Zambia borrowed extensively from abroad after 2015, leading to considerable external financing requirements. Fiscal and monetary policy will have to be contractionary, however, the level of adjustment needed is very large. Thus, Zambia is a prime candidate for an IMF program.

Record high economic policy uncertainty is a key risk for business sentiment; Wall of worry prompts bets on rising gold prices and stronger JPY—and a further drop in stocks; Synchronized global easing could drive another round of synchronized global debt accumulation; China’s Belt and Road Initiative—concerns about debt and environmental sustainability 

US tariffs should be imposing a strain on China’s balance of payments, most obviously in the current account. But the surplus is rising, in part due to quite healthy exports. Instead, trade tensions may be manifesting in capital outflows, which are above 2012 levels and half 2015/6 levels. Tariffs may be raising RMB depreciation expectations, an issue of great importance to China’s policy makers and the rest of EM.

The risk of automation in CEE is relatively low compared to other EMs, but differs considerably within the region, with EU member countries facing less risk. The skill composition of employment appears to play an important role, as does an economy’s relative urbanization and labor market diversification.

Pemex’s woes turned Mexico into an oil importer. The current account could improve significantly if Pemex’s planned output increase materializes. Vulnerability would rise if Pemex underperforms, as gasoline imports would continue growing.

We still expect Brent oil prices to average $65/b in 2019 and $62/b in 2020. Growth in non-OPEC supply combined with deceleration in global oil demand growth in 2019 and 2020, is offsetting upward pressure on oil prices from rising geopolitical tensions that could disrupt supply.