Emerging Economies

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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 [...]

Charts of the Week

Tunisia: concerns over debt
08/02/2023 • By Stéphane ALBY

Tunisia is raising concern. The CDS premium on 5-year sovereign bonds has risen from less than 730 basis points (bps) at the end of November to 1072 bps currently. At this level, the country is joining the category of emerging issuers considered to be close to default by investors. There are many reasons for this.

Eco Week

China : Pending the economic rebound
23/01/2023 • By Christine PELTIER

In Q4 2022, China’s economic growth slowed to 2.9% year-on-year (y/y) from 3.9% in Q3. In quarter-on-quarter terms, activity stagnated. Our Pulse below highlights a broad-based weakening in economic activity during the last quarter of 2022.

Eco Emerging

China: Further turmoil
17/01/2023 • By Christine PELTIER

The sudden and ill-prepared abandonment of the zero-Covid policy at the start of December 2022 has plunged China into further turbulence. The large epidemic wave has hindered production in the manufacturing sector and again delayed the recovery in private consumption and activity in the services sector. However, assuming that the pandemic starts to ease off in February 2023, domestic demand should finally rebound, helped by additional monetary and fiscal support measures [...]

Eco Emerging

India: Growth slows but public finances show resilience
17/01/2023 • By Johanna MELKA

The Indian economy coped well with the external environment in 2022, but slowed down mainly because of inflationary pressures. Over the fiscal year which will end in March 2023, the budget deficit could exceed the initial target, but the overrun should be marginal and the debt-to-GDP ratio should continue to fall. The government’s refinancing risks remain contained [...]

Eco Emerging

Malaysia: Normalisation after the strong rebound in 2022
17/01/2023 • By Johanna MELKA

Malaysia’s economy held up well in 2022. Economic growth may have exceeded 8% and public finances strengthened thanks to the sharp rise in oil revenues. Furthermore, although external accounts weakened due to capital outflows and increased imports, the current account balance remained in surplus and the ringgit depreciated moderately against the dollar over the year as a whole. The outlook for 2023 is less favourable [...]

Eco Emerging

Philippines: Limited slowdown in economic growth in 2023
17/01/2023 • By Hélène DROUOT

The government of the Philippines maintained health restrictions linked to the pandemic for longer than the average period in emerging countries, with some regions still under lockdown until April 2022. The rebound in activity is not yet finished, and the strength of consumer spending, still supported by remittances, should help to offset the effects of higher inflation and the slowdown in global growth. Economic growth is expected to slow in 2023, but should remain solid [...]

Eco Emerging

Vietnam: Financial vulnerabilities in a context of sustained recovery
17/01/2023 • By Christine PELTIER

Vietnam benefited from a solid recovery in its economic growth in 2022, supported by the dynamism of both the export sector and domestic demand. However, the country has also become increasingly vulnerable to the deterioration of the international environment. Exports fell in Q4 2022 and these difficulties are expected to persist in the short term [...]

Eco Emerging

Türkiye: Fragile financial stabilisation
17/01/2023 • By François FAURE

Türkiye has enjoyed a period of financial calm since mid-2022 with exchange rate stability relative to the first half of the year, lower risk premiums and bond yields. Growth stagnated in Q3 2022, but monthly inflation slowed and the economic indicators available for Q4 2022 continued to be positive. For 2023, a slowdown is inevitable given the weaker levels of activity expected from the country’s main trading partners [...]

Eco Emerging

Hungary: Monetary and fiscal policy recalibration

17/01/2023 • By Cynthia Kalasopatan Antoine

Economic activity weakened in the third quarter. The outlook remains gloomy in the short term. Last September, the central bank ended its monetary tightening cycle in the face of downside risks to growth. This policy is currently not very consistent with the trajectory of inflation. Meanwhile, fiscal policy was tightened in the second half of the year due to the marked deterioration in budget deficit [...]

Eco Emerging

Bulgaria: The authorities aim to adopt the euro in 2024

17/01/2023 • By Cynthia Kalasopatan Antoine

GDP growth was resilient in the first three quarters of 2022 but is expected to slow down significantly in 2023. Inflation will be a key feature to monitor as price stability is one of the economic convergence criteria for Bulgaria’s future entry into the Eurozone in 2024. Another point of concern is that the political scene continues to be subject to uncertainty given the many changes in the government over the past 20 months. Investment has suffered as a result of this situation [...]

Eco Emerging

Israel: Amongst top OECD economic performers

17/01/2023 • By Pascal DEVAUX

Israeli economic performance was particularly strong in 2022 and remained above OECD average. Growth was very buoyant thanks to the dynamism of consumption and investment, while the fiscal year should end with a surplus. Although relatively moderate, inflation accelerated during 2022 and forced the Central Bank to tighten significantly its monetary policy. Against this backdrop, which is not favourable to consumption and investment, activity should slow this year [...]

