From global markets to questions of development, money and economic activity.
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Exchange rates increasingly transmit economic and political shocks across borders. A softer dollar offers emerging markets some relief, yet credit spreads and term premiums can outweigh that benefit in financing conditions. Policy uncertainty and shifting investor positions amplify currency movements, while dollar liquidity remains central during stress despite gradual reserve diversification.
Read the workApril’s near balance in emerging market portfolio flows conceals a sharp divide between asset classes. The May tracker reports $0.2 billion in net outflows, as $9.7 billion entering debt nearly offset $9.9 billion leaving equities. China supplied all net debt inflows, while debt markets elsewhere in the emerging world recorded withdrawals.
Read the workArtificial intelligence is reshaping finance and insurance through trading, risk management, customer service, underwriting and claims. Its potential productivity gains come with possible job displacement and wider wage differences. Financial firms are increasing investment while strengthening governance and controls, linking operational adoption to broader questions about growth and financial stability.
Read the workTrade exposure alone no longer determines the consequences of US tariffs in this May 2025 assessment. Political alignment, negotiation speed and discretionary exemptions create divergent outcomes across countries. Numerous exceptions and an opaque negotiating process complicate corporate planning, turning uncertainty about the rules themselves into an economic constraint.
Read the workThe May 2025 Japan outlook forecasts growth of 1.2 percent in 2025 and 0.7 percent in 2026, with a temporary contraction as trade frictions meet softer consumption. Services and employment offer some resilience despite manufacturing weakness. Firm wages support gradual monetary normalization, while limited fiscal room constrains the response to slower activity.
Read the workFiscal support and lower interest rates underpin the April 2025 euro area forecast of 0.7 percent growth in 2025 and 1.2 percent in 2026. Trade volatility could cause a temporary contraction, but services and employment cushion weak manufacturing. Easing inflation supports real incomes, while stable sovereign spreads help create conditions for gradual recovery.
Read the workPolicy uncertainty reshapes the April 2025 US forecast, which incorporates a shallow recession in the second half of that year. Annual growth is projected at 1.4 percent in 2025 and 0.8 percent in 2026. Tariffs raise expected inflation even as labor conditions soften, making anticipated Federal Reserve cuts conditional on a later inflation peak and persistent economic weakness.
Read the workMarch brought $17.1 billion in net portfolio outflows from emerging markets according to the April tracker. Equity withdrawals accounted for most of the retreat, with debt also losing funds. China drove the largest share of the reversal, while debt flows to other emerging markets remained only slightly positive.
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