Emerging countries

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Special Edition

Recent trends and short-term outlook in emerging countries
08/03/2023 • By Christine PELTIER and François FAURE

In 2022 as a whole, average economic growth in Emerging Markets (EMs) slowed to an estimated 3.8% down from 6.6% in 2021 [...]

EcoTV Week

Forecast 2023 - Country Risk
26/01/2023 •

The Country Risk team presents its focus on 2023.

This year, emerging countries will face a more challenging international environment than last year.

Throughout the year, you will be able to read the publications, listen to podcasts and watch videos from the economists dedicated to countries such as China, Brazil, Egypt and India.
Eco Emerging

Inertia in emerging countries
17/01/2023 • By François FAURE

Over the past few months, the equity markets of the main emerging financial centres have shown a little more optimism. They are betting on a recovery in growth in China after the lifting of health restrictions, on the positive effect of the drop in commodity prices for importing countries and on the impact of US monetary tightening and the appreciation of the dollar to be less severe than expected. The first two arguments are uncertain and must be put into perspective [...]

Eco Emerging

Double whammy
09/10/2022 • By François FAURE

Excluding China, activity in emerging countries was stagnant in Q2 2022 and business and household confidence surveys indicate that the economic slowdown will continue. Inflation continues to rise and is being accompanied by new decisions of monetary tightening, including by central banks in Asia. The deterioration in external demand and tighter domestic financial conditions have combined with the monetary tightening in the United States and USD appreciation to trigger the slowdown in activity [...]

Eco Emerging

From one shock to another
08/07/2022 • By Christine PELTIER and François FAURE

Emerging countries have recently faced a series of unexpected and severe shocks that will significantly dampen their economic performance in 2022. Global inflation has increased due to rising commodity prices and world supply disruptions resulting from the conflict in Ukraine. The lockdowns in China’s industrial regions during the spring have aggravated supply problems and further worsened the global economic outlook [...]

Charts of the Week

Central Europe: Higher funding costs in bond markets
13/06/2022 • By Cynthia Kalasopatan Antoine

Over the past few weeks, Central Europe has experienced a spike in Government bond yields. Five-year yields have surged respectively by 338 bp in Poland, 331 bp in Hungary, 350 bp in Romania and 216 bp in Czech Republic since January 2022 and are at present similar to 2008 levels. The trend is also the same for 10-year yields [...]

Eco Emerging

Emerging countries will bend but not break
21/04/2022 • By François FAURE

Emerging countries are now facing another major shock whereas the post-pandemic recovery has remained fragile. The war in Ukraine will impact emerging countries through its negative effects on foreign trade, capital flows and, above all, inflation. The indirect effect of soaring global commodity prices on inflation households’ purchasing power may be particularly severe, and affect mostly low-income countries in Africa, Central Europe and the Balkan region [...]

Eco Emerging

Turkish troubles
25/01/2022 • By François FAURE

For emerging economies, the balance prospects/risks has been deteriorating since end-2021. For 2022, a bigger than expected growth slowdown is very likely, sometimes with social instability as already seen in Kazakhstan. Over the last three months, Turkey has experienced a mini financial crisis again [...]

Eco Flash

The monetary policy dichotomy in emerging economies
13/12/2021 • By François FAURE

The recovery in emerging economies since mid-2020 has been accompanied by a tightening of monetary policy in Latin America and Europe but not in Asia so far (except South Korea). The main reasons for this lie in the level and dynamics of inflation. Inflation is strong and accelerating in Latin America and Europe, more modest and still contained in Asia [...]

EcoTV Week

Monetary tightening in emerging countries
05/11/2021 • By François FAURE

Monetary stance is tightening in Emerging Europe and Latam. The reason: inflation resurgence. This may seem premature at this stage since activity in these countries has just come back to its pre- Covid shock.  Is it justified and what are the consequences ?

Charts of the Week

Inflation pressures in emerging economies
19/10/2021 • By François FAURE

Emerging economies have faced mounting inflation pressures since the beginning of 2021. Headline inflation has continued to accelerate over the summer (except in Asia), primarily reflecting the rise in food and energy prices and weaker currencies against the USD. However, core inflation has also accelerated across the board. As a result, a growing number of central banks in Latin America and Central Europe have started to raise their policy rates [...]

Eco Emerging

A lackluster summer
12/10/2021 • By François FAURE

The recovery in emerging countries remains fragile. Several economies in Asia and Latin America went through an air-pocket in Q2 2021. The emergence of Covid-19 variants has triggered new waves of the pandemic resulting in production stoppages, which have been temporary so far but which are eroding business confidence [...]

Eco Emerging

A fragile recovery
12/07/2021 • By François FAURE

Emerging countries have continued to recover since the beginning of the year, although the recovery remains fragile. Household confidence indicators are lagging behind those of business sentiment, illustrating the constraints on domestic demand: the pandemic risk persists, inflation is accelerating, and governments are facing rising financing costs, which reduces their fiscal manoeuvring room. Despite buoyant foreign trade, the horizon is not clear enough yet for investment to rebound [...]

