Emerging Markets

  • Poor Rwanda farmers have not been able to comply with the 'Green Revolution'.

    Rwanda Hit Surprisingly Bad by the 'Green Revolution'

    A major strategy to reduce poverty in sub-Saharan Africa is through modernisation of agricultural production. The “Green Revolution” policies being implemented promote modern seed varieties and inputs to boost production of marketable crops. This is meant to raise farmers’ incomes, develop their countries’ economies and, by doing so, combat hunger and poverty.

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  • Indonesia, Thailand, Poland, and Mexico are in the EM news headlines.

    An Emerging Markets Status Update

    1) Indonesia announced it will allow full foreign ownership in many local industries in an effort to boost foreign investment, 2) The Thai military government called a referendum on the new constitution on July 31, 3) Poland’s ruling Law and Justice party dropped its backing for candidate Wnorowski to join the MPC, 4) The IMF is starting to warn Ukraine, 5) Press reports suggest some slippage in Brazil’s fiscal consolidation efforts, 6) Mexico’s Finance Minister Videgaray acknowledged spending cut will be needed to maintain budgetary discipline, 7) Elsewhere, Mexico’

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  • The harsh reality of living in South Africa is lost on the World Bank.

    The World Bank Goes Silent on South Africa

    Sometimes silences speak volumes.

    In his seminal book The Anti-Politics Machine Stanford University anthropologist James Ferguson criticised the World Bank’s 1980s understanding of Lesotho as a “traditional subsistence peasant society.”

    Apartheid’s migrant labour system was explicitly ignored by the bank, yet remittances from Basotho workers toiling in mines, factories and farms across the Caledon River accounted for 60% of rural people’s income:

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  • Though EM fared well last week, a bearish tone exists.

    Bearish Sentiment Continues in the Emerging Markets

    EM assets for the most part fared well last week, and positive sentiment should carry over into this week.  China reported January foreign reserves over the weekend, and they fell less than expected to $3.231 bln.  China markets are closed this week for the New Year holiday.  While there should be little risk of negative headlines from the mainland, markets should watch how CNH trades in the offshore markets that are open. 

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  • The Ukrainian Economy Minister Resignation was an Emerging Markets headline.

    An Emerging Markets Status Update

    1) China relaxed some rules on foreign capital flows, 2) Malaysian Prime Minister Najib is tightening his grip on power, 3) The Czech National Bank (CNB) has tilted more dovish, 4) Ukrainian Economy Minister Abromavicius resigned abruptly, throwing the ruling coalition into turmoil, 5) Argentina unexpectedly settled with holdout Italian investors, 6) Press reports suggest Brazil’s central bank is considering rate cuts later this year

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  • Zika arrives in Brazil just in time for Carnival and the Olympics.

    Estimating Zika's Economic Toll

    Predictions are that as many as 4m people in the Americas could become infected with Zika virus this year. While the virus only causes mild symptoms in adults, it is suspected to have been behind a big increase in the number of babies born with abnormally small heads. The human cost of what is happening in Brazil is clear and undeniable. However, with carnival and the Rio Olympics looming, what of the economic costs of the virus?

    To get a sense of how damaging Zika will be to the prosperity of these regions, we can compare its effects with those of other recent outbreaks.

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  • EM Central Banks meet in addition to the release of a wave of data.

    Big Data Week in the Emerging Markets

    As we suspected, the current EM bounce still has some legs.  The BOJ’s surprise easing helped EM and risk end on last week on a strong note, and we expect that to carry over into this week.  Within EM, we will start to see the first readings for January.  The biggest risk perhaps is the jobs report on Friday.  Soft US data has helped push out Fed tightening expectations, but a strong reading here could put it back on the radar screen. 

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  • South Africa's government employment is at an unsustainable level.

    When the Size of Government Becomes Unsustainable

    South Africa faces a looming fiscal cliff owing to growth in social grant expenditure and civil service remuneration, combined with a slowdown in the growth of the economy. A fiscal cliff is when a country’s finances reach a potential crisis point where it can no longer sustain its existing expenditure levels.

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  • The Emerging Markets remain mired in idiosyncratic risk.

    The Latest from the Emerging Markets

    1) Korea’s Financial Services Commission will introduce a so-called “omnibus account” for foreigners investing in local stocks, 2) Malaysian Attorney General Apandi Ali closed the investigation into transfers of foreign money into Prime Minister Najib Razak’s personal bank accounts, 3) The South African Reserve Bank increased the pace of its tightening, 4) The Egyptian central bank eased restrictions on dollar cash deposits, 5) The Turkish central bank raised its 2016 and 2107 inflation forecasts after the minimum wage was hiked 30%, 6) Brazil’s COPOM minutes c

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  • Africa has the demographics to be the next Asia as China slips.

    Making the Most of Africa in the 21st Century

    If the mass media is to be believed, Africa is hardly a continent brimming with opportunities for business. However, for some time international business commentators have been positioning the continent as the next market with significant potential. It is now often described as being ready to take on the mantle of Asia where growth is slowing, markets are becoming crowded and internal competition is becoming more severe.

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