Filtered by Region: Emerging Markets Use setting Emerging Markets
Another 75bp hike, but end of tightening cycle on the horizon Mexico’s central bank delivered a fourth consecutive 75bp interest rate hike, to 10.00%, today but, with inflation now past its peak and the economy likely to slow sharply over the coming …
10th November 2022
Nigeria’s demonetisation efforts are likely to add to already-high economic costs of the country’s unorthodox policies. The resulting currency falls will fuel inflation further and disruptions to activity are more or less inevitable, supporting our …
Our seasonally-adjusted measure of aggregate EM goods exports recorded a decline in dollar terms in September and leading indicators point to further falls over the rest of the year. And with commodity prices on a downward trend and the global economy …
8th November 2022
Brazil’s financial markets have been some of the world’s best performers lately, supported in part by the prospect of centrist policymaking by incoming president Lula. With the presidential election now complete, and Lula set to be inaugurated soon, a …
We think euro-zone retail sales increased by 0.8% m/m in September (10.00 GMT) Romania’s central bank is likely to hike by 50bp (13.00 GMT) Register here for a Drop-In to discuss the key takeaways from our Global Economic Outlook Key Market Themes The …
7th November 2022
Chief Markets Economist John Higgins held a discussion with economists from across our Markets team shortly after the release of our Q4 Outlooks. During this briefing, John and the team answered client questions and highlighted key takeaways from their …
4th November 2022
Currencies in some of the largest frontier markets, including Nigeria and Vietnam, have come under pressure recently as the external backdrop has deteriorated and domestic policy concerns have mounted. With FX reserves generally limited, this will put …
3rd November 2022
Although the aggregate EM manufacturing PMI rose in October, a closer look at the surveys shows that there was a widespread deterioration in EM industry. Highly-open manufacturing economies including Taiwan, Czechia and Poland are struggling in …
2nd November 2022
While the dollar has now reached a 20-year high and looks increasingly overvalued on a long-term basis, we think it will rise further in the near term as the global economy falls into recession and “safe-haven” demand increases further. Even if the FOMC …
Table of Key Forecasts Overview – EM GDP growth has slowed sharply this year and is likely to remain sluggish in 2023 and 2024 as weak external demand and tight financial conditions take their toll. Having started hiking rates much earlier than their DM …
27th October 2022
Our Global Economics team held a 20-minute online briefing on the outlook for the global economy and policy on Tuesday, 8 th November. During this session, the team answered client questions as they highlighted key takeaways from their recently published …
Economists from our Emerging Markets and Markets teams discussed the outlook for EM financial markets in this regular dive into the big stories in EMs. In addition to their dive into what the macro picture means for the market outlook, the team answered …
The Egyptian government announced steps to tackle its economic crisis, including a shift to a more flexible exchange rate regime and accompanying interest rate hikes -- but will it be enough? Our Emerging Markets team held a briefing on whether the …
A closer look at core inflation across EMs suggests that underlying price pressures have started to ease. But they remain very strong by historic standards in most countries – and particularly so in Central and Eastern Europe (CEE). The CEE economies …
26th October 2022
Table of Key Forecasts Global Overview – Persistently high inflation and more aggressive monetary policy tightening now seem set to cause a global recession. While we had previously anticipated contractions in several economies, the gloom has spread …
25th October 2022
Since independence, India has preferred to stay unaligned geopolitically. But in a fracturing global economy, the security and macroeconomic benefits of leaning towards the US – and away from China – may prove too compelling for India to remain on the …
24th October 2022
We don’t think the valuations of emerging market (EM) equities will continue to hold up better than those in developed markets (DMs) if, as we expect, the global economy slips into recession. The valuations of emerging market equities – as measured by …
21st October 2022
Policymakers in Turkey have doubled down on their new economic model of “lira-isation” by pursuing more extreme de-dollarisation policies in recent months. These appear to be having an impact in terms of stemming lira depreciation. But the central bank …
20th October 2022
EM tightening cycles have continued apace but, having started raising rates much earlier than their DM (and Asian) peers, some central banks in Latin America ( Brazil , Chile ) and Emerging Europe (Czech Republic, Poland) are drawing their hiking cycles …
19th October 2022
Overview – Latin America is running into a growing set of headwinds, from the global recession to lower commodity prices to tight policy at home. We expect recessions in Chile and Argentina, and our growth forecasts across most of the region for 2022-23 …
We think benchmark equity indices in Taiwan, Korea and India will fall a bit further over the remainder of this year and into 2023, as the global economy slips into a recession. Although they have generally fallen alongside global equity markets this …
14th October 2022
Inflation & external pressures force the MNB’s hand The surprise decision by Hungary’s central bank (MNB) to tighten monetary policy further today underscores that the economy is facing much stronger inflation and external pressures than its regional …
Apple production shift boosts local manufacturing Regular readers of our India research will be (perhaps all-too-) familiar with our view that the key to India sustaining rapid economic growth over coming decades is the development of its manufacturing …
Overview – Emerging European economies are facing a difficult winter due to the energy crisis as well as headwinds from weakening demand for exports and tightening external financing conditions. We expect almost all economies in the region to experience a …
