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.
Neglect of structural distortions has prevented Morocco from matching its more successful EM peers in raising its standard of living.
High import content in export production and investment is evident across the region. Recent import compression should support current account positions amid weak exports. However, the multiplier effects of import plunge on investment will likely depress GDP growth.
Supported by MSCI upgrade Saudi Arabia has attracted $10.8bn in foreign equity inflows so far this year. In contrast, renewed trade tensions sparked a sharp decline in portfolio equity flows to other EMs. Saudi Arabia can count on an additional $40bn in equity inflows in the coming years.
Consumption-driven growth has led to increasing imbalances and inflation. Ad-hoc policy changes weigh on sentiment, undermining new investment. Further stimulus would pose risks to macroeconomic stability and outlook.
Argentina’s public debt will decline markedly, if fiscal consolidation is large and long-lasting. Fiscal easing could critically affect debt levels, and complicate refinancing of maturing debt. Debt vulnerability will remain high for years.
We have estimated Ukraine’s financing gap at $2 bn (1.5% of GDP). A key ingredient is a stable current account despite growth recovery. This is due to a favorable shift in the current account toward the EU. Domestic politics aside, a key risk is the growth slowdown in Europe.
Venezuela’s oil sector has been in decline for decades. As in Iran, US sanctions are having a severe impact, making the oil output collapse almost unprecedented. Even though sanctions did not deter Asian buyers, the oil sector’s outlook is dim unless policies change.
Holdings of U.S. Treasuries have increased, driven by portfolio restructuring in GOSI and the PIF. As across the GCC, public foreign assets exceed official reserves of the central bank. A further increase in the PIF’s assets abroad is set to improve the country's international investment position.
China currently faces headwinds to growth from both US tariffs and weaker domestic consumption. Compared with 2016, another period of soft exports and weak demand, many cyclical indicators—such as investment and retail—are weaker now, but structural indicators are more promising.
A fiscal stimulus program provided support to private consumption and growth in early 2019. Accommodative policies are expected to continue through 2020, helping growth to remain robust. One-off revenues and cyclically strong tax collection will mask the deterioration in fiscal discipline.