Eco Emerging

Brazil: New priorities
17/01/2023 • By Salim HAMMAD

Luiz Inacio Lula da Silva started his third term as President of Brazil amidst a tense socio-political climate and more benign economic environment. Despite the many obstacles lying ahead of him, Lula bolsters ambitious social and environmental objectives. Their realisation will rely, amongst other, on an increase in public spending and a more interventionist credit policy [...]

Eco Emerging

Chile: Reforms against a backdrop of recession
17/01/2023 • By Hélène DROUOT

Chile is unlikely to escape a recession in 2023. The slowdown in global demand will weigh on exports, while domestic demand continues to be eroded by high inflation and interest rates due to restrictive monetary policy [...]

Eco Emerging

Morocco: A new stress test in 2023
17/01/2023 • By Stéphane ALBY

The Moroccan economy will continue to experience significant external and budgetary imbalances despite the drop in global commodity prices. However, the country's macroeconomic stability is not under threat. Forex reserves are comfortable and the structure of public debt is favourable. Moreover, the economy should benefit from a rebound in agricultural production after a historic fall in 2022 [...]

EcoTV Week

Malaysia: A new prime minister but still high political instability
08/12/2022 • By Johanna MELKA

Summary: In November, Anwar Ibrahim became the new prime minister but the political environment remains particularly unstable. However, in the past three years, the Malaysia’s economy has been buoyant and resisted fairly well to successive external shocks. Economic growth is robust. Although public finances are still weaker than before the pandemic crisis, they have strengthened since the beginning of the year.

Charts of the Week

China: consumer spending still depressed
25/10/2022 • By Christine PELTIER

Chinese economic activity recovered in Q3 2022 (+3.9% quarter-on-quarter and +3.9% year-on-year) following the contraction seen during the lockdown period in Q2 (-2.7% q/q and +0.4% y/y.). The recovery was mainly driven by the industrial sector and helped by the support measures taken by the authorities. In particular, higher public investment stimulated construction activity in infrastructure and tax incentives encouraged car sales [...]

Eco Conjoncture

The "right balance": an economic and political challenge
12/10/2022 • By Hélène DROUOT

Gabriel Boric, the candidate of the very broad left-wing coalition, won the second round of the presidential election last December. He took office in mid-March, and is already facing numerous challenges. His general policy speech at the beginning of June, and then the tax reforms he brought forward at the end of June, have confirmed his intention to implement economic and social policies which differ from those of previous governments [...]

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

Firm resistance against strong pressures
09/10/2022 • By Johanna MELKA

Although it remains dynamic, economic growth slowed in the first quarter of the current fiscal year. Monetary policy tightening, a very mixed monsoon season and disruption to global value chains are expected to weigh on activity during the next two quarters. The central bank has revised its economic growth forecasts downwards for the current fiscal year as a whole. At the same time, pressures on external accounts and the rupee are set to remain strong [...]

Eco Emerging

A less favourable outlook
09/10/2022 • By Johanna MELKA

During the first six months of 2022, the economy proved to be quite resilient to the consequences of the conflict in Ukraine and China’s zero-Covid policy. In particular, it benefited from the higher prices of exported commodities (mainly coal and palm oil). Its public finances and external accounts consolidated despite rising subsidies and net capital outflows. However, the situation could deteriorate in the fourth quarter and the medium-term outlook is less favourable [...]

Eco Emerging

Cautious optimism
09/10/2022 • By Hélène DROUOT

The recovery is continuing in Thailand. The rebound in private consumption and the gradual return of tourists should help, at least in the short term, to compensate for the slowdown in exports. However, the risks to growth remain on the downside, due to rising inflation, monetary tightening, the weakness in global demand and the absence of Chinese tourists. In the run-up to the elections in May 2023 political tensions could increase again [...]

Eco Emerging

Losing steam

09/10/2022 • By Cynthia Kalasopatan Antoine

The economic slowdown is likely to continue in the coming quarters. Poland is facing several challenges. Firstly, the country is highly dependent on coal imports, and the price of this commodity has soared since the end of 2021. The Central Bank has moved towards a less restrictive monetary policy despite high inflationary pressures. Finally, the moratorium on mortgage repayments in 2022 and 2023 will have a negative impact on banks’ balance sheets in the short term [...]

Eco Emerging

Energy dependency
09/10/2022 • By Cynthia Kalasopatan Antoine

All growth drivers weakened in the second quarter of 2022. With a high exposure to Russia for its oil and gas supplies, Slovakia could be amongst the most affected Central European countries by the consequences of the war in Ukraine. The steep rise in energy costs, as well as supply disruptions, will have an adverse impact on industrial activity, which has not yet returned to its pre-Covid level [...]

Eco Emerging

Bucking the trend
09/10/2022 • By Salim HAMMAD

Accelerating growth, slowing inflation, falling unemployment and the interruption of monetary tightening differentiate Brazil from most of the world’s major economies. These developments, which are largely attributable to fiscal stimuli (higher social transfers, reduction in taxes and fuel prices), are complicating the task of monetary authorities by partially diluting the restrictive effects of their policy [...]