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Emerging Countries Team


The Emerging countries team presents its focus for 2022. All year long you will be able to read, listen and watch the publications of its economists on countries such as China, Brazil, Egypt, India or Russia.

TRANSCRIPT // Emerging Countries Team : January 2022

Emerging countries

François Faure, Emerging countries: As for emerging countries, the balance between outlook/risk balance has deteriorated at end-2021 with the slowdown in China and the crisis in the real estate sector, shortages in industrial sectors, a general acceleration of inflation beyond the effect of commodity prices, tightening of monetary policies and geopolitical tensions. For 2022, risks are a larger-than-expected slowdown in growth at best, social instability at worse.


Christine Peltier, China: In China, the authorities have started to ease monetary and fiscal policy in response to the pronounced growth slowdown in the second half of 2021. Domestic demand growth should strengthen in the very short term, but the property market correction should continue. Meanwhile, export performance should remain robust.

In 2022, the challenge for the authorities will be to better coordinate policy measures, regulatory tightening in some services sectors and efforts to improve financial practices. The objective is to continue to adjust the Chinese growth model to make it more ‘sustainable’ and to build a more ‘egalitarian’ society while at the same time containing downside risks on economic growth.


Pascal Devaux, Egypt & the Gulf region: In Egypt, the liquidity in foreign currencies could be at risk. In 2022, we expect a rise in the current account deficit and higher spread on external debt.

In the Gulf region, sustained oil prices will test the governments’ willingness to continue fiscal consolidation. It is a key element for economic diversification.


Salim Hammad, Brazil: In 2022, the economic environment in Brazil will combine very mild growth prospects and persisting inflation. Monetary authorities will have to compose with the anticipated tightening of monetary policy in the US and lingering market concerns regarding the fiscal trajectory – two phenomena that are likely to weaken the currency and therefore have a negative impact on inflation and growth dynamics. On the political front, the point of attention will obviously be the general elections in October – an election that will no doubt be very divisive and could be marked by judicial proceedings; the election will however provide another opportunity to test the resilience of Brazilian institutions. The electoral cycle is expected to put a break on the advancement of reforms; it will also slow down investment and accentuate market volatility.


François Faure, Turkey & Russia: In Europe, Turkey will remain the main unknown. Monetary and foreign exchange policies, which bet on growth through exports at the expense of financial instability, may lead the country to stagflation and undermine the solvency of corporates indebted in foreign currency.

Russia will be the other focus due to geopolitical tensions with the threat of additional sanctions. The growth potential of the Russian economy has already been constrained by low private investment. Moreover, high inflation could lead the government to favor social spending over development spending.


Christine Peltier, India: In India, a number of Assembly elections will be held in the coming months. Uttar Pradesh, which is the most populated State, should be at the centre of the political battle.

The implementation of some key reforms that were adopted in 2020 should continue this year. This is unless the government backtracks as it already did on agricultural reform.

We’ll be watching inflation. Its acceleration could constrain domestic demand growth and lead the authorities to tighten monetary conditions while support measures for the most fragile households and enterprises come to an end. Finally, we will monitor closely the performance of public finance, which remains a crucial issue in India.


William De Vijlder: Key takeaways from our 2022 outlook are the key role played by supply disruption, which is expected to ease gradually, and how it influences the inflation outlook and wage growth. This in turn will steer decisions taken by central banks, where the tone has already been set by the Federal Reserve, which is expected to hike its policy rates on several occasions this year. As a consequence, based on past experience, it is to be expected that financial market volatility would rise. This will be monitored closely in emerging economies given the possible influence on capital flows.

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ABOUT US Three teams of economists (OECD countries research, emerging economies and country risk, banking economics) make up BNP Paribas Economic Research Department.
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