13th October 2022
One question that we frequently get asked is which EM could be the next Sri Lanka. While there are several candidates, Tunisia concerns us most. The good news for the rest of the world is that the most vulnerable countries’ sovereign foreign bonds are …
Capital outflows from EMs have picked up over the past month against the backdrop of a strong US dollar. We think that emerging economies will continue to find it difficult to attract foreign capital in the current environment. This will be especially …
11th October 2022
The bi-annual Monetary Policy Review (MPR) released this week by the South African Reserve Bank (SARB) bolsters our view that the monetary tightening cycle will continue to take on a distinct path to most other EM central banks. In many ways, the SARB has …
7th October 2022
While large-scale intervention to stem currency weakness has led to falls in central banks’ foreign exchange reserves, FX reserve coverage is only really low in a handful of EMs including Egypt, Turkey, Argentina, Pakistan and, to a lesser extent, Chile …
6th October 2022
With monetary tightening cycles approaching their ends in many emerging markets (EMs), we think local-currency (LC) sovereign bond yields will, in general, be much lower in a couple of years than they are now. But we anticipate a significant amount …
4th October 2022
The batch of manufacturing PMIs for September point to further weakness in EM industry at the end of Q3. And the backdrop of slowing growth at home and a global economy heading for recession will keep EM industry subdued over the coming quarters. The …
3rd October 2022
The surge in energy prices this year (particularly gas) will have the biggest impact on Central and Eastern Europe (CEE) and push economies there into recession. There will be an impact in the rest of the emerging world but we expect it to be much smaller …
29th September 2022
The ramping up of the US Fed’s hawkish rhetoric has turbocharged the dollar’s appreciation against EM currencies, with most falling by 2-6% against the greenback since the start of the month. (See Chart 1.) Reluctant to allow currencies to slide too …
27th September 2022
EM Drop-In: Rising EM macro risk in a strong dollar world …
26th September 2022
Capital inflows into EMs have dropped sharply over the past few weeks as the US dollar has been on a tear. External financing is likely to remain challenging in this environment, posing a threat to EMs whose current account deficits have widened sharply, …
23rd September 2022
The strong dollar environment is particularly worrying for those EMs with large dollar debts, including parts of Latin America, Turkey and many frontier markets. But it’s also a concern for countries with large current account deficits (including parts of …
20th September 2022
Shifts in China’s approach in debt talks with Zambia and planned changes to the Common Framework, such as establishing firm timelines, will go some way to smoothing the debt restructuring process for affected EMs. For now, though, there are reasons to …
14th September 2022
In this Update, we analyse the impact of surging energy prices in Europe and show that the Central and Eastern European (CEE) economies are the most vulnerable. The share of household disposable income spent on energy could double to more than 10% and a …
12th September 2022
The National Bank of Poland (NBP) slowed down the pace of its tightening cycle again today with a 25bp rate hike to 6.75%. There was no new guidance in the communications in terms of the central bank’s next move, but with policymakers seemingly more …
7th September 2022
Tighter global monetary policy and the strength of the US dollar continue to punish a number of frontier markets with weak sovereign balance sheets. Meanwhile, worries about Turkey’s balance of payments position remain acute, and external risks are …
5th September 2022
The fall in the EM manufacturing PMI to a three-month low last month was driven by China’s recovery stalling and weakness in export-oriented manufacturing EMs in parts of Asia and Eastern Europe. The one crumb of comfort is that price pressures have eased …
1st September 2022
The renminbi has weakened 2.5% against the US dollar since mid-August and is nearing our year-end forecast of 7.00/$. This is mostly a reflection of broad dollar strength – the …
31st August 2022
Resilience so far, but much tougher times ahead Economies across the region were generally resilient in Q2 despite tightening financial conditions and the war in Ukraine. Russia’s downturn was milder than expected as it was able to re-orientate trade to …
We think developed market (DM) monetary policy may be a threat to emerging market (EM) assets for some time yet . Hawkish monetary policy has arguably been the biggest headwind for global financial markets this year. Rapid upward revisions to …
While EM real effective exchange rates have held up better than their nominal exchange rates against the dollar since 2021, we think there are some economies where appreciations look stretched, and nominal exchange rates may need to adjust further. …
26th August 2022
The further widening of Chile’s current account deficit in Q2 combined with an increased reliance on portfolio inflows leave the Chilean peso vulnerable to a deterioration in investor risk appetite. We think the peso will remain under pressure and, as a …
24th August 2022
The growth outlook for the emerging world has taken a turn for the worse. The latest activity data for China suggest that the post-lockdown recovery has lost steam. The PBOC has responded by lowering interest rates and we expect further easing, but we …
23rd August 2022
Bank Indonesia (BI) hiked interest rates by 25bp to 3.75% today, and the hawkish commentary from the press conference increases the risk that the Bank will tighten policy further this year. Today’s decision came as a surprise. Of the 27 analysts …
Recent national accounts data show that many of the major EMs experienced a difficult second quarter . Looking ahead, a combination of weaker global demand, high inflation and rising interest rates is set to weigh on the outlook over the coming months. …
22nd August 2022
