Filtered by Region: Emerging Markets Use setting Emerging Markets
Rates on hold, door for rate cuts this year remains open Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and we don’t think the NBP will rule out further interest rate hikes just yet. But with inflation …
8th March 2023
Financial risks across the emerging world have eased since the start of the year but, with the Fed’s Jerome Powell all but confirming a higher peak for US rates, there is still scope for EMs with weak balance sheets to get punished. Although current …
Non-performing loan (NPL) ratios have risen by as much as 4-5%-pts during non-banking crisis downturns in EMs in the past. This time around, there are reasons to think that the increase will be smaller and EM banks generally look well placed to cope. But …
6th March 2023
Very weak Q4 figures The fourth quarter GDP figures published over the past few weeks made for grim reading. GDP contracted in around half of the countries covered by our Emerging Asia services. Only India, Indonesia and the Philippines recorded decent …
3rd March 2023
Labour markets look very tight in Central Europe and a handful of other EMs (particularly in Latin America), and we think that wage growth is unlikely to fall far enough in these countries to bring inflation back to target in the near future. One …
2nd March 2023
As political risks appear to be largely discounted by investors, we expect the Colombian peso to outperform other major EM currencies over the next couple of years. Although the Colombian peso is broadly unchanged against the greenback so far this year, …
The Israeli shekel has been amongst the worst performing currencies over the past month amid a rise in risk premia in Israel. We think it may remain under pressure against the US dollar over the coming months; but we doubt it will keep underperforming its …
1st March 2023
The manufacturing PMIs for February remained very weak in most EMs, but they did at least provide signs that industry across much of the emerging world has fared better so far this year than it did in late 2022. Meanwhile, there were encouraging signs …
Industrial downturns in CEE bottoming out The manufacturing PM Is for February suggest that industrial sectors in Central and Eastern Europe are continuing to struggle, but there are tentative signs that the region may now be past the worst of its …
We think even if some of the recent headwinds that have buffeted emerging market (EM) assets fade, a slowdown in global growth might keep them under pressure in the near term. EM assets have had a fairly tough month . Local-currency and …
28th February 2023
Strong Q4, but slowdown in store for 2023 Turkey’s economy expanded by 0.9% q/q (3.5% y/y) in Q4, but growth remained unbalanced as it was driven largely by private consumption while net trade provided a sizable drag. We think growth will slow towards …
Russia’s economy defied expectations in 2022 Russia’s war in Ukraine, which marks its one year anniversary this week, fundamentally changed the geopolitical and economic landscape in the region. From a macroeconomic perspective, one of the more surprising …
24th February 2023
Malaysia announces modest fiscal tightening Malaysia today announced a modest tightening of fiscal policy for 2023, but the most eye-catching element of the budget was a significant increase in infrastructure spending. The budget deficit is projected to …
Last week’s European Court of Justice (ECJ) opinion on Poland’s Swiss franc mortgage dispute dealt yet another blow to Poland’s banking sector and will expose those banks with large FX loan portfolios. The sector as a whole looks strong, but many banks …
23rd February 2023
Figures released today highlight the dreadful demographic outlook facing Korea, with the population (excluding migrants) falling for a third year in a row. Poor demographics are the key reason why we expect trend growth in Korea to continue slowing over …
22nd February 2023
The war in Ukraine, which marks its one year anniversary on Friday, has had a profound impact on the emerging world. Ukraine’s economy has collapsed, while Russia’s has contracted too even though the imposition of sanctions has not been as severe as …
Russia’s budget deficit has widened sharply in recent months and is likely to remain under pressure amid lower oil prices and rising military spending. The government is unlikely to experience severe fiscal strains this year, but the public finances are …
21st February 2023
Nigeria’s presidential election this weekend could be one of several EM elections this year (including Turkey and Argentina) that see opposition victories and a turn away from unorthodox policymaking. The experience from elsewhere in the emerging world is …
Shallower contraction in GDP as sanctions hit fades The 2.1% contraction in Russian GDP in 2022 was smaller than expected and is consistent with an expansion in Q4, providing further evidence to suggest that the economy stabilised after the initial hit …
20th February 2023
The Bank of Israel (BoI) hiked interest rates by another 50bp, to 4.25%, today and while it continued to point to signs of slower growth, it sounded more concerned about the strength of inflation than it did at its last meeting. It now looks likely that …
EM investment surged far above pre-pandemic levels last year, but there was a clear divergence across countries and we think investment growth will slow in 2023. One worrying development is that investment has continued to lag behind in countries where it …
We think the Composite PMI rose to just above 50 in February in the euro-zone… (Tue.) …but remained below that threshold in the UK (Tue.) US real consumption probably rebounded in January, reversing declines in past months (Fri.) Key Market Themes While …
17th February 2023
We expect MSCI’s Brazil Index to drop over the next couple of quarters in local-currency (LC) terms, before it begins to recover towards the end of this year. Since end-October, equities in Brazil have generally underperformed equities in other major …
Tough times ahead for CEE, after Q4 contraction … Q4 GDP data released across Central and Eastern Europe (CEE) this week were a mixed bag, but show that the regional slowdown at the end of 2022 was (broadly) as we had anticipated. We now know that the …
EM core inflation jumped to its highest rate in almost two decades in January. That can partly be pinned on China, where core inflation has risen from a very low rate. In most other EMs, core inflation has passed its peak, which should allow policymakers …
