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16 August 2013 Emerging Markets Weekly Economic Briefing Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation has generally remained moderate, allowing many countries to loosen policy. But in some countries policy has been much more constrained and the constraints have grown in recent months. Currencies have generally depreciated, particularly in those countries that rely on external financing to fund a sizeable current account deficit. In several countries this has added to existing inflation pressures. In this article we look at the factors influencing monetary policy choices in the emergers. The policy dilemma in Brazil is particularly stark, with high inflation demanding tighter policy despite a prolonged period of weak economic activity. In Turkey and Indonesia, falling exchange rates are exacerbating existing inflation pressures and policy is already being tightened. In India, until the currency plunged in May we had expected further policy easing but sustained currency weakness and rising inflation have now forced the central bank to tighten monetary conditions. By contrast, some of the major emergers still have scope to ease policy if growth disappoints in H2; indeed, we expect Russia to start cutting rates in the coming months. Meanwhile, China has tightened monetary policy modestly in recent months but this action has been prompted by considerations of long-term financial stability (to dampen shadow banking) rather than by any fears of inflation. Currency vs US$ Latest Date Changed Highest Interest rate Lowest Interest rate 12 month average Latest % change over 12 months to 14 Aug China 2.25 Dec-10 2.25 1.80 2.3 2.7 3.9 India 7.25 May-13 9.00 4.75 10.0 9.6 -9.3 Indonesia 6.50 Jul-13 12.75 5.75 5.3 8.6 -7.9 Korea 2.50 May-13 5.25 2.00 ? 1.4 1.4 1.1 Malaysia 3.00 May-11 3.50 2.00 ? 1.5 1.8 -4.9 Philippines 3.50 Oct-12 7.50 3.50 ? 3.1 2.5 -4.0 Thailand 2.50 May-13 5.00 1.25 ? 2.8 2.0 0.7 Brazil 8.50 Jul-13 12.50 7.25 6.0 6.3 -12.8 Chile 5.00 Jan-12 8.25 0.50 ? 1.9 2.2 -5.1 Mexico 4.00 Mar-13 8.25 4.00 ? 4.1 3.5 3.5 South Africa 5.00 Jul-12 13.50 5.00 5.5 5.5 -17.9 Czech Rep 0.05 Nov-12 2.75 0.05 2.2 1.4 -3.0 Hungary 4.00 Jul-13 11.50 4.00 3.7 1.8 -6.7 Poland 2.50 Jul-13 6.00 2.50 1.9 1.1 -2.9 Russia 8.25 Sep-12 13.00 7.75 ? 6.8 6.5 -7.3 Turkey 4.50 Apr-13 7.00 4.50 7.5 8.9 -14.0 * vs basket, ** vs Euro Recent cycle Inflation Policy Rate Emerging Markets: Monetary Policy and Inflation Direction of latest monetary conditions * ** ** ** **

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Page 1: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets

Weekly Economic

Briefing

Divergence in emergers’ monetary policy

This year economic activity across the emergers has been subdued but inflation has

generally remained moderate, allowing many countries to loosen policy. But in some

countries policy has been much more constrained and the constraints have grown in

recent months. Currencies have generally depreciated, particularly in those countries that

rely on external financing to fund a sizeable current account deficit. In several countries

this has added to existing inflation pressures. In this article we look at the factors

influencing monetary policy choices in the emergers.

The policy dilemma in Brazil is particularly stark, with high inflation demanding tighter

policy despite a prolonged period of weak economic activity. In Turkey and Indonesia,

falling exchange rates are exacerbating existing inflation pressures and policy is already

being tightened. In India, until the currency plunged in May we had expected further policy

easing but sustained currency weakness and rising inflation have now forced the central

bank to tighten monetary conditions. By contrast, some of the major emergers still have

scope to ease policy if growth disappoints in H2; indeed, we expect Russia to start cutting

rates in the coming months. Meanwhile, China has tightened monetary policy modestly in

recent months but this action has been prompted by considerations of long-term financial

stability (to dampen shadow banking) rather than by any fears of inflation.

