Nigeria is increasingly reliant on expensive “hot money” flows. Non-residents are flocking to central bank auctions of CBN bills. Nigeria leads the region in Eurobond issuance, at a high cost. With non-oil revenue below 4% of GDP, risk of crowding out is high. Weak oil production and low prices weigh on the current account.

Recent attacks on Saudi oil facilities led to the worst supply disruption in last 50 years. Aramco’s full return to normal crude oil production may take more than a few weeks. The impact on the Saudi economy includes a small contraction in overall real GDP and a wider fiscal deficit.

Colombia’s current account deficit is still widening, despite depreciation since the oil price shock of 2014-15. High FDI mitigates financing risk to some extent, but external funding needs are high relative to reserves. Foreign bond holdings rose fast compared to GDP, but aren’t unusually high relative to bond index weights.

ECB responds decisively to “protracted” Euro Area weakness—but will it prolong September’s risk rally?; Persistent trade tensions put a spotlight on aggregate financing needs in emerging markets; At close to 90% of GDP, Argentina’s government debt is well above the EM average of 50%; over half is now owned by foreigners; Boom in “sustainable debt” issuance—green is the new gold!

Portfolio flows to Russia are weakly correlated with global flows, likely due to sanctions. Despite the risk of further sanctions, government debt remains attractive to investors, as Russia stands out among EM due to exceptionally low macroeconomic vulnerabilities. In the long run, sanctions can lead to less prudent policies and reduce growth prospects. We expect discussions of Russia sanctions in the US Congress to pick up again in the fall.