Filtered by Region: Emerging Markets Use setting Emerging Markets
Copom to stay hawkish despite inflation decline The sharp fall in Brazilian inflation, to 4.2% y/y last month, was encouragingly broad based among the sub-categories of the CPI basket. But we think the central bank will want to see more evidence that core …
12th May 2023
Sovereign debt risks are back in focus as some frontiers appear to be drifting closer to default. We remain most concerned about default risks in Tunisia and Pakistan, particularly in light of this week’s unrest and IMF deals now appear further away. Debt …
Activity bounces back after earthquake disruption Industrial production and retail sales bounced back strongly in March, supporting our view that the impact of the earthquakes was short-lived. GDP growth is likely to have remained positive in Q1. But the …
Egypt’s make or break moment This week saw positive news in Egypt regarding the public finances and the privatisation drive. But next week’s MPC meeting will prove critical as to whether policymakers can get out of the economic crisis. Finance Minister …
11th May 2023
The looming impeachment trial of Ecuador’s president Guillermo Lasso marks a further intensification of the country’s political crisis and suggests that the recent experiment with market-friendly governments is on borrowed time. There are lots of ways in …
10th May 2023
Most EM central banks have drawn their monetary tightening cycles to a close now and, if history is any guide, it looks like the conditions will be in place for an easing cycle to start from around July/August. EM central banks were quick off the mark to …
Rates on hold, window for cuts this year narrows Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and we think there is a small window for rate cuts by year-end. But with core inflation proving sticky and …
A stronger finish to Q1 The surprisingly strong 1.1% m/m increase in Brazilian industrial production in March suggests that the economy fared a bit better than we’d expected in Q1. The risks to our GDP growth forecast for this year of 1.0%, which had …
Disinflation process largely on track, rate cuts in 2024 Romania’s central bank (NBR) left its policy rate on hold as expected today, at 7.00%, and we think that it will keep policy rates unchanged throughout this year. Interest rate cuts are likely to …
Note: We discussed Turkey’s election in an online briefing on 10th May. Watch it here . There’s a lot of optimism that the opposition will emerge victorious in Turkey’s elections, which would pave the way for a return to orthodox economic policy. Were …
This webpage has been updated with additional analysis and key chart and table of data. Inflation eases, but another rate hike on the cards next Thursday Egypt’s inflation rate slowed from a near-five-year high of 32.7% y/y in March to 30.6% y/y in April, …
Flash GDP figures showed that Saudi Arabia’s economy contracted in Q1 on the back of OPEC+-agreed oil output cuts, but growth in the non-oil economy remained strong. The “voluntary” oil production reductions announced last month will continue to weigh on …
9th May 2023
Note: We’ll be discussing the economic and market risks around the upcoming Turkish presidential and parliamentary elections on at 09:00 EDT/14:00 BST on 10 th May . Register now. Turkey’s election race heats up Opinion polls are now painting a clearer …
5th May 2023
The manufacturing PMIs for April suggest that industrial activity softened in most EMs last month and that external demand generally remained weak. The one crumb of comfort is that price pressures eased further last month. The aggregate Emerging Market …
4th May 2023
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Oil prices: “Don’t get cocky OPEC+” The price of oil has dropped sharply this week on fears about the health of the …
Economy posts strong growth in activity in Q1 Industrial production and retail sales continued to recover strongly in Russia in March and suggest that GDP growth may have accelerated in Q1. The economy appears to be receiving a boost from the recent surge …
3rd May 2023
Click here to read the full report. We think the economic recovery in China will support further gains in the country’s equity market. Despite some renewed evidence that China’s economy has been recovering more strongly than most anticipated in the first …
The Czech central bank (CNB) left its main policy rate on hold at 7.00% as expected today, but it looks like policymakers set out to strengthen their hawkish rhetoric and downplay expectations of an imminent cut in interest rates. The message was loud and …
Note: We'll be discussing Turkey's election in an online briefing at 09:00 EDT/14:00 BST on 10th May . Register here . Parliamentary and presidential elections on 14 th May will make or break macroeconomic stability in Turkey. As things stand it looks …
CNB still on pause, but cuts not far away The Czech National Bank (CNB) left its main policy rate on hold again today, at 7.00%, but we think that interest rate cuts are not far away, with policymakers likely to kickstart the loosening cycle in September. …
This webpage has been updated with additional analysis and a chart of key data. Non-hydrocarbon sectors in the Gulf continue to enjoy a strong start to 2023 April’s PMIs for the region showed that activity in private non-hydrocarbon sectors in the Gulf …
Disinflation process continues, but smaller falls from here Inflation in Turkey fell a bit more than expected in April, to 43.7% y/y, driven largely by a sharp decline in energy inflation, but m/m price growth remained strong and the disinflation process …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Egypt’s balance of payments (BoP) position strengthened markedly late last year, but policymakers’ reluctance to live up …
2nd May 2023
Property policy recalibration The Politburo held its monthly meeting today and, as is usual in April, its focus was the economy. The gist of its statement is one we’d agree with: economic growth in the immediate rebound from zero-COVID weakness “has been …
28th April 2023