Currency vs US$

Latest Date

Changed

Highest

Interest rate

Lowest

Interest rate

12 month

average

Latest % change over 12

months to 14 Aug

China 2.25 Dec-10 2.25 1.80 ↑ 2.3 2.7 3.9

India 7.25 May-13 9.00 4.75 ↑ 10.0 9.6 -9.3

Indonesia 6.50 Jul-13 12.75 5.75 ↑ 5.3 8.6 -7.9

Korea 2.50 May-13 5.25 2.00 ↓ ? 1.4 1.4 1.1

Malaysia 3.00 May-11 3.50 2.00 ↓ ? 1.5 1.8 -4.9

Philippines 3.50 Oct-12 7.50 3.50 ↓ ? 3.1 2.5 -4.0

Thailand 2.50 May-13 5.00 1.25 ↓ ? 2.8 2.0 0.7

Brazil 8.50 Jul-13 12.50 7.25 ↑ 6.0 6.3 -12.8

Chile 5.00 Jan-12 8.25 0.50 ↓ ? 1.9 2.2 -5.1

Mexico 4.00 Mar-13 8.25 4.00 ↓ ? 4.1 3.5 3.5

South Africa 5.00 Jul-12 13.50 5.00 → 5.5 5.5 -17.9

Czech Rep 0.05 Nov-12 2.75 0.05 → 2.2 1.4 -3.0

Hungary 4.00 Jul-13 11.50 4.00 ↓ 3.7 1.8 -6.7

Poland 2.50 Jul-13 6.00 2.50 ↓ 1.9 1.1 -2.9

Russia 8.25 Sep-12 13.00 7.75 ↓ ? 6.8 6.5 -7.3

Turkey 4.50 Apr-13 7.00 4.50 ↑ 7.5 8.9 -14.0

* vs basket, ** vs Euro

Recent cycle InflationPolicy Rate

Emerging Markets: Monetary Policy and Inflation

Direction of

latest monetary

conditions

*

******

**

Page 2: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

The policy dilemma is especially awkward in Brazil, so growth will stay low for longer

In recent months, the Brazilian central bank has raised the key Selic interest rate to 8.5% as

inflation breached the 6.5% upper target in March and has remained high since then. In addition,

the currency fell sharply against the US$ in May and June and remains 12% lower than a year

earlier, pressured by the current account deficit widening to over US$80bn this year. The weak

currency will exacerbate the inflation pressures. And while the authorities would like to see faster

growth (after two years of disappointingly sluggish activity), they cannot ignore inflation given the

country’s hyperinflationary history and the particularly marked impact it has on squeezing real

incomes of the poor (which might lead to further bouts of social unrest). As a result, we expect

further rate hikes, taking Selic to 9.75% by the end of the year. This should gradually bring

inflation under control and support the currency, but it will also mean another year of modest

growth. We now expect the Brazilian economy to grow by just 2.3% in 2014.

High inflation has also prompted tighter policy in Indonesia

By contrast, in Indonesia economic activity has reasonable momentum. In an effort to combat

higher inflation expectations triggered by fuel prices rising a third (CPI inflation rose to 8.6% in

July after subsidies were cut), Bank Indonesia has increased the key interest rate by 75bp in

recent months. Inflation pressures have also been exacerbated by a weakening currency, as the

IDR has fallen 8% over the past twelve months, undermined by the country running a small

current account deficit for the first time since the 1990s (which has made the economy more

vulnerable to swings in global sentiment). In addition to the rises in interest rates, the authorities

have intervened very heavily in the foreign exchange market, running down their reserves to limit

the fall in the IDR (reserves in July fell to US$92.7bn, down US$20bn from end-2012). On

balance we expect the bank to now leave interest rates on hold in the coming months and only

tighten further when the global economy is much stronger in mid-2014. We forecast that inflation

will fall back to 5% or so next year once the fuel price hike drops out of the annual comparison,

while GDP growth should be dampened only modestly by these developments, moderating to a

5-6% pace.

