Overall non-resident capital flows to FMs are estimated to rise modestly in 2018 on the back of a strong rebound in flows to Qatar. However, flows to other frontier markets are projected to decline by nearly 20%.
The Indian rupee is the worst-performing currency in Asia this year. We assess whether this reflects heightened external vulnerability, comparing risk metrics in the run-up to the taper tantrum vs. now. The current account deficit will widen, but not to 2012 levels. Reserves relative to external financing needs are higher now. External vulnerability persists but is less acute than in 2012.
This short note provides an update to the FM scorecard rankings first published in February 2018: these latest findings suggest that Bahrain, Pakistan, Zambia, Ghana and Tunisia are most susceptible to economic and financial shocks, but we see fewer vulnerabilities for a subset of FM countries, including Qatar, Kazakhstan, Serbia, Croatia, and Kuwait.
Cyclical sectors have lost momentum, signaling concern about slower growth in 2019. While sentiment indicators and survey data continue to surprise on the upside, hard data have been weaker. Equities still overvalued across mature markets, but some bargains to be found among EMs. Increased frontier market debt service costs – rising oil prices and trade war threats could sting
