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  • Emerging Markets Debt Daily

    IMF – Better Growth Outlook

    Natalia Gurushina, Chief Economist, Emerging Markets Fixed Income Strategy
    April 06, 2021

    The IMF now sees higher global growth rates in 2021 and 2022. China’s central bank reportedly asked banks to contain new loans’ growth.

    We are at the IMF Spring meetings this week – virtually of course – and we are happy to report that the world outlook is improving. The IMF’s growth projections for 2021 and 2022 were revised higher – to 6% in 2021 and 4.4% for 2022. However, the upgrades were driven mostly by advanced economies. The U.S. growth revisions were really quite stunning – 6.4% in 2021 and 3.5% in 2022, with the IMF saying that the 2022 real GDP growth will be higher than the pre-pandemic forecast. Emerging Markets (EM) are still expected to grow faster than Developed Markets (DM), but the growth differential now looks smaller – which means that EMs should work harder (especially on the policy front and structural issues) to remain attractive for investors.

    We are just a few days away from the release of China’s credit and monetary aggregates, so today’s reports that the central bank (PBoC) asked banks to keep new loans at about the same level as in 2020 drew a lot of attention. The latest data releases show that China’s post-pandemic rebound is well underway, so authorities can afford to pay more attention to structural issues, including leverage. This is part of policy normalization. But normalization might not necessarily be “blanket” – some areas of the economy, such as private and small enterprises, still need support – and it is coming in the form of continuing tax relief. We discuss some of these issues in our latest monthly China update.

    Brazil’s fiscal issues continue to dominate headlines. The current budget is widely considered “unworkable”, and officials seem to believe that “partial” solutions (partial amendments, partial veto) might be the way forward. The ongoing negotiations between the government and the parliament suggest that headline noise will remain high in the coming weeks. The triumphant return of the former president Luiz Inácio Lula da Silva to the national political arena will ensure that this is indeed the case. Lula is now leading President Jair Bolsonaro in some polls – and if this trend continues, this can increase pressure on the current administration to spend more.


    PMI – Purchasing Managers’ Index: economic indicators derived from monthly surveys of private sector companies; ISM – Institute for Supply Management PMI: ISM releases an index based on more than 400 purchasing and supply managers surveys; both in the manufacturing and non-manufacturing industries; CPI – Consumer Price Index: an index of the variation in prices paid by typical consumers for retail goods and other items; PPI – Producer Price Index: a family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time; PCE inflation – Personal Consumption Expenditures Price Index: one measure of U.S. inflation, tracking the change in prices of goods and services purchased by consumers throughout the economy; MSCI – Morgan Stanley Capital International: an American provider of equity, fixed income, hedge fund stock market indexes, and equity portfolio analysis tools; VIX – CBOE Volatility Index: an index created by the Chicago Board Options Exchange (CBOE), which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities on S&P 500 index options.; GBI-EM – JP Morgan’s Government Bond Index – Emerging Markets: comprehensive emerging market debt benchmarks that track local currency bonds issued by Emerging market governments.; EMBI – JP Morgan’s Emerging Market Bond Index: JP Morgan's index of dollar-denominated sovereign bonds issued by a selection of emerging market countries; EMBIG - JP Morgan’s Emerging Market Bond Index Global: tracks total returns for traded external debt instruments in emerging markets.

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  • Authored by

    Natalia Gurushina
    Chief Economist, Emerging Markets Fixed Income Strategy

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