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Unusually large capital withdrawals from China suggested a change in how investors assessed geopolitical exposure after Russia's invasion of Ukraine. The February 2024 analysis identifies Latin America as a potential beneficiary of portfolio rebalancing. Less restrictive central banks and stronger international debt issuance could further support emerging economies outside China.
Read the workFinancial conditions, business surveys and the relationship between employment and inflation offered mixed signals about the timing of Federal Reserve easing in February 2024. While much of the evidence suggested waiting until at least June, the analysis argued that normalizing inflation justified a more accommodative stance by May. These were competing assessments at that historical date.
Read the workJanuary 2024 portfolio investment in emerging markets was dominated by debt demand. The IIF reported net inflows of $35.7 billion, alongside $42.7 billion into debt and $6.9 billion in equity withdrawals. Chinese stocks lost $3.2 billion. The reported figures show how bond inflows offset continued equity selling.
Read the workCooling inflation complicated the timing of Japan's exit from yield curve control in early 2024. Wage negotiations were central to establishing a firmer basis for policy normalization. The February assessment retained an expectation of an exit by July, while recognizing that Governor Ueda's communication could alter the timetable.
Read the workThe recovery after COVID raised the possibility of escaping the weak growth and low inflation that followed the global financial crisis. By January 2024, renewed shortfalls relative to earlier growth paths suggested otherwise, particularly in China and Europe. The analysis links those output gaps to the possibility of returning to a subdued inflation environment.
Read the workReal effective exchange rates can reveal conspicuous currency misalignments even before applying a full current account model. The January 2024 review uses this perspective to examine emerging market valuations and highlights Egypt, Pakistan and Ukraine as potential cases of overvaluation. It presents a diagnostic assessment rather than a prediction of when an adjustment would occur.
Read the workEmerging markets ended December 2023 with reported portfolio inflows of $29 billion. Debt attracted $18 billion and equities $11.1 billion, even as Chinese stocks recorded withdrawals of $3.4 billion. Positive investment across both broad asset classes therefore coexisted with continued weakness in Chinese equities.
Read the workWeakness in the euro area extended beyond Germany at the end of 2023. Deteriorating French indicators strengthened the case that market expectations for 2024 growth were too optimistic. The analysis examines the risk of a renewed recession, drawing parallels with the uneven European recovery after the global financial crisis.
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