From global markets to questions of development, money and economic activity.
617 results
Large 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.
Read the workSri Lanka’s debt outlook in October 2020 depended on reversing the fiscal effect of earlier tax changes, but the more immediate vulnerability was external financing. Jonathan Fortun, Yuanliu Hu and Sergi Lanau examined the difficulty of meeting borrowing needs without international bond issuance. Official lending could bridge the gap if provided early, although the authors considered that support unlikely without a strong IMF program.
Read the workWeak portfolio inflows do not necessarily mean that foreign investors hold small positions in emerging markets. Robin Brooks and Jonathan Fortun distinguish recent flows, which reflect sentiment, from accumulated holdings shaped by years of inflows and valuation changes. In October 2020, ahead of the US election and further COVID waves, they argued that foreign positioning remained substantial despite the pandemic shock.
Read the workThe October 2020 capital flows outlook anticipated a slow and uneven recovery in emerging market inflows. It linked the weakness to China’s smaller stimulus response than in 2009 and India’s deep recession, both weighing on commodity exporters. A widely available vaccine was identified as a potential catalyst for stronger flows. These were forecasts made during the pandemic, not final growth outcomes.
Read the workEfforts to revive inflation after the pandemic created currency tensions as the United States, euro area and Japan tried to reflate simultaneously. Jonathan Fortun and Robin Brooks compared central bank forecasts in October 2020 and found a much faster projected inflation recovery in the United States. They argued that a weaker dollar against the yen and euro could aggravate this divergence and complicate the other economies’ efforts to restore inflation.
Read the workYield curve control helped the Bank of Japan contain yen appreciation in 2016 by shifting attention away from fears of government bond scarcity. By September 2020, however, the framework constrained policy while other central banks eased aggressively. With larger fiscal deficits easing scarcity concerns, the analysis argued for returning to quantitative and qualitative easing. This is the policy recommendation made at that time.
Read the work