Growth differentials across EM are large. Asian EMs outperformed in the long-run, mostly due to higher productivity growth. Low productivity explains low growth, in Brazil, Mexico, and South Africa.

Spurred by falling interest rates, global debt rose by a hefty $3 trillion in Q1 2019.  At over $246 trillion, global debt is now just $2 trillion shy of the all-time high of Q1 2018.  EM debt hit a record $69 trillion in Q1 2019—over 216% of GDP. 

Since the height of the Lira and Peso sell-off in August 2018, both currencies have weakened sharply in real effective terms. While both have seen their current account deficits narrow sharply, this is mostly due to cyclical weakness and not genuine rebalancing. This is why our FX fair value model signals that both the Lira and Peso are only fair and not undervalued.