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Headline CPI

Source: Haver Analytics / Oxford Economics

Brazil: CPI measures & Selic interest rate

CPI ex regulated

prices

& food & drink

Selic interest rate

0

2

4

6

8

10

12

14

16

18

20

2001 2003 2005 2007 2009 2011 2013

%

Policy interest rate

Source: Bank Indonesia

Indonesia: Interest rates & CPI inflation

CPI inflation

Page 3: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Currency weakness exacerbating inflation risks, forcing reversal in policy in Turkey…

Turkey’s domestic economy gathered momentum in H1 2013, sucking in more imports and

widening the country’s large current account deficit again. But having been one of the favourite

destinations for overseas money in the 12 months to early May, sentiment towards Turkey

changed quite dramatically when global markets began to worry about the likelihood of QE

starting to be reduced in the US. The disruption to Turkey relative to other leading emergers was

magnified by a sharp increase in domestic political tensions occurring at the same time. Against

this background, the currency has dropped significantly. This has exacerbated inflation

pressures, which were already elevated due to surging domestic food prices, and CPI inflation

rose to 8.9% in July. In response to this combination of adverse developments, the central bank

has had no choice but to reverse policy and tighten monetary conditions significantly. Although it

has not yet raised the main policy interest rate, it has tightened liquidity conditions so that 3-

month interbank rates have risen to more than 7.7% from under 5% in early May (feeding into

higher bank lending rates). At the moment we do not anticipate that market interest rates will rise

much further, and therefore expect only a comparatively brief period of subdued growth, but

renewed global tensions could result in further currency weakness and higher interest rates, with

dangerous consequences for the economy.

…and also in India, increasing the risks to growth

Until the rupee began to slide in May, we had expected the Indian central bank would follow its

25bp rate cuts in January, March and May with more easing to support activity. But while growth

remains disappointingly modest, the currency dropped sharply in May and June, exacerbating

already high inflation risks (wholesale price inflation rose to 5.8% in July, while CPI inflation is still

close to 10%). The rupee is now 10% lower than a year earlier against the US$, which given the

importance of financing the current account deficit (5% of GDP last year or over US$90bn) and

the impact of rising oil import costs, has altered the central bank’s priorities. In July the central

bank kept its main official rate (the repo rate) unchanged but raised others (with the consequence

that 3-month interbank rates have jumped nearly 250bp) – forced to tighten actual monetary

conditions to maintain India’s attractiveness as a destination for foreign inflows. But despite this

latest development, provided markets stabilise in the coming months we expect the bank will

0

3

6

9

12

15

18

21

24

2006 2007 2008 2009 2010 2011 2012 2013

%

"Core" inflation

Source: Haver Analytics / Oxford Economics

Turkey: Interest rates and inflation

Average bank lending rate

1-week

interbank rate

-2

0

2

4

6

8

10

12

14

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Repo rate

Source: Oxford Economics

India: Interest rates and wholesale prices

Mumbai 3-month

offered rate

Wholesale prices

(WPI) inflation

Page 4: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

resume its policy of cutting rates to support the real economy in Q4 2013. But clearly there is a

significant risk that the rupee will remain fragile, removing the bank’s room for manoeuvre. And if

policy remains tighter for longer, our forecast of stronger 6% GDP growth next year, up from 5%

in 2013, may be too optimistic.

China tightened policy modestly mid-year, but for long-term financial stability reasons

In China, growth is modest by historical standards and inflation remained moderate at 2.7% in

July. But although the combination of low inflation and more subdued economic activity would

seem to justify a continued loose policy, effective monetary conditions have actually tightened in

recent months. Having surged to 5.8% in late June, the 3-month SHIBOR rate has subsequently

fallen back to 4.7%, but this is noticeably higher than May’s level of 3.9%. But unlike Brazil and

India, whose recent monetary policy actions are essentially responses to short-term concerns

about inflation and the exchange rate, China’s recent policy adjustment reflects the authorities’

determination to ensure financial stability for the longer term and to ensure that the economy

does not become excessively dependent on cheap credit (by clearly indicating that it wants to

dampen the expansion of the shadow banking sector).

Weak ZAR means that South Africa’s central bank is ‘boxed in’

In South Africa, although growth is weak, inflation is relatively high (just within the target range

ceiling), its currency has depreciated the most of all the major emergers over the last 12 months

(down almost 18% against the US$) and its current account deficit is set to exceed 6% of GDP

again this year. As a result, the central bank is ‘boxed in’ – it does not want to raise interest rates

to support the currency as this might lead to even weaker growth, but nor can it cut interest rates

further, as this might spark a completely uncontrolled fall in the currency, which in turn would lead

to rapidly accelerating inflation and a sharp erosion of consumers’ purchasing power.

