The IIF covers 30-40 emerging and frontier markets, with a particular focus on economic and financing issues. Our reports feature topical analysis of macroeconomic fundamentals, policy developments, political economy dynamics and downside risks.
Turkey and Argentina saw sharp depreciations in 2018, that erased substantial real exchange rate overvaluations. We assess the BoP impact in 2019 using our Nowcast.
Indian shadow banks came under pressure in 2018. We assess how much of a macro risk they pose.
Expansionary fiscal policy will continue to drive non-oil growth, as fragile investment sentiment and regional tensions continue to hinder growth of the private non-oil sector. We expect overall growth to moderate to 2.0% in 2019, dragged down by compliance with the recent OPEC+ deal.
In our last edition of Sticky Notes in 2018, we look at President Xi's reform anniversary speech, Venezuela's future, NAFTA termination, oil markets, and a potential U.S. government shutdown.
Growth has rebounded, driven by higher copper prices and robust investment. Ongoing reforms will help reduce the fiscal deficit and stabilize public debt. High external corporate debt poses challenges, but several factors mitigate risks.
Sentiment on oil prices remained weak amid doubts that the planned production cuts will be enough to rein in oversupply, and as investors suspect that OPEC+ would honor their pledge to cut production. We expect Brent oil prices to average $67/bbl in 2019 if the OPEC+ agreement is fully implemented.
Sanctions depressed capital flows to Russia. Despite banks losing much foreign funding, domestic credit in local currency revived, and lending rates normalized in due course. High reserves cushioned the cost of sanctions, as did robust oil exports and low external debt.
Activity in China is cooling more than GDP suggests, but exports are not the main driver of the slowdown. Tariffs will eventually have an impact on the economy, that we quantify in a simple model of import demand. Growth would fall modestly in a détente scenario, but could drop by 0.5-1pp if trade tensions escalate.