Filtered by Region: Emerging Markets Use setting Emerging Markets
The latest data suggest that Brazil’s labour market isn’t softening as quickly as we and many others (not least the central bank) had anticipated. That’s keeping wage growth high and, while that may help to support growth in Q2, it will probably deter …
1st June 2023
The manufacturing PMIs for May suggest that EM industry has, in aggregate, strengthened in Q2. Nonetheless, with the surveys pointing to further weakness in key DM trading partners, EM industry is likely to struggle in the second half of this year. The …
All eyes on OPEC+ Sunday’s OPEC+ meeting is going to be a closely watched affair amid speculation that Saudi Arabia will push for another oil output cut. Our expectation is that OPEC+ will stick with current output quotas. (Listen to an on-demand …
The re-election of President Erdogan has raised concerns about a possible sovereign default. We think this risk looks low for now, but it would become a bigger threat in the coming years if the current policy mix continues, macro imbalances worsen and …
A bumper jump in GDP, but signs of underlying weakness The breakdown of Brazil’s Q1 GDP figures suggests that the economy is not as strong as the staggering 1.9% q/q rise in output would suggest. Even so, the sharp rise in output has prompted us to revise …
MPC to keep rates on hold next week Slower growth and inflation could mean MPC is laying groundwork for cuts before long Consensus has come round to our view that rates will be cut in early 2024 We think the MPC will keep policy unchanged at the …
PMIs point to further falls in manufacturing ahead The fall in the South African manufacturing PMI in May leaves it at a level consistent with modest falls in output in the sector. And the collapse in the future conditions component suggests that things …
PMIs stabilise, but growth to remain tepid The manufacturing PMIs for May across Emerging Europe were either flat, or edged up slightly, providing further evidence that the worst of the regional downturn is probably now behind us. That said, the PMIs …
Economic momentum sustained at the start of Q2 The continued growth of Russian industrial production and retail sales in April suggests that the strength of activity seen in Q1 continued at the start of Q2. This momentum is likely to be sustained in the …
31st May 2023
Financial risks across the major EMs look relatively well contained for the time being but there are some areas of weakness. Most immediately, following President Erdogan’s election victory the prospect of continued unorthodox policymaking in Turkey …
There has been further evidence over the past month that resilient export growth, weak domestic demand and lower energy prices have helped to improve current account positions across Central and Eastern Europe this year. This has been particularly …
India’s economy is one of the most vulnerable in the world to the physical effects of climate change. Climate change alone won’t stop relatively rapid rates of growth over the coming decades. But it is likely to mean that income convergence with other, …
Solid Q1, but economy set for slowdown in growth Turkey’s economy shrugged off the impact of the earthquakes in February and grew by 0.3% q/q (4.0% y/y) in Q1. GDP growth is likely to remain soft in q/q terms this year, but a continuation of President …
Turkish economy’s day of reckoning may now just be around the corner The victory for President Erdogan in Turkey’s presidential election on Sunday is likely to result in a continuation of distortive economic policies and push the economy down a path …
29th May 2023
Attention focusing on financial stability in Turkey With the second round vote of Turkey’s presidential election taking centre stage on Sunday, the day of reckoning for Turkey’s economy and financial markets may now just be around the corner. The …
26th May 2023
Slow progress tackling construction backlog New home sales have ticked up since the end of last year, helped by a post-zero-COVID recovery in consumer confidence and large reductions in mortgage rates and down-payment requirements. But the improvement has …
Challenges to China’s long-run growth potential that were mounting a few years ago are now evident to all. We continue to expect trend growth to have fallen to around 2% in 2030. We held an online drop-in yesterday to discuss how our views on China’s …
The South African Reserve Bank (SARB) hiked interest rates by 50bp, to 8.25%, today on the back of policymakers’ growing concerns about the inflationary impact of persistent power cuts. For now, we think that today’s move marks the end of the tightening …
25th May 2023
The results of elections in major EMs over the past month have increased macroeconomic policy risks. Most notably in Turkey , President Erdogan now has the edge ahead of a second-round presidential election run-off next week. Hopes of an opposition …
Tunisia’s central bank independence under fire A new wave of reforms supposedly laid out by Tunisia’s President Saied’s have taken aim at the central bank’s (BCT’s) mandate which could result in it being used for unorthodox measures. That would …
This webpage has been updated with a table and chart of key data Inflation shows broader signs of easing The surprise fall in Brazilian inflation to 4.1% y/y in the first half of May, coming alongside this week’s approval of the new fiscal framework in …
Hopes for CBRT rate hikes are evaporating Turkey’s central bank (CBRT) left its key policy rate on hold at 8.50% again today and, with Recep Tayyip Erdoğan in pole position to be re-elected as Turkey’s President this Sunday, the probability of much-needed …
The flash Q1 GDP figures for Saudi Arabia showed the economy grew at its weakest pace in two years at the start of 2023, reflecting the cut in oil production in line with the OPEC+ decision in October. And the even more recent voluntary output reductions …
24th May 2023
During our latest monthly dive into the big themes in emerging markets, the team discussed the macro and market forces that could see EM equities breaking their recent run of underperformance against their developed market peers. In addition, economists …
EM labour markets have shown relatively little sign of adjustment in response to the recent weakening of growth. That’s likely to keep wage growth uncomfortably strong in Central Europe and Latin America. In turn, we think this will limit the scale of …
