Entries for 2021

Total debt in frontier markets (FM) reached a record high of nearly 110% of GDP in 2020, up from less than 100% in 2019. We have added 15 new countries to our FM debt database.

Higher oil prices so far this year have been supported by the partial recovery in demand and temporary production cuts. We expect oil prices to average $60/b in 2021. 

We last week decided to keep our 7.50 Turkish Lira fair value unchanged, ... given that tighter financial conditions will narrow the current account...

We expect the ongoing recovery from the COVID-19 shock to strengthen this year.  We project global growth of 6.2% in 2021, led by developed markets ...

Emerging markets still face the threat of a full-fledged taper tantrum in 2021. For Ukraine, we do not see indications that foreign investors are pulling back. However, their increased engagement in local markets raises the risk overall. Macroeconomic vulnerabilities are markedly smaller than they were in 2013. The main risk is a stalling—or reversal—of the reform course of the last decade.

The March 2021 edition of the Insurance Update provides targeted updates on IIF insurance activities and events. 
 

The market setup now is reminiscent of the 2013 taper tantrum. Back then, the fragile five were especially vulnerable to outflows. Now they all ru...

Robust growth this year and next is expected to intensify inflationary pressures. Even so, the NBP’s policy stance will likely remain accommodative into 2022. Inflows of FX liquidity into Poland should remain robust over the near term. A forced conversion of CHF mortgages would increase banks’ demand for FX. Losses from such a conversion could constrain banks’ ability to extend credit.

The IIF has prepared a brief paper on our expectations for the Biden administration’s approach to financial regulatory policy.

Domestic banking systems financed widening deficits in Sub-Saharan Africa in 2020. Tighter financial conditions and less IFI support will likely require the same this year. Absent robust deposit growth, this will lead to a crowding out of private sector credit. Meaningful fiscal consolidation would enable banks to expand lending significantly.

The ESG-labelled bond universe has exploded over the past decade, from $15 billion in 2010 to over $1.3 trillion in 2020; Year-to-date fund flows into ESG bonds are running at a record pace of over $30 billion; ESG bonds have weathered the current bond market selloff well, with notable outperformance in carbon intensive sectors

Turkey has suffered three BoP sudden stops in recent years. The Lira almost fully recovered after the August 2018 sudden stop, … because a deep re...

We forecast a moderate activity upturn in 2021-22, following the deep contraction in 2020. COVID-19 challenges indicate an ongoing need for policy support this year, but external conditions have recently become more volatile. Capacity to keep stimulus while maintaining investor confidence is key.

The risk of a full-fledged taper tantrum in 2021 is still high for emerging markets. EM assets have already reacted strongly to the pickup in developed market rates. We analyze a number of country cases to see how circumstances differ from 2013. Russia’s macro vulnerabilities are significantly smaller during the current episode. The key risk for investors is a loss of access to the OFZ market due to U.S. sanctions.

High commodity prices can put pressure on some EM current accounts. We study the cases of India and Turkey, two major commodity importers. India’s...

With an increasing number of firms and governments committing to net zero targets, a wide variety of carbon pricing schemes have sprung up in recent years.; Observed carbon prices range from less than $1 to nearly $140 per ton—covering about 22% of global emissions; Finding an optimal price of carbon is difficult, posing conceptual, technical, and political challenges.