CEE edges closer towards monetary easing Central banks across Central and Eastern Europe (CEE) provided firmer signs this week that, with inflation now declining , monetary loosening may soon be on the cards. But there are still clearly big concerns that …
CBR keeps rates on hold, hike still on the table Russia’s central bank maintained its hawkish tone today as it left interest rates unchanged at 7.50% and continued to emphasise pro-inflation risks in the economy. So far these risks do not seem to be …
Fall in the rupee this year likely to be limited The rupee is up by around 1% against the US dollar so far this year, leaving it in the middle of the pack among other EM currencies. (See Chart 1.) Chart 1: Currencies vs. US$ (% change, YTD) Sources: …
Inflows into EM bond and equity markets have picked up sharply in the past month, with flows into Asian equity markets looking particularly strong. That said, if we right that the dollar will rebound, we suspect that these inflows will drop back. That’s …
27th April 2023
With Egyptian policymakers dawdling on the IMF’s reform demand, pressure is growing for another devaluation of the pound and investors are increasingly fearing that a sovereign default could follow. For now at least, there is still a path out of the …
Calm before the storm? Turkey’s central bank (CBRT) left its key policy rate on hold at 8.50% again today, but all eyes are now firmly on next month’s election for a possible change in the stance of monetary policy. Polls are close, but an opposition …
Fall in sentiment points to tepid growth The EC’s Economic Sentiment Indicators (ESIs) for Central and Eastern Europe generally fell slightly in April, with our regional measure declining for the first time in six months. On past form, the ESIs suggest …
Inflation has finally turned a corner. Headline inflation rates fell in March in all 14 economies that we cover, the first synchronised drop in more than a decade. This partly reflects base effects resulting from the sharp rise in prices after the war in …
26th April 2023
Balance of payments strains have prompted Egypt, Morocco and Tunisia to turn to the IMF over the past six months or so, but agreements in Egypt and Tunisia are faltering. The IMF postponed its first review of Egypt’s deal amid the government’s slow …
The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50% and, while this move alone won’t loosen monetary conditions, it is likely to be followed by cuts to the effective policy rate (the overnight …
25th April 2023
EM central banks have, in general, remained in hawkish mood over recent weeks. Tightening cycles have continued in Mexico, Colombia and South Africa in response to high inflation, while policymakers in Egypt and Pakistan among others have raised …
24th April 2023
Door remains ajar for further tightening… The minutes of the MPC’s April meeting – in which the committee voted unanimously to keep the repo rate on hold (at 6.50%) for the first time in a year – were published this week. While it has been clear for some …
21st April 2023
Large current account deficits across CEE have started to narrow in recent months and we think that this will continue as slowing economies and lower energy prices shrink import bills. This will reduce vulnerabilities, but external risks and currency …
20th April 2023
Aramco transfer accelerates under Vision 2030 plan Saudi Arabia’s government transferred a further 4% of Aramco to the Public Investment Fund (PIF) this week as part of its efforts to diversify its revenues away from oil as part of Vision 2030. But there …
India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. (See Chart 1.) And …
Our dataset on inflation expectations across EMs shows some encouraging falls recently and supports our view that, with EM inflation likely to fall further, monetary easing cycles will start in the coming months. However, inflation expectations remain …
19th April 2023
The increasingly diverse array of creditors to debt-distressed EM governments – and the difficulties in getting China and Western lenders to see eye to eye – is already gumming up sovereign debt restructurings. And despite some positive noises from the …
17th April 2023
Note: Join our Tuesday 18 th April online briefing discussing what China’s Q1 “data dump” tells us about the strength of the country’s reopening recovery. Register Now . The rebound has exceeded most expectations Mixed data have contributed to differences …
14th April 2023
The raft of EM CPI figures out this week show that headline inflation is, in aggregate, finally starting to fall significantly, and we expect it to decline further in the coming months. But core inflation is easing relatively slowly, and remains …
13th April 2023
This report has been updated with an additional table and chart of the key data. Price pressures continue to ease Saudi Arabia’s headline inflation rate slowed from 3.0% y/y in February to 2.7% y/y in March as both food and non-food inflation decreased …
Inflation nearing a peak but devaluation fears linger Egyptian inflation rose to its fastest pace since mid-2017 in March and, while there are signs it could be nearing its peak, mounting pressure on the pound presents a clear upside risk. Data released …
Sharp fall in inflation as base effects pass through Russian inflation fell sharply in March, to 3.5% y/y, as the surge in prices after the war started to fall out of the annual comparison. The 0.4% m/m increase suggests that price pressures generally …
12th April 2023
We’re not convinced by the arguments currently doing the rounds that military spending in Russia artificially boosted GDP in a significant way last year. While military spending has increased further this year and manufacturing in military-oriented …
Headline CPI rate now likely to remain within target range The drop in headline consumer price inflation back to within the RBI’s 2-6% target range in March supports our view that the central bank’s hiking cycle has come to an end. Headline CPI inflation …
Earthquakes take their toll on activity Turkish industrial production and retail sales figures for February showed that the impact of the earthquakes on the economy was larger than we and most others had anticipated. But we think this will be short-lived …
