From global markets to questions of development, money and economic activity.
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May brought a recovery in emerging market portfolio inflows to $19.2 billion. The June release records $10.8 billion entering debt and $8.4 billion entering equities. China again drove debt flows, while continued strength in bonds denominated in local currencies provided another sign of investor demand.
Read the workRising Japanese government bond yields in May 2025 reflect monetary normalization, inflation expectations and term premiums in this assessment. A stronger yen, contained credit risk measures and solid auctions support that reading. Private investors absorb supply as the central bank steps back, suggesting an adjustment in market pricing rather than a loss of fiscal confidence.
Read the workExchange 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.
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