But Hungary and Poland have loosened monetary policy substantially this year

By contrast, some emerger central banks have been in a position this year to move more

aggressively than expected on interest rates to support their real economies, as inflation has

fallen sharply and their exchange rates have not fallen too dramatically. In Hungary, headline CPI

inflation has fallen from 5% at the end of last year to 1.8% in July. This, together with a more

0

1

2

3

4

5

6

7

2007 2008 2009 2010 2011 2012 2013

%

Source: Haver Analytics

China: 3-month SHIBOR rate

60

65

70

75

80

85

90

95

100

105

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index v US$ (Dec 30, 2010 = 100)

Source: Haver Analytics

South Africa: Exchange rate

depreciation

Page 5: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

aggressive policy approach after a change of personnel, has led to the central bank there cutting

rates from 7% in August last year to 4% currently, and we expect another 50bp of cuts in the next

few months. Meanwhile, since November the National Bank of Poland has cut its main policy rate

from 4.75% to 2.5% (headline inflation has dropped from 2.4% in December to 0.2% in June and

1.1% in July). We now expect rates to be left on hold as, after a period of disappointingly weak

growth, we anticipate that the policy easing of the past year and the Eurozone moving out of

recession will induce a gradual improvement in the real economy; however, should the latter not

materialise, then further rate cuts are likely.

Russia is also expected to cut rates in the coming months to boost activity…

Economic activity has been disappointing in Russia this year; we are now forecasting GDP

growth of 2.2% this year, down from 3.7% expected in January. Moreover, inflation has started to

fall in recent months and this disinflationary trend should continue in H2 due to the strength of

this year’s harvest (we expect the headline rate to be under 5% in early 2014, down from July’s

6.5%). Against this background, we think the stage is set for a concerted monetary easing cycle,

with the refinancing rate falling by 125bp to 7% by end-2014. The one factor that may impede this

easing is the performance of the rouble, which has slipped over the last year despite relatively

firm oil prices.

…and a number of other emergers have scope to loosen policy if activity disappoints

In Korea, Thailand, Chile and Mexico, inflation is moderate and their currencies have not

weakened that significantly against the US$ over the last year. In these countries, economic

activity was generally quite subdued in H1 2013 and we forecast a modest pick-up in H2 2013.

But if the recovery is weaker than anticipated, these countries have room to ease policy. Korea

and Thailand cut rates in Q2 but Mexico is perhaps more likely to cut rates again in H2 2013

(having cut in March). Mexican CPI inflation eased to 3.5% in July, falling within the 2-4% target

range for the first time since February and industrial activity and retail sales have stagnated this

year. We also think there is a high chance that Chile will cut its policy rate (currently 5%) in

response to low inflation (around 2%) and the ongoing uncertainty about the health of the global

economy, though as domestic demand is fairly robust we only expect one 25bp cut.

-2

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Poland

Source: Haver Analytics

Central & Eastern Europe: Consumer prices

Czech

Russia

Hungary

0

3

6

9

12

15

18

21

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

%

Source: Haver Analytics

Czech

Russia

Hungary

Emerging Europe: Policy interest rates

Poland

Page 6: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Latest data

Recent Data Releases

Previous month

Latest Comment

Brazil – Retail sales vol.

(s. adj.) (Jun)

– Economic Activity (s. adj)

(Jun)

0.0% m/m

4.0% y/y

-1.5% m/m

2.6% y/y

0.5% m/m

2.8% y/y

1.1% m/m

3.2% y/y

The monthly indicator of economic activity rebounded in June, but in Q2 as a whole was up just 0.9%, slower than Q1’s rise of 1.1%. Retail sales also rose on the quarter but only modestly compared with trend of recent years.

Russia – Exports (Jun)

- Imports (Jun)

- Trade balance (12m total)

-8.9% y/y

-6.2% y/y

$175.7bn (May)

1.8% y/y

3.6% y/y

$175.5bn (Jun)

The trade surplus may fall faster in H2 and 2014 if domestic demand and imports start to pick up again.

India – Industrial Output (Jun)

– Wholesale prices (Jul)

– Food prices (Jul)

– Consumer Prices (Jul)

– Exports (Jul)

- Trade balance (12m total)

-2.9% y/y

4.9% y/y

8.6% y/y

9.9% y/y

-4.6% y/y

-$204.5bn

-2.2% y/y

5.8% y/y

9.5% y/y

9.6% y/y

11.6% y/y

-$199.3bn

Industrial output fell y/y for a second successive month in June and the outlook remains weak as the July manufacturing PMI fell to its lowest in more than four years. The weaker currency is putting pressure on prices and wholesale prices picked up in July. More encouragingly, exports rose strongly in July.

