Entries for 2022

EMs funded large fiscal deficits smoothly in the covid crisis. Foreigners and FX issuance played a minor role in most EMs. Domestic bond buyers ar...

The authorities and the IMF have reached a staff-level agreement on a comprehensive economic program. Approval by the IMF Executive Board is contingent a series of prior actions. The program is based on two pillars–-a unified market-determined exchange rate and a confidence-inspiring banking system.

Political tensions and major structural challenges combined with the war in Ukraine have exacerbated economic vulnerabilities. Current and fiscal deficits and high public debt pose significant financial risks. An IMF program is needed to close the financing gap and restore macroeconomic stability.

Against a challenging market backdrop, flows to ESG funds fell to just $75 billion in Q1 2022-a sharp slowdown from their recent pace. Inflows in March ($15 billion) were at their weakest since March 2020; Sustainable debt issuance dropped to $285 billion in Q1, down 30% from Q4 2021; However, investor demand will remain underpinned by the continued acceleration in corporate net-zero pledges.

Offset issuance in voluntary carbon markets declined sharply in Q1 2022-the slowest pace of issuance since Q3 2020. Most of the issuance came from China, the DRC, Indonesia, India, the U.S. and Turkey in Q1.

The direct impact of the war in Ukraine on China's economy is minor due to the relative sizes of these economies. However, the indirect impact of global consumer and investor confidence can be profound and complicated. We expect the war to reduce China's GDP growth by 0.2 points.

Russia’s invasion of Ukraine is upending markets. Rising commodity prices are buoying Latin America, … while commodity importers like...

Severe sanctions have focused on Russia’s domestic financial system, with freezes of Bank of Russia assets among the most impactful steps. Emergency liquidity support by the CBR stabilized the banking system. The Ruble has also made up most of its losses due to capital controls, together with large current account surpluses and tight monetary policy. We see a tightening of financial sector sanctions as likely going forward.

Portfolio flows to EM stood at -$9.8 bn in March. Equity and debt flows were -$6.7 bn and -$3.1 bn. China equity posted $6.3 bn in outflows. ...

Chile and Colombia ran very wide twin deficits last year, … and their economies overheated due to policy stimulus. Very different fiscal policy wi...

The sanctions and the contraction of the Russian economy will have adverse economic spillovers to the CCA. The degree of the effect on each country will depend on its exposure to Russia. Elevated inflation is expected to persist with ongoing supply chain disruptions and higher commodity prices.

China’s 2022 budget seems rather tepid with a narrower fiscal deficit and flat new debt. Once the deficit in the government fund account and special transfers are considered, the consolidated fiscal deficit could reach 8.1% of GDP in 2022, lending strong support to economic recovery.

Despite rapidly growing use of renewables, many EU countries still rely heavily on fossil fuel energy; Russia currently provides the lion’s share of EU energy: 38%, 23%, and 46% of imported gas, oil, and coal respectively; High and volatile fossil fuel prices should accelerate Europe’s transition to clean energy over the medium term…; …but greater demand and higher prices for non-Russian gas sources could push Asia towards cheaper coal; Change could come quickly: the REPowerEU plan aims to cut EU reliance on Russian gas by two-thirds in 2022.

The March 2022 edition of the Insurance Update provides targeted updates on IIF insurance activities and events.

We examine some of the main drivers of Russia’s current account surplus. Since Russia invaded Ukraine a month ago, global oil prices have rise...