Filtered by Region: Emerging Markets Use setting Emerging Markets
Inflation figures out of Turkey – including those published for October yesterday – have surprised on the upside and forward-looking indicators suggest that the disinflation process will be slow in the coming months too. Consensus expectations for the …
5th November 2024
Despite the tick-up in the EM manufacturing PMI in October, manufacturing activity appears to have remained soft and we think this will be the case over the rest of the year. The surveys suggest that goods price pressures were contained last month, but …
4th November 2024
The rise in Brazilian local currency government bond yields this year is now on a scale similar to that seen during its fiscal crisis in 2015. Back then, bond yields only started to fall back when wholesale political change was on the horizon. That’s not …
In a week in which the Federal Reserve and the Bank of England are expected to deliver further rate cuts, and there’s anticipation that the Standing Committee of China’s National People’s Congress will flesh out the details of much-anticipated fiscal …
Another upside surprise likely to reenforce CBRT’s hawkish stance The smaller-than-expected fall in Turkish inflation in October, to 48.6% y/y, is likely to dash any remaining hopes that a monetary easing cycle will start this year. The risks now seem …
CEE struggling, Hungary in a league of its own The Q3 GDP data out of Central Europe this week continued a bleak run of activity data for the region. The Czech economy grew by just 0.3% q/q – in line with our forecast, but some way below the central …
1st November 2024
South Africa reembraces fiscal discipline The biggest event this week was South Africa’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, which was pitched as pro-growth, but the numbers underline that the Treasury sees little room to loosen the …
It’s still unclear if consumption will be prioritised Over the weekend, the Vice Finance Minister confirmed that the NPC Standing Committee is set to approve a fiscal package at its upcoming meeting , set to last from Monday to Friday of next week. At a …
We think that if Vice President Harris wins the US presidential election next week, she would be more likely to stick to policy continuity, and EM risk premia would remain low. If former president Trump is elected, we would expect an initial adverse …
The economy has already regained some momentum on the back of increased policy support. But the extent of the recovery hinges on the scale of fiscal stimulus, which remains uncertain. Our base case is for growth to pick up over the coming quarters before …
The latest activity data out of Emerging Europe have been surprisingly weak, and GDP growth in many parts of the region looks as though it will come in below our previous expectations this year. That said, above-target inflation remains a concern, and we …
31st October 2024
Africa Chart Pack (Oct. 2024) …
Weak external demand results in a sharp slowdown Hong Kong’s economy contracted sharply in Q3. GDP surprised significantly to the downside, with growth of 0.4% q/q in Q2 more than reversed by a 1.1% q/q fall in Q3 (Bloomberg median: +0.2%, CE: -0.2%). In …
This report was first published on 31 st October covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 1 st November and on the Caixin services and composite PMIs on 5 th November. Economy continues to regain momentum The PMIs …
Growth slowing further in Q3, but consumer spending remains strong The latest Russian industrial production and retail sales figures for September were a bit stronger than expected, although GDP growth still probably slowed over Q3 as a whole towards 3.0% …
30th October 2024
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency risks ease further, regional divergence among fiscal risks Financial vulnerabilities have declined further …
The South African Medium-Term Budget Policy Statement (MTBPS) was presented as a “pro-growth” statement, but the numbers underscore that the government has no room to loosen the fiscal stance. Continued fiscal austerity will help to sustain investor …
The outbreak of unrest in Mozambique after contested elections is unlikely to have a large impact on growth in the near term. But any attempts by the government to loosen fiscal policy to appease protestors or, further out, disruptions to large gas …
EMs are playing a growing role as substitute markets for Chinese exporters that face rising trade barriers in DMs. A second trade war with a re-elected President Trump would only accelerate that shift. It is plausible that a sizeable portion of the loss …
Central Europe continues to struggle The weaker-than-expected Q3 GDP data out of Central Europe, which showed that the Hungarian economy slipped back into recession last quarter, suggests that stagnating demand from the euro-zone is continuing to act as a …
Our China Activity Proxy suggests that the economy’s growth picked up in September, bringing Q3 growth in-line with official estimates. While this acceleration was broad-based across sectors, the main driver was financial services activity which was …
29th October 2024
Our measure of capital outflows from EMs has jumped to its highest level since July 2022 amid the recent surge in US Treasury yields and strengthening of the dollar. If Donald Trump wins the US election, there is plenty of scope for these market moves to …
Has Poland’s consumer recovery gone into reverse? The downside surprise in Polish retail sales data this week was the biggest at any point in the past decade. (See Chart 1.) In contrast to expectations for a slight slowdown in growth to +2.0% y/y in …
25th October 2024
Dead Nigeria Shell oil deal sign of local firm worries This week Nigeria rejected Shell’s sale of its onshore oil business, the latest multinational attempt to divest from Nigeria. Lower foreign investment makes us less hopeful on Nigeria’s oil production …
Surprise 200bp hike takes policy rate to a new high The decision by the Russian central bank (CBR) to hike its policy rate by a larger-than-expected 200bp today, to 21.00%, is evidence that – despite President Putin’s efforts at this week’s BRICS summit …
