In 2010 we argued that fast growth in emerging markets (EM) and their increasing weight in world GDP was driving an economic super-cycle. We have lowered our forecasts for China, India and others, but the case broadly still holds (see Part 1).
We see growth improving across the region, despite recent financial-market distress. Fretting over the growth outlook because of portfolio outflows is missing the point, in our view. We think more optimism is in order, as simultaneous growth in majo...
To paraphrase Mark Twain, the reports of the death of EM bond markets have been greatly exaggerated. Increased global allocations to local EM bond markets have been not cyclical but primarily structural in nature, reflecting these markets’ rising ec...
• Stable FX reserves offset the impact of Moody’s sovereign outlook revision on Sri Lankan markets
• Steady growth and lower inflation underpin our constructive outlook on Sri Lanka
• Inflation is likely to pick up in Q4, but the absence of furthe...
• Worries over the impact of eventual US tightening and policy actions in China may have affected markets, but Asia’s underlying macro resilience remains intact. Domestic demand indicators have been holding up. We have downgraded our 2013 growth for...
• FY14 budget targets economic growth of 7.2%, CPI inflation of 7.0% and fiscal deficit of 4.6% (of GDP)
• Revenue target of BDT 1.67tn seems aggressive, but tax-to-GDP ratio is improving
• A 23% drop in gross (and c.30% in net) T-bond issuance wi...
• CBSL has lowered policy rates by 50bps each on growth concerns; likely to remain stable until Q1-2014
• IMF cautions that inflation is still a risk but its pace is not “unduly worrying”
• T-bond yields to remain range-bound on supply concerns; ...
Top 3 data/events
• Euro area – Eurostat business surveys to improve, but from low level
• Sri Lanka – CBSL expected to maintain policy rates
• Australia – Trade likely remained in deficit for an eleventh straight month
• Market focus
Local-currency emerging bond markets have seen ever greater levels of foreign demand as global investors flee from the ongoing European sovereign crisis and continue to allocate to fixed income securities. From less than USD 150bn in March 2009, for...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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