Korea – Unemployment (Jul)

– Employment (Jul)

3.2% (seas. adj.)

1.4% y/y

3.2%

1.5% y/y

Employment continues to increase at a solid pace – suggesting steady growth in services.

Mexico – Ind. Output

(Jun, s. adj.)

1.1% m/m

0.3% y/y

0.0% m/m

-1.5% y/y

Although overall industry was flat in June, manufacturing did rise on the month but its trend so far this year has been subdued.

Turkey – Ind. Output (Jun, s. adj.)

– Current account (12m total)

-0.7% m/m

0.8% y/y

-$53.2bn (May)

1.4% m/m

4.3% y/y

-$53.6bn (Jun)

Industrial output increased by 1.3% on the quarter in Q2 despite weaker export volumes, suggesting strengthening domestic demand. The latter has led to a widening current account deficit but fast growth in exports of services is providing some offset.

S. Africa – Retail sales vol.

(Jun, s. adj.)

2.1% m/m

5.3% y/y

0.0% m/m

3.0% y/y

Retail sales were up 1% on the quarter in Q2. The consumer remains key driver of economy.

Singapore – GDP (Q2,

s. adj)

– Consumer spending (Q2)

– Export Volumes (Q2)

– Fixed Investment (Q2)

0.4% q/q

0.1% y/y

1.3% y/y

-4.1% y/y

-5.8% y/y

3.7% q/q

3.7% y/y

2.7% y/y

3.1% y/y

-3.8% y/y

The economy rebounded in Q2, with both manufacturing and services growing strongly. The Ministry of Trade and Industry upgraded its forecast for GDP growth this year to 3.5% from 2.5%. But machinery investment continued to fall significantly, reflecting global uncertainty.

Poland – GDP (Q2, s. adj)

– Exports (Jun) (EUR)

0.1% q/q

0.4% y/y

2.1% y/y

0.4% q/q

1.1% y/y

7.1% y/y

Some improvement in growth, helped by end to Eurozone recession. Boost from interest rate cuts should lead to faster q/q growth in 2014.

Czech – GDP

(Q2, seas. adj.)

-0.8% q/q

-1.9% y/y

0.7% q/q

-1.2% y/y

The economy grew in Q2 for the first time in nearly two years.

Hungary – GDP

(Q2, s. adj.)

0.6% q/q

-0.5% y/y

0.1% q/q

0.2% y/y

Advance estimates suggest the economy struggled to make any headway in Q2.

Page 7: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Events

Monetary policy meetings in past week

Key rate (now) Outcome Comment

August 15th - Indonesia 6.5% (Policy rate) Unchanged Bank Indonesia left the key interest rate on hold as

expected but took a number of measures to try to curb credit growth and stop inflation expectations increasing. The bank cut the ceiling on the loan-to-deposit ratios of commercial banks to 92% from 100% and said it plans to increase the secondary minimum reserve requirement for rupiah deposits from 2.5% to 4%.

Aug 14th - Chile 5.0% (Policy rate) Unchanged The central bank has not changed interest rates for 19 months now. However, we expect the main policy rate to be cut to 4.75% next month. With inflation (2.2% in July) still well below the 3% target and likely to fall below 2% again later this year (inflation ex food and energy was under 1% in July), the central bank has scope to bolster the economy in the face of a subdued external outlook. Domestic activity remains reasonable so we expect the loosening to be limited to one cut.

Aug 9th - Russia 8.25% (Refinancing

rate) Unchanged The central bank left the interest rate on hold,

suggesting that it will wait until inflation drops below 6% before easing rates. Inflation slowed to 6.5% in July and will fall below 6% within the next few months (influenced by a good harvest). As a result, we think the bank will start lowering rates soon although it will have to keep an eye on the rouble, which has weakened over the last couple of months.