Hungary’s central bank (MNB) cut the interest rate on its one-day deposit tender at today’s meeting, from 18% to 17%, and this is likely to be followed by further cuts in the coming months, with the central bank’s key policy rates returning to single …
23rd May 2023
MNB inching closer to an easing cycle Hungary’s central bank (MNB) left its base rate on hold at 13% as expected today and the post-meeting communications are likely to provide guidance on when the overnight daily deposit rate of 18% will be cut, which …
In a fracturing global economy, India stands out as a prime location for the “friend-shoring” of manufacturing supply chains out of China. The manufacturing powerhouses of Gujarat and Tamil Nadu are best-placed to benefit from this shift. But a handful of …
Activity continues to struggle Industrial production and retail sales data for April for Poland were generally on the weak side and suggest that the economy lacked momentum at the start of Q2. We think activity will soon bottom out, but the prospect of a …
The Bank of Israel (BoI) delivered another 25bp interest rate hike, to 4.75%, at today’s meeting and did not offer any guidance as to whether this would be the last in the cycle. On balance, we think the central bank will deliver one more 25bp hike, to …
22nd May 2023
Last week’s disappointing China economic releases were greeted by the usual calls for more stimulus to boost near-term growth. These are part of a long-standing tradition for when data undershoot expectations, reflecting the often short-term focus on …
Emerging market equities have typically outperformed their developed market counterparts after US recessions. While we don’t foresee them replicating the sort of outperformance seen after the early-1990s or early-2000s recessions, we do think the MSCI …
19th May 2023
Erdogan in pole position for the presidency Sunday’s presidential election result in Turkey was all about Erdogan. He gained more than 49% of the vote share after some of the more reliable polls last week had opposition candidate Kemel Kilicdaroglu at …
The Central Bank of Egypt (CBE) opted to leave interest rates unchanged at Thursday evening’s MPC meeting and the lack of comment on the pound will only add to investor concerns about the commitment to orthodoxy. Unless something changes soon, the path …
Over the past couple of weeks we have held a series of roundtable discussions with clients across Asia and North America on the outlook for EMs. In this Update we provide our thoughts on the recurring questions that we received, including on China’s …
Egypt stepping up reforms to attract investments The first privatisation deal in nearly a year took place in Egypt this week and the prime minister outlined fresh steps to overhaul the business environment, but loosening the central bank’s grip on the …
18th May 2023
Economies across Central and Eastern Europe (CEE) have significantly underperformed the euro-zone and the rest of the world in recent quarters, which has its roots in the scale of the inflation shock that the region suffered and the impact on domestic …
Fears among investors have continued to grow that Egypt’s government will default on its debt in the coming years although, for now at least, there remains a path to avoid such an outcome. Taking that path will require the government to step back from …
Q1 acceleration, on track for full-year growth The smaller-than-expected 1.9% y/y contraction in Russian GDP in Q1 suggests that the economy has turned a corner and that growth accelerated in q/q terms at the start of this year. Industry and retail sales …
17th May 2023
Having picked up sharply in April, inflows into EM bond and equity markets have weakened in the past few weeks. Inflows into India and Turkey remained strong over the first half of the month, but in the latter this is likely to reverse after the …
16th May 2023
Economy slowing, but growth remains solid GDP growth remained fairly solid in Israel in Q1 (2.5% q/q annualised) as it came in slightly above expectations thanks to an unexpected surge in business investment. We think growth will come in below potential …
Downturns ease, but growth to remain weak Q1 GDP data for Central and Eastern Europe were fairly weak, but Poland’s economy beat expectations and the worst of the regional downturn appears to have passed. Even so, headwinds remain strong and a sustained …
The sharp rise in unsecured bank lending has probably helped to support consumption and boosted bank profitability over recent quarters. But it also leaves the banking sector at risk of rising defaults, a concern that is exacerbated by the relatively low …
Turkey’s presidential election on Sunday was close, but Erdogan performed better than recent polls had suggested and he now has the edge ahead of a second round run-off on 28 th May. Hopes of an opposition victory and a return to orthodox policymaking …
15th May 2023
This webpage has been updated with a table and chart of key data. Inflation steady, but should resume its slowdown over the rest of the year Saudi Arabia’s inflation rate was unchanged at 2.7% y/y in April, as an increase in non-food inflation offset …
Better showing for Erdogan, now in the driving seat for victory Turkey’s presidential election this weekend was incredibly tight and looks to have produced no clear winner, but President Erdogan performed better than recent polls had suggested and this …
The PBOC is likely to leave the MLF rate unchanged at 2.75% (Mon) US retail sales probably rose in April, but industrial production may have declined (Tue) We think UK wage growth eased but labour market conditions probably remained tight (Tue) Key …
12th May 2023
An underwhelming set of data published over the past week have added to growing concerns about the state of China’s recovery. Imports , inflation and credit all came in below expectations for April. It might seem hard to square this with the more …
Czech government tightens the purse strings The Czech government’s long-awaited fiscal consolidation package this week will include fiscal tightening of around 1.5% of GDP over 2024/25 which will come at the cost of weaker growth. But this appears to be a …
Click here to read the full report . This revamped Global Markets Valuations Monitor combines and replaces our previous DM Valuations Monitor and EM Valuations Monito r publications. … Global Markets Valuations Monitor (May …
