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.

The March 2021 Global Regulatory Update provides updates on current work streams. 

We worried about a repeat of the 2013 taper tantrum back in January. Our focus was that 2021 would see a big rise in GDP as the economy reopens, … ...

High-frequency data points to strong capital outflows starting at the beginning of March. Emerging market assets are under pressure from the increase in U.S. long-term real rates. EM credit appears to have held up better so far, while local markets are already hard-hit. Relating the current shock to the taper tantrum suggests that the worst may still lie ahead. EM with large fiscal financing needs and shallow domestic markets are the most exposed.

GCC authorities took forceful steps to mitigate the fallout from COVID-19, and we expect a modest recovery in 2021 supported by higher oil prices. However, the region confronts an ongoing exodus of expats and decelerating growth of capital stock, underscoring the need for broad structural reforms.

We look into China’s demand for commodity imports, … one of the main determinants of global commodity prices. We build import volume indices for s...

While the pandemic hit the economy hard, timely measures have limited the health and economic effects. Uzbekistan entered the pandemic with strong fundamentals and policy buffers. We expect real GDP to pick up to 4.5% in 2021 from 1.6% in 2020.