For more information contact Clare Howarth ([email protected]) or

Sarah Fowler ([email protected])

Page 8: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Asia

70

80

90

100

110

120

130

140

150

160

170

2000 2002 2004 2006 2008 2010 2012

2005=100 (seasonally adjusted)

Latin America

Source: Haver Analytics / Oxford Economics

Emerging Markets: Industrial output

East Asia

ex China

Emerging Europe ex Russia

(inc. Turkey)

India

-20

-15

-10

-5

0

5

10

15

20

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

% year

Source: Haver Analytics

South East Asia: Real GDP

Indonesia

SingaporeMalaysia

4

6

8

10

12

14

16

18

20

2001 2003 2005 2007 2009 2011 2013

% year

Industrial

output

Source: CEIC

China: Industrial output & retail sales volumes

Retail sales

3 month moving average

-2

-1

0

1

2

3

4

5

2001 2003 2005 2007 2009 2011 2013

% year

Source: Korea National Statistics Office

Korea: Employment

-4

-2

0

2

4

6

8

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% quarter

Source: Haver Analytics

Hong Kong: Components of GDP

Consumer

spending

GDP

Exports of

services

-8

-4

0

4

8

12

16

20

2000 2002 2004 2006 2008 2010 2012

% year

China

Source: Haver Analytics

Korea producer

prices

Asia: Manufacturing producer prices

Page 9: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Asia

1

2

3

4

5

6

7

8

9

10

2001 2003 2005 2007 2009 2011 2013

%

Korea

Source: Haver Analytics

Emerging Asia: Short-term interest rates

China

India

Thailand

72

76

80

84

88

92

96

100

104

108

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index (Dec 30, 2010 = 100)

China

Source: Haver Analytics

Emergers: Exchange rates v US$

India

Indonesia

Korea

appreciation

94

96

98

100

102

104

106

108

110

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index (Dec 30, 2010 = 100)

Malaysia

Source: Haver Analytics

Emergers: Exchange rates v US$

Thailand

Philippines

Singapore

appreciation

-3

0

3

6

9

12

15

18

21

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Total

Source: Oxford Economics

India: WPI inflation

Non-food

manufacturing

products (core)

Food

-40

-30

-20

-10

0

10

20

30

40

50

60

70

1997 1999 2001 2003 2005 2007 2009 2011 2013

% year

Exports

Source: India Ministry of Commerce

India: Exports & imports

3 month moving average

Imports

-10

-5

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013

% year (3 month average)

Source: Oxford Economics

India: Manufacturing & electricity output

Manufacturing

Electricity

Page 10: Emerging Markets Briefing - Oxford Economics · 2013-09-19 · Divergence in emergers’ monetary policy This year economic activity across the emergers has been subdued but inflation

16 August 2013

Emerging Markets Weekly Economic Briefing

Latin America

85

90

95

100

105

110

115

120

125

130

135

2000 2002 2004 2006 2008 2010 2012

2003=100 (seasonally adjusted)

Manufacturing

output

Source: Haver Analytics / Oxford Economics

Mexico: Real economy indicators

Construction

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

%3 month annualised growth

Source: Haver Analytics

Brazil: Monthly economic activity indicator

Year-on-year

growth

70

80

90

100

110

120

130

140

150

160

2000 2002 2004 2006 2008 2010 2012

2007=100 (seasonally adjusted)

Source: IBGE

Brazil: Industrial output & retail sales volumes

Retail sales

Industrial output

-4

0

4

8

12

16

20

24

28

1997 1999 2001 2003 2005 2007 2009 2011 2013

% year

Chile

Source: Haver Analytics

Latin America: Consumer prices

Mexico

Colombia

Brazil

-20

-10

0

10

20

30

40

50

1997 1999 2001 2003 2005 2007 2009 2011 2013

US$ bn

Source: Haver Analytics

Latin America: Trade balance

12 month total

Mexico

Argentina

Brazil

Chile

70

75

80

85

90

95

100

105

110

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index (Dec 30,2010 = 100)

Chile

Source: Haver Analytics

Emergers: Exchange rates v US$

Brazil

depreciation

Argentina

Mexico

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16 August 2013

Emerging Markets Weekly Economic Briefing

Emerging Europe

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Source: Haver Analytics

Russia: Industrial output

Mining

Manufacturing

80

85

90

95

100

105

110

115

2005 2006 2007 2008 2009 2010 2011 2012 2013

2008Q1=100

Poland

Source: Haver Analytics / Oxford Economics

CEE: Real GDP (seasonally adjusted)

