Double-whammy of higher U.S. yields and stronger dollar, with peak deglobalization still to come Most people think my newsletter is only about sovereign debt. This is a fair assumption: after all, “sovereign” is in the name. But it’s also about deglobalization, geoeconomic fragmentation, slowbalization. Or whatever other convoluted term you want to label the post-2016 […]

With global public debt at $100 trillion, many countries need more IMF-World Bank help. Now that the dust has settled over last week’s IMF-World Bank Annual Meetings here in Washington, D.C., I can’t help but feel underwhelmed. The meetings have achieved only incremental progress at a time when bold measures are needed to foster growth, […]

High economic-political uncertainty paired with low volatility amplifies market risks In its recently-released Global Financial Stability Report, the IMF warns that the disconnect between rising economic and geopolitical uncertainty and low financial volatility increases market risks. The CBOE Volatility Index – a barometer of equity market volatility – has remained at or below 20 for […]

Rampant inflation is most prevalent in lower-middle income countries, except for Argentina and Turkey. A recent piece by the ex-head of EM economics at Citi, David Lubin, ponders inflation risk in emerging markets, citing fiscal indiscipline as a major threat to price stability. So I wanted to visualize cross-country IMF forecasts for EM inflation in […]

The Fed’s data-dependence is clouding EM’s mostly-benign cutting cycle outlook. Investor expectations of Fed policy and the resulting impact on US Treasury yields is increasingly affecting emerging market debt, as markets lurch from one narrative to another in response to data releases. Volatility in the US Treasury market has surged since last Friday’s blockbuster US […]

The recent escalation presents downside market risks, albeit these are limited. Brent oil prices have risen quickly this week to reach $74.92 per barrel at the time of writing on Thursday, reflecting concerns at potential disruption to Iranian supply. Market participants see a non-zero chance of Israel targeting Iran’s oil facilities in response to over […]

Markets cautious on newly-elected President Dissanayake, renegotiations. In one of Sri Lanka’s greatest political shake-ups in decades, this weekend’s presidential election saw the victory of neo-Marxist Anura Kumara Dissanayake ahead of the country’s two main, established parties. With the political establishment now swept away, Dissanayake now faces the arduous task of consolidating the economic recovery […]

Small island states and large emerging markets have the biggest budget deficits in 2024. So this week I wanted to take a quick look at how our beloved emerging and frontier markets compare fiscally . In today’s newsletter I’m only showing you overall budget balances as a starting point. This is part of a larger […]

EM convergence to rich-world wealth levels is concentrated in Europe and Asia. When I read a recent piece by Ruchir Sharma about a growth revival under way in emerging markets, I had to start investigating. Apparently, a higher-than usual proportion of EMs (88%!) will have GDP per capita growth higher than the US in 2025-29, […]

2024: string of electoral victories for right-wing populists across emerging markets Right-wing populism In order to help you EM aficionados cut through the political news cycle noise, it’s necessary take a step back and think about the direction of travel of EM politics. Let’s not bury the lede: by my count, the political winds in […]

It’s not just the usual suspects: some oil exporters also have low official reserves levels. When writing last week’s piece on the IMF’s shoddy deal with Pakistan, I was blown away at the country’s astonishingly-low level of international reserves. $9.5 billion for a $350 billion economy. That’s only around 3% of GDP and 1-2 months […]

Pakistan and the IMF recently agreed on a program worth $7 billion, which appears woefully insufficient to resolve the country’s macroeconomic imbalances. The Fund claims that the Extended Fund Facility over the next 37 months intends to “cement macroeconomic stability and create conditions for a stronger, more inclusive, and resilient growth.” But this nothingburger of […]