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.
A soft exit out of the debt overhang is possible and the authorities now recognize the urgency of committing to meaningful and widespread reforms to improve long-term fiscal sustainability and rebuild confidence. However, the scope of credible reforms for 2019 remains unclear.
Sanctions lowered capital flows to Russia permanently but robust oil exports cushioned their economic impact. Our BoP Nowcast suggests a still manageable situation, despite a falling current account surplus due to lower oil.
We assess the impact of potential policy surprises, using our BoP Nowcast and positioning toolkits. Low current account deficits pose limited risk, but in Mexico heavier positioning than in Brazil could amplify the impact of negative policy surprises.
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.