Romania

Czech

Hungary

-30

-20

-10

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Poland

Source: Haver Analytics

Central & Eastern Europe: Goods' exports

3 month moving average (in

EUR terms) Slovak

Czech

Germany

-20

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013

% year

Source: Haver Analytics

Russia: Credit growth

Corporate rouble loans

Personal rouble loans

-40

-30

-20

-10

0

10

20

2001 2003 2005 2007 2009 2011 2013

20

40

60

80

100

120

140

160

180

200

220US$ bn

Russia (RHS)

Source: Haver Analytics

Central & Eastern Europe: Trade balance

12 month total

Poland

Hungary

Czech

US$ bn

-5

0

5

10

15

20

25

30

2001 2003 2005 2007 2009 2011 2013

% year

Estonia

Source: Haver Analytics

Central & Eastern Europe: Consumer prices

Latvia

Romania

Bulgaria

Lithuania

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Emerging Markets Weekly Economic Briefing

Rest of the world & financial developments

-20

-15

-10

-5

0

5

10

15

1997 1999 2001 2003 2005 2007 2009 2011 2013

% year

Source: Haver Analytics

South Africa: Industrial output & Retail Sales

3 month moving average

Retail sales volumes

Manufacturing output

80

85

90

95

100

105

110

115

120

2005 2006 2007 2008 2009 2010 2011 2012 2013

2010=100 (seasonally adjusted)

Source: Haver Analytics

Turkey: Industrial output

-60

-45

-30

-15

0

15

30

45

60

2001 2003 2005 2007 2009 2011 2013

% year

Turkey

(goods)

Source: Haver Analytics

Turkey: Exports (US$)

3 month moving average

Turkey (services)

60

65

70

75

80

85

90

95

100

105

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index (Dec 30, 2010 = 100)

Source: Haver Analytics

Emergers: Exchange rates

Turkey (v Euro)

depreciation

S. Africa (v US$)

3

4

5

6

7

8

9

10

11

12

13

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

%

Poland

Source: Haver Analytics

Emergers: 10 year government bond yields

Brazil

South Africa

Turkey

70

80

90

100

110

120

130

140

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Index (Dec 30, 2010 = 100)

Source: Haver Analytics

Emergers: Equity markets

Emergers (MSCI, US$)

US S&P 500

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Emerging Markets Weekly Economic Briefing