Fiscal package may be revealed in two weeks At its 12 th October press conference, the Ministry of Finance (MoF) offered some reassurances that fiscal spending would pick up in the final months of this year and stay supportive into 2025. But it didn’t …
Overview – With goods inflation vanquished, the last leg of disinflation in advanced economies must come from falling services inflation. After plateauing at the start of the year, services inflation has fallen in recent months, and we think that this …
24th October 2024
EM GDP growth picked up in Q3, but we expect growth to slow over the coming quarters - despite the recent stimulus announcements in China. The threat of more protectionist trade policy in the US poses an additional downside risk to our already …
Renewed jitters in bond markets in part reflect a nagging sense that inflation isn’t whipped. Headline rates have come back to target, but central banks in many economies are faced with still-sticky core inflation readings that investors worry will force …
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
Recent threats by Donald Trump to impose tariffs on Mexico’s vehicle sector could just be pre-election bluster or an attempt to get concessions from Mexico. But if implemented, they would deal a big blow to Mexico’s economy – a 0.6% drop in real GDP for …
23rd October 2024
Sharp drop sets the stage for 25bp rate cut in November The drop in South Africa’s headline inflation rate, to 3.8% y/y, in September, means that the SARB will almost certainly continue its easing cycle. The chances of a 50bp cut at its the next meeting …
Following a record high in August, our proprietary measure of China’s green export volumes edged down in September. Meanwhile, China’s exports of EVs to Europe surged despite the recent EU tariffs, and we expect continued strong performance in China’s …
22nd October 2024
MNB pauses easing cycle again The Hungarian central bank (MNB) acknowledged the possibility that interest rates could be left on hold for an “extended period” after it paused its easing cycle today. We maintain our forecast that the policy rate will be …
Retail sales collapse in September, but weakness probably temporary The much weaker-than-expected Polish retail sales data for September suggest that the economy slowed more than we had been expecting in Q3. Even so, we think that this weakness was …
The persistent strength of wage growth in Central and Eastern Europe (CEE) reflects continued tightness in labour markets and lingering effects from the 2022-23 inflation shock. While the latter should unwind, we think that wage growth will generally …
21st October 2024
The recent outperformance of emerging market equities, relative to their developed market peers, has almost entirely reversed in October and we think this may be a sign of things to come. Chinese equities did not react much to the larger-than-expected …
The outcomes of the EM central bank meetings since the beginning of October underscore the point that Asia will lead the next phase of the EM easing cycle. Central banks in Central and Eastern Europe and Latin America are slowing the pace of (or pausing) …
SARB lays out requirements for lower rates The South African Reserve Bank’s Monetary Policy Review (MPR) released this week made clear that recommitting to fiscal consolidation and pushing through structural reforms are key to creating extra space for …
18th October 2024
External developments: the good, the bad & the ugly The current account data released across the region over the past week show that external positions have continued to improve in some countries (notably Turkey), while in others they are deteriorating …
BRICS+ to meet with a notable absentee Next week’s BRICS+ summit in Russia is likely to focus on the group’s further expansion after Egypt and the UAE (along with several other countries) joined last year. Notably, however, Saudi Arabia – which was also …
17th October 2024
Several EMs have reached provisional agreements with creditors to restructure their sovereign debts in recent months, including Zambia, Ukraine, Sri Lanka and Ghana. In principle, restructurings should pave the way for improved fiscal positions, stronger …
Slow pace of disinflation will prevent monetary easing this year The decision by the Turkish central bank (CBRT) to leave its policy rate on hold again today, at 50.00%, was accompanied by communications which support our view that monetary easing is …
South Africa’s economy continued to pick-up in the middle of Q3 but the recovery is taking place at different speeds across sectors; lower inflation is supporting consumer-facing sectors but industry is lagging behind. As the drag from supply-side …
16th October 2024
Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some …
15th October 2024
The BRICS+ summit in Russia next week is likely to see another push on expansion, mainly to close allies of China and Russia. But limited economic benefits for potential new members, divisions among existing members, and concerns (for some) about …
Inflation picks up, one more rate hike lies in store Nigeria’s headline inflation picked up to 32.7% y/y in September, confirming that the CBN’s fears about upside risks from last month’s petrol price hikes were not misplaced. We think the CBN will …
South African Finance Minister Enoch Godongwana will be in a cheerful mood when he delivers the Medium-Term Budget Policy Statement (MTBPS) on 30th October; the budget deficit has narrowed and the government’s borrowing costs have fallen sharply. Even so, …
Having stormed to victory in February’s presidential election, Prabowo Subianto, a former army general and the current defence minister, will take over from Joko Widodo on Sunday (20 th October). Since his election victory, Prabowo has made a number of …
South Africa’s Finance Minister Enoch Godongwana will be in the unusual position of presenting the Medium-Term Budget Policy Statement (MTBPS) later this month against the backdrop of a sharp improvement in the public finances. And he is likely to use the …
