Filtered by Region: Emerging Markets Use setting Emerging Markets
BCB kicks off Brazil’s easing cycle The Brazilian central bank (BCB) started its easing cycle today with a larger-than-expected 50bp cut in the Selic rate, to 13.25%, and the relatively dovish tone of the accompanying statement suggests that policymakers’ …
2nd August 2023
Strong Q2, but signs of softening industrial activity Russia’s economy is likely to have had a very strong second quarter as industrial production and retail sales rose sharply in Q2 (both by more than 3.0% q/q). But the activity data for June suggest …
We estimate that China’s trend rate of growth has slowed from 5.0% in 2019 to 3.0% now, based on our China Activity Proxy. This is a steeper deceleration than in the years leading up to the emergence of COVID-19. The official GDP data, while not fully …
Jump in food prices makes rate hold next week less of a certainty On balance, we still think the MPC will stand pat but strike a more hawkish tone If food price surge is sustained, loosening may be pushed back from early 2024 The recent surge in food …
The fall in the EM manufacturing PMI to a six-month low in July was mainly driven by a renewed drop in China, but the surveys generally remained downbeat across most EMs last month. We think EM industry will continue to struggle over the rest of this year …
1st August 2023
This page has b een updated with additional analysis since first publication . Economy showed signs of resilience in Q2 The slightly better-than-expected 0.1% m/m increase in Brazilian industrial production in June indicates that the sector grew a little …
PMI makes for grim reading South Africa’s manufacturing PMI fell even further in July as power cuts intensified again and the outlook remains bleak – we remain comfortable with our forecast for the economy as a whole to stagnate this year. Price pressures …
CEE industry continues to struggle, price pressures diverge The manufacturing PMIs for July suggest that industrial sectors generally struggled across the region at the start of Q3, and support our view that economic recoveries in CEE are not about to …
This page has been updated with additional analysis since first publication. Manufacturing PMI shows further signs of cooling activity India’s manufacturing PMI edged down in July to a three-month low, and we expect higher rates and subdued global demand …
Disinflation continues, October rate cut now in play The larger-than-expected fall in Polish inflation, from 11.5% y/y in June to 10.8% y/y in July, is likely to fuel calls at the central bank for the start of an easing cycle very soon. It still looks …
31st July 2023
This webpage has been updated with an additional chart and table of key figures. Kingdom enters a recession on back of oil production cuts Saudi Arabia’s flash GDP estimate showed that the economy fell into a technical recession on the back of oil output …
Recession over, but recovery likely to be weak The 0.1% q/q expansion in Czech GDP in Q2 took the economy out of technical recession last quarter, but we expect the recovery over the coming quarters to be weak. With inflation likely to continue falling …
Central Bank of Nigeria’s reluctance to hike This week, the CBN’s policy rate hike of 25bp underwhelmed markets, presenting further evidence that Nigerian policymakers are trading off growth concerns with their inflation mandate. The MPC chose to hike …
28th July 2023
Erkan delivers, but lingering doubts remain All eyes were on Turkey’s central bank governor on Thursday and she delivered a convincing message during the Inflation Report briefing. The priority is clearly for a more rounded policy shift than one that …
Risks to EM food supply have increased amid the likelihood of an El Niño, the end to the Black Sea grain deal and India’s rice export ban. Countries in the Middle East and Africa are the most vulnerable to lower grain supplies and many EMs (particularly …
Sentiment improves, but is still depressed The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally ticked up in July, but our regional measure still points to weak GDP growth at the start of Q3. Economic …
Reforms to take a back seat for now In an otherwise quiet week, the big news from the past few days is that India’s parliament has approved a no-confidence vote lodged by opposition parties against Prime Minister Modi’s BJP-led government. The motion has …
In the latest of our monthly EM Drop-Ins, Shilan Shah le a team of economists from across our EM and Markets services to answer client questions on what’s happening in EM macro while addressing key issues including: Which EMs are benefitting from the …
Mbappé or not, Saudi gov’t focussed on sports The Saudi Pro League went from the back pages to the front pages this week as Al-Hilal (a football club recently acquired by the Kingdom’s sovereign wealth fund) made a world record $335mn bid for PSG’s Kylian …
27th July 2023
“The Boy” is back Much ink has been spilled – not least by ourselves – on the potential impacts of the return of El Niño conditions on commodities and economies. It’s fair to say that some of the analysis we have stumbled across has been towards the …
Policymakers at the South African Reserve Bank are keen to emphasise that their work to tame the “inflation monster” is not over, leaving open the possibility of additional monetary tightening. The two most likely triggers would be, first, if loadshedding …
The continued rise in the valuations of “risky” assets relative to “safe” ones mostly seems to reflect growing confidence in the economic outlook. We think that optimism will be disappointed and that risk premia may rise again – and valuations may fall – …
26th July 2023
Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth forecasts across the region are generally …
Russia and Turkey have had a strong first half of the year, but growth across Central and Eastern Europe (CEE) remains depressed and we don’t expect a meaningful recovery until 2024. While inflation pressures are building in Russia and Turkey and further …
New CBN governor stumbles at the first hurdle The Central Bank of Nigeria’s decision to raise its policy rate by just 25bp, to 18.75%, was underwhelming and suggests that officials are trying to balance tackling inflation against the president’s wishes …
