Flux Publicationshttps://economic-research.bnpparibas.com/html/en-US/Emerging-Economies-weathering-energy-shock-well-7/24/2026,53682Emerging CountriesEmerging EconomiesFinancial markets and investmentsMonetary policyEconomic growthInflationEnergyEmerging economies have so far withstood the energy shock caused by the conflict in the Middle East better than expected. The surge in oil, gas and energy-related input prices was rapid, but less inflationary than in 2022. While monetary policy easing cycles have been interrupted in many countries, most central banks have been able to keep their policy rates unchanged since last February. Emerging financial markets have not faced a widespread loss of confidence, while macroeconomic buffers are stronger than in the summer of 2022, helping to absorb the rise in energy costs.Fri, 24 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Editorial-Emerging-economies-energy-shock-derailing-growth-driven-AI-boom-7/20/2026,53650christine.peltier@bnpparibas.comEmerging CountriesEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceDespite the war in Iran, the closure of the Strait of Hormuz and the temporary surge in energy prices, emerging economies have so far avoided a crisis scenario. Their growth is slowing marginally, inflation remains contained in most countries and financial markets have not collapsed. The most powerful growth engine is coming from Asia: global demand for chips, data centers and electronic goods linked to artificial intelligence is offsetting part of the oil shock and reshaping the external balances of several emerging countries.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Emerging-countries-Consequences-energy-shock-7/20/2026,53673Emerging CountriesEmerging EconomiesEnergyThe impact of the energy shock on the economic variables of emerging countries.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Emerging-countries-Main-indicators-7/20/2026,53651Emerging CountriesEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceKey indicators for emerging countries: Real GDP, inflation, credit, current account balance, fiscal balance, public debt.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Emerging-countries-Regional-overviews-13-July-2026-7/20/2026,53649Emerging CountriesEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligencePanoramas as of 13 July 2026: a severe shock with varying effects in the North Africa/Middle East region; heightened fragilities in Sub-Saharan Africa; Latin America less exposed to the energy shock; Asia with strengths to face the energy crisis.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/China-Strengths-imbalances-7/20/2026,53652christine.peltier@bnpparibas.comChinaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceChina’s economic growth continues to be characterised by a significant disparity between the robust performance of the export sector and the fragility of sectors that rely on domestic demand. This gap has even widened this year, fuelling concerns about China’s growth model and its imbalances with its trade partners. In recent months, China has once again demonstrated its resilience to external shocks. The impact of the energy crisis caused by the war in Iran on economic activity and inflation has been limited. Furthermore, exports have benefited from the surge in global demand for goods linked to AI and green technologies. This momentum is expected to continue in the short term.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/South-Korea-energy-shock-AI-boom-growth-finding-balance-7/20/2026,53653helene.drouot@bnpparibas.comSouth KoreaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceSouth Korea is one of the countries most exposed to the global energy shock, yet it also reaps substantial benefits from soaring demand for artificial intelligence-related products. Despite the country's dependence on hydrocarbon imports, with the vast majority transiting through the Strait of Hormuz, short-term growth forecasts remain highly optimistic, bolstered by a robust export sector. Factors such as inflationary pressures, the depreciation of the won, and rising household debt, justify monetary tightening. In the longer term, the government is banking on an integrated AI ecosystem, encompassing data centres, robotics and advanced materials) to strengthen its key position in global value chains.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/India-economy-better-equipped-than-2022-face-energy-shock-7/20/2026,53654johanna.melka@bnpparibas.comIndiaEmerging EconomiesEconomic growthInflationIndia is currently in a stronger position than it was in 2022 to cope with the new energy shock. The fiscal capacity to support the economy has increased, and inflation is more contained. Although a slowdown is anticipated (from 7.7% for FY 2025/2026 to 6.7% for the current year), economic growth is expected to remain robust. However, the government’s subsidy policy is likely to delay the consolidation of public finances. Despite the expected reduction in energy subsidies—supported by lower oil prices — food subsidies could rise due to a poor monsoon.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Indonesia-Robust-growth-deteriorating-governance-7/20/2026,53655johanna.melka@bnpparibas.comIndonesiaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceIndonesia is facing two external shocks: rising energy prices and capital outflows. The decline in governance quality has indeed impacted foreign investor confidence. Assuming that the conflict in the Middle East subsides, pressures on external accounts and energy subsidy costs are expected to ease. However, oil prices are expected to remain consistently above their early-2026 levels, perpetuating the risk of fiscal slippage. Investors remain cautious, and rupiah volatility is high.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Poland-Robust-growth-major-imbalances-aside-from-public-deficit-7/20/2026,53656cynthia.kalasopatanantoine@bnpparibas.comPolandEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceDespite the energy shock, Poland’s economic growth is expected to remain robust and could even accelerate slightly in 2026. This growth is being driven by a recovery in investment, while consumption, although slowing, will continue to be one of its main pillars. Inflation remains moderate despite rising fuel prices and is expected to stay within the Central Bank’s target range. The external accounts, meanwhile, are very solid and can accommodate for the rise in energy costs. However, the trajectory of public debt is a cause for concern, particularly given that the government’s lack of a qualified majority is hampering fiscal consolidation.