FRT visits SEB CEO Johan Torgeby in Stockholm, to discuss Open Banking, Artificial Intelligence, advising new high-tech clients, and the emergence of Sweden’s cashless economy (with Brad Carr).
High import content in export production and investment is evident across the region. Recent import compression should support current account positions amid weak exports. However, the multiplier effects of import plunge on investment will likely depress GDP growth.
Disconnect between Fed dots and market rate expectations set to persist; Negative-yielding debt hits a record high of over $12 trillion—putting the risk of asset price bubbles in focus; Further USD strength could pose significant challenges for non-bank borrowers in emerging markets and mature markets outside the U.S.; More monetary stimulus would widen the gap between the cost of equity and debt, triggering another sharp accumulation in corporate debt; Robust growth in Panda bond issuance
Supported by MSCI upgrade Saudi Arabia has attracted $10.8bn in foreign equity inflows so far this year. In contrast, renewed trade tensions sparked a sharp decline in portfolio equity flows to other EMs. Saudi Arabia can count on an additional $40bn in equity inflows in the coming years.
Our global growth tracker has fallen to its lowest levels since 2015, driven by a sharp drop in manufacturing sentiment around the world. The evidence points to normal ups and downs in global manufacturing, with some early signs that hard-hit places like Germany are turning up.
Consumption-driven growth has led to increasing imbalances and inflation. Ad-hoc policy changes weigh on sentiment, undermining new investment. Further stimulus would pose risks to macroeconomic stability and outlook.
Argentina’s public debt will decline markedly, if fiscal consolidation is large and long-lasting. Fiscal easing could critically affect debt levels, and complicate refinancing of maturing debt. Debt vulnerability will remain high for years.
S&P CEO Doug Peterson joined FRT during the IIF Spring Membership Meeting & G20 conference in Tokyo, discussing investments in innovative technologies, environmental management tools and metrics on plastics footprints, and the necessary evolution of pension systems.
EM Growth Tracker at 3.8% 3m/3m SAAR in May. Business and financial conditions drag growth down. Imports appear to have bottomed out, improving trade.