25th July 2023
The Israeli government’s decision to press ahead with its controversial judicial reforms won’t necessarily cause foreign investment into Israel to dry up, but the direction of policymaking threatens to push the economy onto a permanently lower growth …
This page has been updated with additional analysis since first publication . Soft inflation print brings 50bp rate cut into play The Brazilian July mid-month inflation reading of 3.2% y/y suggests that price pressures are weaker than we and most others …
This page has been updated with additional analysis since first publication. MNB may pause or slow its easing cycle after September Hungary’s central bank (MNB) announced another 100bp cut to its one-day quick deposit rate (the key policy rate at the …
Investment held up well in the first half of the year but the recent moderation in credit growth and the messages from the latest survey data suggest that it is going to enter a softer patch over the coming few quarters. Unperturbed by the cumulative …
China is not suffering a balance sheet recession: most private firms are not highly indebted and would borrow if they had more confidence in the economic outlook. But there are other parallels with Japan’s circumstances in the 1990s that point to …
24th July 2023
While the Fed and the ECB are set to hike interest rates this week, subsiding inflation means that the upcoming EM central bank meetings will tilt towards monetary easing . And we expect that the EM rate cutting cycle will broaden out over the course of …
This page has been updated with additional analysis since first publication . Fresh rise in services inflation likely to raise concerns at Banxico Mexico’s headline inflation rate eased further in the first half of July but the fresh rise in services …
The end to the Black Sea grain deal has put Egypt’s vulnerability to rising global wheat prices back in the spotlight. Even if supply disruptions are avoided, higher wheat prices would add to strains in Egypt’s balance of payments, force the government to …
Food supply concerns mount The near-term outlook for global food security and prices has continued to worsen. Following the recent news that we are entering El Niño, this week saw the collapse of the Black Sea Grain Deal as well as India ban the export of …
21st July 2023
Russian FinMin throwing in the towel? A raft of comments from senior policymakers at the Russian Ministry of Finance this week highlight the pressures that the public finances are under and how policymakers are likely to tighten fiscal policy in response …
Inflation worries trigger bumper hike The much larger-than-expected 100bp interest rate hike (to 8.50%) by the Russian central bank underscores policymakers’ concerns about inflation risks. And while we don’t think monetary tightening will continue quite …
Limited impact from ban on trade and inflation We warned last week of a potential ban on rice exports in response to rising prices in some parts of the country and as a pre-emptive measure ahead of a potentially severe El Niño weather event. This week, …
This page has been updated with additional analysis since first publication. Resilience in June, but Q2 was still weak June’s retail sales and industrial production data out of Poland suggest that the economy held up relatively well last month, but we …
Saudi-UAE tensions pose a threat to OPEC+ A Wall Street Journal report this week highlighted the tensions between Saudi Arabia and the UAE, which have been simmering for some time. If these persist, one risk is that the UAE will seek to leave OPEC+. The …
20th July 2023
Mexico’s exports have fared well recently and the current account deficit remains small. But a closer look suggests that the strength of the peso is causing dynamics in the balance of payments to worsen. The Mexican peso has been one of the best …
This webpage has been updated with additional analysis and charts since first publication. The further fall in inflation in June, coupled with signs of economic weakness and a decline in risk premia, prompted the South African Reserve Bank to leave its …
EM growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and Emerging Europe will limit how far …
CBRT underwhelms again, risks to the lira build The 250bp interest rate hike, to 17.50%, by Turkey’s central bank today once again underwhelmed expectations and the slow and steady tightening is pushing the limits on what policymakers can get away with . …
Egyptian policymakers’ commitment (or lack of) to economic orthodoxy continues to provide cause for concern and, while we don’t share the view that sovereign default is a serious risk, the near-term economic outlook is challenging. Over a longer …
One way in which EMs may benefit from the fragmentation of the global economy into US- and China-aligned blocs is via “friend-shoring”. There appears to be evidence that the US is importing a higher share of goods from EMs, mainly Vietnam, Taiwan, Mexico, …
19th July 2023
Weakness in May looks set to continue The worse-than-expected South African retail sales figures for May add to the raft of weak activity data and it looks like things may get even worse over the coming months. Coupled with figures earlier today showing …
India's economy is showing signs of coming off the boil and, with inflation lodged within the RBI’s target range, a resumption of the tightening cycle looks unlikely. However, the onset of a severe El Niño is a looming threat and presents a key risk to …
Drop in inflation means SARB to stand pat tomorrow The larger-than-expected fall in South Africa’s headline inflation rate to 5.4% y/y in June brings it back within the Reserve Bank’s 3-6% target range for the first time since April 2022 and means that …
Stage 6 loadshedding returns with a vengeance Cold weather in South Africa prompted officials to return to Stage 6 loadshedding this week, threatening a fresh hit to the economy. We doubt that concerns about the inflationary impact of power cuts will …
14th July 2023
May data underscore Turkey’s vulnerabilities The raft of Turkish activity and balance of payments data for May published this week highlighted the precarious nature the economy was in prior to the shift back to orthodox economic policymaking. The …
