The world economy is unlikely to experience a synchronized recovery from the COVID-19 shock. Despite robust global growth of 5.8% and 4.8% in 2021-22, we see uneven and fragile prospects. Emerging markets will be vulnerable due to the early withdrawal of monetary and fiscal support. Furthermore, vaccination progress differs considerably as the Delta variant continues to spread. A further weakening of growth in China could have important effects on the broader EM universe. Despite an expected tightening of global liquidity, we still see an EM “taper tantrum” as unlikely. We project non-resident flows to emerging markets excl. China to reach around $850 bn in 2021. Driving factors are a recovery in FDI, strong portfolio debt flows, and the IMF’s SDR allocation. Looking ahead, our main concern is ”secular stagnation” in EM following an incomplete recovery.

Building on the IIF’s previous work on the latest trends and developments in cyber insurance coverage, this IIF staff paper, the third in our series, focuses on ongoing cybersecurity challenges and their effect on the pricing, terms and conditions, and availability of cyber insurance.

ESG funds saw net inflows of $110 billion in Q3 2021—the slowest pace of inflows of the past four quarters—of this total, emerging market securities attracted a sub-par $4.8 billion of ESG fund flows—less than 5% of the total; LatAm received the largest share of ESG fixed-income flows, while EM Asia attracted the most ESG equity flows; Substantial divergence in ESG fund classifications highlights the lack of commonly accepted disclosure standards; Around 20% of the EU fund universe is classified as ESG under the EU Sustainable Finance Disclosure Regulation (SFDR).

The IIF has submitted a letter to the EBA and the European Commission on the treatment of third country branches. 

The IIF Sustainable Finance Monitor covers key developments in the global sustainable finance agenda. In the September 2021 issue, we discuss official-sector approaches to mandatory TCFD implementation, share updates on policy and regulation, latest developments on frameworks, tools, initiatives, and key research insights.

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

China's post-Covid stimulus was more restrained than after the great financial crisis (GFC) even though the Covid shock was about twice that by GFC in terms of the damage to GDP growth.

The IIF Sustainable Finance Official Sector Calendar provides a quarterly update on upcoming events, deliverables, and policy/legislation relevant to sustainable finance from global platforms, coalitions, and standard-setters.

In this note, we update out view on inflation and monetary policy in emerging markets. Rising inflation, even if partially transitory, has forced the hand of EM central banks. We expect inflationary pressures in many countries to peak in the next six months. Slowing growth, favorable base effects, and lower commodity prices will be the drivers. However, rate hikes were also prompted by expansionary fiscal policy in some cases. Furthermore, tightening global liquidity in 2022 may add pressure on central banks.

The food production cycle generates 35% of all GHG emissions globally, with animal-based food production generating twice the emissions of plant-based foods. Beef alone emits 8.4% of all GHGs; Public-private partnerships in agriculture are needed to promote sustainable agriculture practices; Voluntary carbon markets can play a crucial role in mobilizing international capital for sustainable agriculture

The pandemic combined with the current political paralysis have exacerbated vulnerabilities in the economy. Tunisian policymakers face difficult choices in stimulating growth while reducing macroeconomic imbalances. 

Growth remains a key policy priority, despite rising inflation. A looser stance by the CBRT will likely weaken the Lira further. This should boost exports while containing growth in imports. As a result, trade and current account deficits will be limited. The inflation outlook is set to deteriorate with a weaker Lira. And the ongoing dollarization trend could gain momentum.