From global markets to questions of development, money and economic activity.
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Emerging markets responded to the pandemic differently from earlier crises by easing monetary policy to support domestic activity. Jonathan Fortun and coauthors explain how additional liquidity helped governments borrow in local bond markets. Their December 2020 assessment nevertheless finds smaller fiscal support than in advanced economies and anticipates tightening across most emerging markets in 2021.
Read the workA broader sample tests whether large currency depreciations support exports. Robin Brooks and Jonathan Fortun lower their real depreciation threshold to 20%, expanding the historical sample from nine to 24 episodes since 1980. Their December 2020 analysis finds median export volume growth doubling in the following years, challenging the view that dollar invoicing neutralizes the trade response.
Read the workCurrency valuations varied sharply across emerging markets in November 2020 despite broad dollar overvaluation. Robin Brooks and Jonathan Fortun distinguish an undervalued renminbi and several Latin American commodity currencies from overvaluation in Argentina, Egypt and South Africa. China’s rising external surplus supported their contemporary assessment of its currency.
Read the workChanges in bond holdings reflect both transactions and movements in asset values. Jonathan Fortun and Sergi Lanau extend their emerging market government bond database to distinguish those effects in November 2020. Outflows and valuation losses reduced positions in many markets, while China attracted investment without comparable valuation losses and gained portfolio weight.
Read the workEmerging markets attracted $17.9 billion in portfolio investment in October 2020, with external issuance supporting inflows. Jonathan Fortun’s tracker reported $11.7 billion entering debt and $6.3 billion entering equities, including $4.7 billion into Chinese stocks. The headline total is retained as published rather than recomputed from rounded components.
Read the workLarge emerging market currency depreciations predated the pandemic and remained substantial after adjusting for inflation. This October 2020 survey examines how export and import volumes responded ahead of an update to currency fair values. Brazil and Russia showed the most favorable net export developments, while Egypt and Turkey presented a weaker picture.
Read the workTourism’s uneven recovery remained vulnerable to renewed pandemic restrictions in October 2020. Jonathan Fortun, Benjamin Hilgenstock and Elina Ribakova maintained a baseline decline of 60% to 70% in tourism revenues. Rising infections in the United States and Europe threatened further setbacks, with Mexico, South Africa, Thailand and Turkey identified as particularly exposed.
Read the workA new monthly dataset reveals the depth of foreign withdrawals from emerging market government bonds in local currency during 2020. Jonathan Fortun and Sergi Lanau identify Mexico, South Africa and Turkey as experiencing the largest outflows. They also distinguish domestic bond market losses from total external funding, noting that international issuance compensated for Mexico’s local bond outflows.
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