This edition includes:
- Market background
- Top-down views and outlook for the asset class
- Insights from the team:
Key takeaways from IMF World Economic Outlook
The latest World Economic Outlook from the IMF paints a broadly positive picture of the growth outlook for EM economies, with a significant number seeing their growth forecasts upgraded for next year. We summarise the key takeaways.
- Regional highlights
Our EM Debt experts summarise October’s market developments across the EM sovereign debt universe.
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The fast view
Market Background
- The key theme in October was widespread concern around the persistence of inflation. Volatility in the US Treasury market continued.
- The economic growth rebound continued in developed markets and governments eased some of the COVID-related restrictions that have held back some emerging markets.
Africa
- Both the Ivory Coast and Ghana improved their debt balances, helped by a deal with France in the former and a reduction in debt to independent power providers in the latter.
- In Egypt, fiscal momentum remains positive, while in Zambia the government made progress towards an IMF deal.
Asia
- Moderate inflation rates and healthy external balances have allowed for accommodative monetary policy in much of the region.
- The region is generally moving towards a stance of ‘living with COVID-19’, with restrictions eased in some (but not all) countries.
Latin America
- The main theme in the region was one of high inflation, although momentum around this appears to be fading in some markets.
- Central banks have raised interest rates more than in other regions, and local bond curves have more rate hikes priced in by the market.
Central and Eastern Europe
- Inflation continues to rise across the region, with Polish inflation beating consensus expectations for a fourth consecutive month.
- Central banks remain mostly hawkish, reflecting the inflation backdrop.
Rest of Europe, Middle East and Africa (EMEA)
- Several members of the Gulf Cooperation Council, including Saudi Arabia and the United Arab Emirates, committed to net-zero targets.
- In Turkey, monetary policy credibility and political risk remain key themes after a surprisingly large interest rate cut and threat to expel some NATO ambassadors.