16th February 2023
Nigerians go to the polls on 25th February for general elections which could put the country on a very different path. Will the outcome of the vote end years of economic mismanagement and usher in a wave of pro-market reforms, or does it threaten more of …
The raft of EM central bank meetings over the past couple of weeks reinforces the view that monetary tightening cycles have now drawn to a close or are very close to doing so, several months earlier than in their DM counterparts. Policymakers in some EM …
10th February 2023
Foreign capital inflows have been soft this year in spite of the improvement in the economic outlook for EMs and the weaker dollar. And the very latest data suggest that capital has flowed out of EMs recently, which is a trend that we think is likely to …
9th February 2023
We expect the Riksbank to conclude its tightening cycle with a 50bp hike (08.30 GMT) The central banks of Mexico and Peru are also likely to deliver final 25bp hikes… …while policymakers in Romania will probably keep interest rates on hold Key Market …
8th February 2023
Nigerians voted at the weekend in a presidential election whose outcome could bring relief to Africa's biggest economy after years of mismanagement. They faced a stark choice, from the continuity of the ruling party's Bola Tinubu to the seemingly …
6th February 2023
The recent earthquakes that hit Turkey and Syria are a human tragedy and foremost in everyone’s minds. Nonetheless, the financial markets will also need to bear in mind the economic cost and, to the extent that this provides some comfort, the damage to …
7th February 2023
Investors’ concerns about sovereign debt risks in frontier markets have eased a touch recently but several countries, particularly Tunisia and Pakistan, remain on the path to default. The latest (and last-minute) demands from China in debt talks with …
We’ve received a lot of questions recently about the impact of China’s re-opening on EMs, including at our monthly Drop-in today. This Update answers three key questions on the winners and losers, the inflationary impact and the outlook for EM financial …
2nd February 2023
EM banks will face an increase in loan losses this year, but the good news is that banking sectors on the whole appear well-placed to absorb these, particularly in parts of Latin America, Emerging Europe and the MENA where capital buffers are high. That …
The manufacturing PMIs picked up in most emerging markets in January, offering hope that the worst for EM industry may have now passed. But activity remains soft against the backdrop of high interest rates and weak global external demand. The aggregate …
1st February 2023
We think the rapid economic recovery in China will lead to further gains in equities in China and other emerging markets (EM) this year. Despite some recent weakness, equities in China have rallied since the end of October, as a shift toward living with …
31st January 2023
Consumer spending in emerging markets initially recovered quickly from the pandemic, but it looks like high interest rates and inflation caused spending growth to slow sharply over the second half of last year. And we think consumer spending is likely to …
27th January 2023
The growth outlook for 2023 across Central and Eastern Europe has brightened a bit over the past month. Wholesale European natural gas prices have continued to fall sharply and survey measures of activity have generally improved. The outlook for external …
26th January 2023
China’s statutory retirement ages for men and women are low. But raising them would not make a big difference to the size of the workforce since most workers today keep working once they have passed retirement age. Only a quarter of men drop out of the …
25th January 2023
China’s re-opening will have a significant impact on the rest of the emerging world by lifting commodity prices. That will improve the terms of trade of EM commodity producers, particularly Chile, Peru and the Gulf economies. However, we think that this …
The outlook for emerging markets is looking better than it did just a few weeks ago. Most obviously, China’s shift to living with COVID means that its economy will rebound far sooner than we had previously thought. That will provide a lift to countries …
24th January 2023
The powerful re-opening rally in China’s stock market has eroded a large part of the valuation gap that led us to judge that equities there were relatively appealing a couple of months ago. That said, we think there’s still some scope for it to continue …
18th January 2023
The surge in FDI inflows to a 15-year high in Central and Eastern Europe (CEE) last year will partly unwind this year given the weaker global macro backdrop. But we think that a large part of the increase reflected structural forces, which will keep FDI …
17th January 2023
It looks highly likely that Tunisia’s government will this year follow in the footsteps of Sri Lanka and Ghana by defaulting on its external debts. Fortunately, public debt risks elsewhere don’t look as acute. But while the focus is on sovereign …
We have revised up our forecasts for equities in China, given a brighter outlook for the economy there. We have also increased our China 10-year sovereign bond yield forecast for end-2023, as we think that a faster economic recovery will lead to tighter …
13th January 2023
Early signs that the inflation tide is turning This week brought the clearest evidence yet that the disinflation process in Central Europe is underway as most economies experienced a marked and broad-based easing of price pressures in December. This is …
Foreign capital inflows into EMs have picked up a little since the beginning of the year. This should provide some relief to those countries with sizeable current account deficits, including Chile, Colombia, Philippines, and several countries in Central …
11th January 2023
We think Australia’s consumer price inflation remained at 6.9% in November (00.30 GMT) Catch up here on today’s Global Macro Drop-In where we discussed our 2023 outlook… …and sign up here for tomorrow’s Financial and Commodity Markets Drop-In Key Market …
10th January 2023
In this Update , we take a look at the key elections that are scheduled across the emerging world this year. The most notable ones are in Argentina, Nigeria and Turkey, where opposition victories could be the catalyst for a shift away from the …
