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.
Widespread demonstrations and strikes followed the presidential election on August 9. Political uncertainty, together with the COVID-19 shock, weigh on the economic outlook. Belarus’ economy is highly dependent on Russia’s energy subsidy and domestic SOEs. The disputed election results mean that international financial support is very unlikely.
COVID-19 has exacerbated El Salvador’s external financing needs. Pressure has intensified amid a widening fiscal deficit, and financing options are narrow. With limited flexibility to unwind stimulus after COVID-19, an IMF program would help ease medium-term financing concerns.
China’s economic recovery in 2Q2020 was mainly driven by manufacturing and construction, thanks to effective pandemic control and policy support. Increases in household income and consumption are needed to make the recovery more sustainable. We expect the economy to grow by 2.2% for the whole year.
The explosion in Beirut is calling attention to a pervasive culture of negligence, corruption, and complacency among Lebanon's ruling elite. The blast will deepen the contraction in the economy, but may spur badly needed political and economic reforms. If not, the country will continue to sink.
The Caucasus and Central Asia (CCA) region was hit hard by COVID-19, with energy exporters also enduring the oil price collapse. Exchange rate flexibility, support from the IMF, and low risk of sovereign debt distress will help most CCA countries remain stable through 2021 absent further outbreaks.
COVID-19 has exacerbated Costa Rica’s external and fiscal imbalances. We project a widening of the current account deficit driven by the services sector. Further IMF funding would be needed to cover a potential external financing gap. External risk remains tied to substantial fiscal vulnerability.
We analyze external adjustments in EM Asia following the COVID-19 shock. Cross-border flows are shifting considerably in many countries in the region. The global recession weighs on exports and weak domestic demand on imports. Other sources of FX inflows have come under significant pressure as well in H1. This includes both international tourism revenues and workers’ remittances.
The ASEAN region is now China’s largest trading partner, top tourism destination, and a key investment partner. However, the depth of these relationships vary among the individual ASEAN member states. We expect economic integration to continue in the region.