China Brazil Korea India Mexico Russia Turkey Taiwan Poland

2012

Jul 9.2 -3.9 -0.6 -0.1 4.6 3.4 3.3 -0.2 4.4

Aug 8.9 -1.9 -2.5 2.0 3.6 2.1 0.5 1.3 1.4

Sep 9.2 -0.7 -1.8 -0.8 3.5 2.0 3.5 5.2 -1.6

Oct 9.6 1.1 -0.7 8.3 2.0 1.8 0.8 2.4 0.7

Nov 10.1 -0.9 2.2 -1.0 3.1 1.9 4.0 5.8 -1.7

Dec 10.3 -1.7 4.1 -0.5 0.0 1.4 -1.3 4.3 -4.5

2013

Jan 9.9 3.0 0.6 2.5 0.4 -0.8 2.2 1.4 -2.3

Feb 9.9 -0.7 -1.6 0.6 1.1 -2.1 3.9 5.3 -2.3

Mar 8.9 1.2 -1.4 3.5 0.5 2.6 1.3 -1.7 0.8

Apr 9.3 3.5 -1.4 1.9 -2.1 2.3 3.3 -1.8 -0.4

May 9.2 1.9 -2.7 -2.9 0.3 -1.4 0.8 -1.0 -0.9

Jun 8.9 4.2 -1.3 -2.2 -1.5 0.1 4.3 1.5 4.5

Jul 9.7 - - - - -0.7 - - -

Industrial Production

Percentage changes on a year earlier unless otherwise stated

China Brazil Korea India Mexico Russia Turkey Taiwan Poland

2012

Jul 1.8 5.2 1.5 9.9 4.4 5.6 9.1 2.5 4.0

Aug 2.0 5.2 1.2 10.0 4.6 5.9 8.9 3.4 3.8

Sep 1.9 5.3 2.0 9.7 4.8 6.6 9.2 3.0 3.8

Oct 1.7 5.4 2.1 9.8 4.6 6.5 7.8 2.3 3.4

Nov 2.0 5.5 1.6 9.9 4.2 6.5 6.4 1.6 2.8

Dec 2.5 5.8 1.4 10.6 3.6 6.6 6.2 1.6 2.4

2013

Jan 2.0 6.2 1.5 10.8 3.3 7.1 7.3 1.1 1.7

Feb 3.2 6.3 1.4 10.9 3.6 7.3 7.0 3.0 1.3

Mar 2.1 6.6 1.3 10.4 4.3 7.0 7.3 1.4 1.0

Apr 2.4 6.5 1.2 9.4 4.6 7.2 6.1 1.0 0.8

May 2.1 6.5 1.0 9.3 4.6 7.4 6.5 0.7 0.5

Jun 2.7 6.7 1.0 9.9 4.1 6.9 8.3 0.6 0.2

Jul 2.7 6.3 1.4 9.6 3.5 6.5 8.9 0.1 1.1

Consumer prices

Percentage changes on a year earlier unless otherwise stated

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Emerging Markets Weekly Economic Briefing

China Brazil Korea India Mexico Russia Turkey Taiwan Poland

2012

Jul 1.0 -5.6 -8.8 -12.2 3.1 -0.6 8.8 -11.5 -4.6

Aug 2.7 -14.4 -6.2 -9.7 5.2 -6.0 12.6 -4.0 -9.4

Sep 9.9 -14.1 -2.0 -10.8 5.4 0.2 19.6 10.3 -6.1

Oct 11.6 -1.7 1.0 -1.6 5.2 2.9 19.7 -1.9 11.4

Nov 2.9 -6.0 3.8 -4.2 5.3 -2.5 13.2 0.8 3.3

Dec 14.0 -10.8 -6.0 -1.9 4.1 -4.0 5.0 8.9 -2.6

2013

Jan 25.0 -1.1 10.9 0.8 -0.7 -1.5 7.5 21.6 9.4

Feb 21.7 -13.8 -8.6 4.2 -0.9 -6.6 7.9 -15.8 6.4

Mar 10.0 -7.6 0.2 7.0 1.6 -4.6 2.4 3.2 -3.0

Apr 14.7 5.4 0.4 1.7 -0.6 -2.0 -3.4 -1.9 11.4

May 1.0 -6.0 3.0 -1.1 1.6 -8.9 0.8 0.7 3.5

Jun -3.1 9.2 -1.0 -4.6 4.4 1.8 -3.1 8.6 12.8

Jul 5.1 -0.9 2.7 11.6 - - - 1.6 -

Exports (US dollars)

Percentage changes on a year earlier unless otherwise stated

China Brazil Korea India Mexico Russia Turkey Taiwan Poland

2012

Jul 4.6 -5.1 -5.4 -1.1 0.0 10.6 -6.5 -3.3 -11.2

Aug -2.5 -13.9 -9.7 -5.1 5.6 1.8 -0.3 -7.9 -15.4

Sep 2.4 -13.7 -6.1 5.1 0.1 2.0 -2.3 1.2 -8.5

Oct 2.3 1.7 1.6 7.4 6.4 12.0 -2.3 -1.8 3.3

Nov 0.0 -2.5 0.9 6.4 8.7 2.8 1.4 0.1 -1.1

Dec 6.1 -4.5 -5.3 6.3 2.3 6.3 0.2 1.5 -2.3

2013

Jan 29.0 14.7 3.9 6.1 6.7 13.3 8.2 22.2 4.1

Feb -15.2 3.1 -10.7 2.6 2.7 7.6 15.2 -8.5 -4.7

Mar 14.0 1.4 -1.9 -2.9 4.8 0.5 2.9 0.2 -3.4

Apr 16.8 15.7 -0.3 11.0 0.4 11.3 15.7 -8.2 2.9

May -0.3 4.0 -5.2 7.0 4.2 -6.2 7.9 -8.0 -3.6

Jun -0.7 1.5 -2.5 -0.4 5.3 3.6 6.0 6.8 4.5

Jul 10.9 25.2 3.0 -6.2 - - - -7.6 -

Imports (US dollars)

Percentage changes on a year earlier unless otherwise stated