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Romania-Weakened-political-instability-7/20/2026,53657cynthia.kalasopatanantoine@bnpparibas.comRomaniaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceRecent political tensions are once again drawing attention to Romania. The next government’s priority will be to further consolidate public finances; otherwise, the public debt-to-GDP ratio will continue to deteriorate. In addition, Romania appears to be the Central European country most adversely affected by the energy shock, although the situation is still manageable. Economic growth has been sluggish since 2024 and is not expected to improve in 2026. Inflation has now exceeded 10%, but it is expected to ease from September as the effects of the VAT rate hike subside. Monetary authorities are expected to adopt a cautious approach in the short term. By 2027, the Neptun Deep gas project in the Black Sea is set to be a major asset that should help reduce public and external account deficits.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Turkiye-economy-will-cope-renewed-headwinds-once-again-7/20/2026,53658francois.faure@bnpparibas.comTürkiyeEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceTurkish growth has slowed significantly since Q4 2025, and the oil shock since March has led to a significant erosion of foreign exchange reserves, a more pronounced depreciation in the lira than in other emerging-market currencies, and pressure on domestic bond yields. The risk of disruptions to hydrocarbon and fertilizer supplies is limited. However, the revision of official inflation forecasts, the subsequent tightening of monetary policy, and warnings of the finance minister about potential budget slippage have dampened investor sentiment, which is further unsettled by the AKP’s strategy of systematically sidelining potential rivals in the presidential elections. There are often recurring financial tensions in Türkiye. However, the risk of economic destabilization is low given the government’s moderate debt levels and the strength of the banking system. The slowdown is even beneficial, as it will help to limit the current account deficit and should help the central bank in curbing expectations of inflation and rebuilding its foreign exchange reserves.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Brazil-high-cost-resilience-7/20/2026,53659salim.hammad@bnpparibas.comBrazilEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceThe Brazilian economy continues to withstand an ultra-restrictive monetary policy stance. In an election year, fiscal policy has become increasingly active to help cushion the impact of high interest rates and mitigate the effects of the oil shock on households' purchasing power. The resilience of economic activity comes at the cost of slower disinflation and a shift in the fiscal burden towards public banks. The policy mix—protective fiscal policy versus restrictive monetary policy—complicates the adjustments of prices, public finances, and inflation expectations amid more frequent supply shocks. The oil price shock has helped strengthen both external accounts and the reais. Over the medium term, it could strengthen Brazil's attractiveness as an energy supplier while accelerating the country's drive towards greater productive sovereignty.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Colombia-programme-radical-change-7/20/2026,53660lucas.ple@bnpparibas.comColombiaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceThe presidential election on 21 June 2026 was won by Abelardo de la Espriella, an outsider who distances himself from the traditional figures of the Colombian right. His programme, which represents a total departure from that of the outgoing government, draws clear inspiration from the economic liberalisation advocated by Argentine President Javier Milei and the security measures of Salvadoran President Nayib Bukele. His accession to power in August therefore heralds major shifts in economic and fiscal policy, as well as in the fight against drug trafficking. Although economic growth has remained largely unaffected by the closure of the Strait of Hormuz, it is expected to slow in 2026, primarily due to more restrictive monetary and fiscal policies. However, the risks associated with implementing the incoming government’s socio-economic programme are considerable, particularly given the high level of fragmentation in Parliament, where the outgoing government’s party retains a large number of seats.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Mexico-USMCA-review-Mexico-industrial-headache-7/20/2026,53661helene.drouot@bnpparibas.comMexicoEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceMexico’s economic outlook remains modest. It is characterised by a slowdown in private consumption and investment still held back by uncertainty and a lack of new infrastructure projects. Exports, the main drivers of economic activity, have benefited from the US regionalisation strategy, but the USMCA renegotiation is introducing new constraints. The US is tightening the conditions for accessing its market, threatening the competitiveness of the manufacturing sector, which remains dependent on Asian inputs. At the same time, rising public debt, continued support for Pemex and falling oil revenues are drastically reducing fiscal margins, exacerbating the country’s economic challenges.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Saudi-Arabia-conflict-Middle-East-than-just-temporary-shock-7/20/2026,53662stephane.alby@bnpparibas.comSaudi ArabiaEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceSaudi Arabia may not be the Gulf economy most vulnerable to the conflict in Iran, but it is by no means unaffected. This year’s growth forecasts have been significantly downgraded due to the decline in oil production. Nevertheless, excluding hydrocarbons, economic activity remains resilient. Crucially, the country has been able to capture some of the trade flows blocked in the Strait of Hormuz thanks to its infrastructure on the Red Sea. In the short term, the rise in oil exports will improve its external accounts. On the other hand, the recovery in public finances will be less pronounced due to soaring budgetary expenditures. However, there is still ample fiscal headroom. Public debt levels are moderate and the conflict has not undermined creditors’ confidence. Beyond the short-term effects, this conflict is likely to have lasting repercussions across the entire region. Saudi Arabia could stand to benefit from this.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016https://economic-research.bnpparibas.com/html/en-US/Egypt-Encouraging-signs-macroeconomic-recovery-7/20/2026,53663pascal.devaux@bnpparibas.comEgyptEmerging EconomiesInternational TradeEconomic growthInflationArtificial intelligenceThe impact of the war in Iran and the energy crisis on the Egyptian economy are currently limited. The economy has benefited from macroeconomic fundamentals strengthened by international support and the increased credibility of its economic policy. The momentum for economic recovery and disinflation, which began in 2025, remains intact. The main source of vulnerability – foreign exchange liquidity – has only slightly deteriorated, supported by increased flexibility in exchange rates. Nevertheless, while the Egyptian economy’s vulnerability to external shocks is diminishing, it remains high, particularly due to the growing imbalance in the energy sector and dependence on volatile capital flows. In the medium term, Europe’s willingness to diversify its gas imports could benefit the Egyptian gas hub.Mon, 20 Jul 2026 00:00:00 +0200© BNP Paribas - 2016