EcoTV Week

Emerging Countries: a still fragile recovery
09/07/2021 • By François FAURE

The recovery trend is confirmed in EM remains fragile. Household confidence indicators are lagging behind those of business sentiment. Reasons are new waves of contamination, acceleration in inflation and impoverishment caused by the pandemic.
EcoTV Week

Emerging countries: speed races
16/04/2021 • By François FAURE

In their spring outlook, the IMF economists expect to see a multi-speed and incomplete recovery of the global economy in 2021. Indeed, speed is the key word for 2021 because the emerging countries are racing against time on several fronts.
Eco Emerging

Racing against time
15/04/2021 • By François FAURE

In their spring outlook, the IMF economists expect to see a multi-speed (and incomplete) recovery of the global economy in 2021. Indeed, speed is the key word for 2021 because the emerging countries are racing against time on several fronts. In our eyes, the greatest short-term risks are linked to the race between the rollout of vaccinations and the spread of the pandemic, and between higher food prices and the partial catching-up of revenues for low-income households [...]

Charts of the Week

Rising US Treasury yields : no spillovers yet to emerging bond markets
23/03/2021 • By William DE VIJLDER

The significant increase in US Treasury yields in recent months has not yet led to a widening of the spread between US Treasuries and the global emerging bond market index. This index covers USD-denominated traded bonds & loans issued by sovereign and quasi-sovereign borrowers in a large number of developing economies, whereby a distinction is made between investment grade (IG) and the lower quality speculative grade (SG) issuers [...]

Charts of the Week

The Covid crisis has not raised domestic borrowing costs for governments
09/02/2021 • By François FAURE

Almost a year ago, the pandemic triggered a financial shock that shook the emerging countries. Since then, monetary and financing conditions have largely returned to normal. Portfolio investment even soared to record levels in the second half of 2020 in a context of a massive support from the Fed. Under this environment, for the majority of the major emerging countries, government borrowing costs in local currency are equal or lower than they were at year-end 2019 [...]

Eco Emerging

Cautiously optimistic
18/01/2021 • By François FAURE

As the new year gets underway, emerging countries are benefiting from a combination of favourable factors for a recovery (catching-up movements in foreign trade, a weak dollar, rising commodity prices, and domestic financing costs that are lower than pre-crisis levels) [...]

Eco Emerging

Loss of momentum
05/10/2020 • By François FAURE

The recovery in economic activity that began at the end of the spring continued through the summer, with China leading the way, and oil and metals prices have picked up. But doubts are emerging as the pace of the recovery seems to be slowing, as reflected by exports recent loss of momentum. Above all, there are currently worries regarding the persistence of the pandemic and the risk of lockdown extensions or even new lockdowns in several countries [...]

Eco Emerging

A premature rally
22/07/2020 • By François FAURE

Since mid-April, calm has been restored in the financial markets of emerging economies. In most countries, exchange rates have begun to appreciate again, while money market rates and bond yields have eased thanks to the general easing of policy rates and greater use of quantitative easing by national central banks, external financial support, and the return of portfolio investment. As is often the case, the equity markets have exuberantly – and prematurely – welcomed this return to normal [...]

Eco Emerging

Triple whammy
13/04/2020 • By François FAURE

Emerging countries have been severely affected by the COVID-19 pandemic even though the official number of confirmed cases and deaths (excluding China) is still low compared to the figures for the developed countries. A wave of slowdowns and recessions is only just beginning, and the economic fallout will probably spread beyond 2020, because the real shock (shutdown of business due to confinement measures) is compounded by a financial shock and commodity price shock [...]

Eco Emerging

Birth of the eco: essentially a symbolic change
27/01/2020 • By Stéphane ALBY and François FAURE

The end of the CFA franc and its replacement with the eco scheduled for next June address the legitimate desire of WAEMU member countries to manage what is already their single currency. Governance of the currency regime will change as the French Treasury pulls out of WAEMU entities, although it will still serve as the lender of last resort. Though the euro peg will limit monetary policy’s independence, it is necessary to shore up the macroeconomic stability of WAEMU, which is still fragile.

Eco Emerging

Monetary policy is back to the fore
18/10/2019 • By François FAURE

Growth prospects for the emerging countries in 2020 (EC) have dimmed with the slowdown in export markets and the climate of uncertainty that reigns with the US-China trade war. This uncertainty has increased the volatility of portfolio investments since last summer, although external financing conditions are still favourable on the whole. The majority of countries have also eased monetary policy, and the pass-through of key policy rates to lending rates is functioning rather well [...]

Eco Emerging

Rebound in portfolio investments: a not so passive management
18/04/2019 • By François FAURE

After tightening in Q4-2018, external financing conditions in the emerging countries have eased since the beginning of the year. At the same time, there was a net upturn in non-resident portfolio investments, which shows that investors have a greater appetite for risk after the US Fed announced that it would pursue a cautious and flexible monetary tightening policy, and would pause the reduction of the Fed’s balance sheet [...]