple of years, although we doubt they’ll do better than developed market (DM) equities. EM equities have struggled this year, at least judging …
Given our dovish view of monetary policy in Emerging Markets (EMs) – and our increasingly less bearish view of the US economy – we think that EM local-currency government bond yields will fall across the board in the next couple of years, particularly in …
14th September 2023
Yesterday, we hosted a Drop-in webinar taking a closer look at the state of play in Egypt and whether the country can get its IMF deal back of track. You can view on-demand here . This Update addresses some of the questions we received during the event. …
A gesture of support from the PBOC The People’s Bank has just announced a cut to bank reserve requirements. With private sector credit demand still weak, this is a gesture rather than a meaningful support measure. Substantial rate cuts or a sea change in …
South Africa’s unemployment rate has dropped back over the past year or so but it remains far above its pre-pandemic level. The rise in long-term unemployment, which has its roots in both cyclical and structural factors, is particularly worrying and could …
All eyes on the CBE The Central Bank of Egypt (CBE) resumed its tightening cycle in August and, with inflation rising further, we expect interest rates to be hiked again. More than anything, though, investors will be looking for any shift in the exchange …
We have updated this webpage with additional analysis, as well as a Chart and Table of the key data. Inflation slows to weakest pace in a year and will ease further Saudi Arabia’s headline inflation rate slowed from 2.3% y/y in July to 2.0% y/y in August, …
Overview – India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, a surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a …
13th September 2023
EM governments’ budget deficits have narrowed and their debt-to-GDP ratios have fallen since the height of the pandemic. But some of the tailwinds that have supported an improvement in fiscal health are set to unwind. Among the major EMs, debt dynamics …
There’s little evidence in the investment and trade data so far to back up the commonly-cited narrative that Mexico is experiencing a “nearshoring” boom. The one sector where there are some signs of this is industrial real estate, which suggests that it’s …
12th September 2023
This page has been updated with additional analysis since first publication. Headline CPI rate drops, but food inflation threat is not over yet The drop in headline consumer price inflation in August should provide some welcome relief for the RBI. But …
Little sign of the economy slowing Industrial production softened a touch in Turkey in July but retail sales continued its recent run of strength and adds further support to the view that the economy is not yet slowing in response to the recent policy …
Industry continuing to hold up well, for now Mexico’s industrial sector posted a slightly larger-than-expected 0.5% m/m increase in output in July and the survey evidence suggests that activity continued to hold up well in August. But we still think that …
11th September 2023
The devastating earthquake that hit Morocco on Friday evening has severe humanitarian consequences, but, from a purely economic standpoint, it should only have a small and short-lived impact on GDP. The spillovers are also set to be limited on Morocco’s …
The quantitative tools that the PBOC relied on to pump up credit growth during previous downturns have become ineffective due to weak demand. That leaves interest rates as the main avenue for monetary support. But bank lending rates need to decline to a …
This page has been updated with additional analysis since first publication . Turning a corner thanks to policy support China’s bank loan growth stabilised in August after declining for three consecutive months, and broad credit growth edged up from …
Disinflationary pressures easing CPI exited deflation in August, and PPI rose for the first time in nine months. Core inflation remained unchanged after hitting a 11-month high in July, while services inflation rose to its highest in 18 months. We expect …
Inflation still some way from its peak The further rise in Russian inflation to 5.2% y/y in August is a sign that the economy is bumping up against capacity constraints and we think it will continue to increase over the coming months. The central bank …
8th September 2023
Sheinbaum follows in Amlo’s footsteps Former Mexico City mayor Claudia Sheinbaum was unveiled as the ruling Morena party’s presidential candidate this week and with her facing off against the main opposition candidate Xóchitl Gálvez in next June’s …
The decision by the National Bank of Poland (NBP) to kick off its easing cycle this week with a much larger-than-expected 75bp interest rate cut has been heavily criticised, and suggests to us that policymakers are underestimating the challenge of …
Having remained resilient over the past months, inflows into EM bonds and equity markets have turned negative in recent weeks. Inflows into Turkey have weakened despite August’s sharp interest rate hike and while India has continued to see notable …
Geopolitics loom large over New Delhi showcase Following the success of the Chandrayaan-3 mission to the south pole of the moon in August, this weekend’s G20 summit in New Delhi will undoubtedly be presented as another foreign policy triumph by the BJP as …
Huawei's chip breakthrough The launch of Huawei’s new phone, the Mate 60 Pro, has sparked a debate over the effectiveness of US export controls that were tightened last year, restricting the sale to China of machinery needed to produce sub-18nm chips. The …
