From global markets to questions of development, money and economic activity.
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Dollar performance against advanced and emerging currencies told different stories in August 2020. Jonathan Fortun and Robin Brooks contrast relative stability against the G10 with appreciation against emerging markets exposed to weaker commodity prices. The absence of a Chinese stimulus comparable to 2009 underpinned their view that a sustained dollar decline was unlikely in the near term.
Read the workThe collapse of international tourism threatened a major source of activity in emerging markets during the pandemic. Writing in July 2020, Jonathan Fortun and coauthors estimated that tourism could fall by 60 percent that year even under optimistic assumptions. They anticipated an uneven recovery, with Asia and Europe better positioned, while emphasizing that uncertainty over the pandemic made the outlook unusually fragile.
Read the workImport compression was reshaping emerging markets’ external balances during the pandemic. Jonathan Fortun and Sergi Lanau compare trade trends in the first half of 2020 and find imports falling sharply enough to outweigh export losses in almost every country examined. Their July assessment anticipates the disappearance of current account deficits through this crisis adjustment.
Read the workPandemic import compression changed emerging market current accounts and the exchange rates consistent with external balance. The July 2020 valuation update identified the Brazilian real as the most undervalued emerging market currency and the South African rand as close to fair value. Turkey’s prospective return to a substantial current account deficit, by contrast, pushed the lira into overvaluation in the assessment.
Read the workJonathan Fortun’s July 2020 tracker estimated emerging market portfolio inflows of $32.9 billion in June, as flows continued to recover. Debt attracted $23.5 billion, compared with $9.5 billion for equities, while equity flows outside China posted only marginal gains. The composition shows that the aggregate recovery was stronger in debt than in equities and remained uneven across markets.
Read the workEmerging market activity was still contracting as early signs of recovery appeared in June 2020. Jonathan Fortun contrasts deteriorating hard data with purchasing managers’ surveys suggesting that the pandemic downturn had bottomed. Asia was the only regional tracker with positive readings, while the effects on trade remained uncertain.
Read the workTracking fiscal deterioration during the pandemic required more timely information than annual budget figures. Jonathan Fortun and Sergi Lanau introduce tools for frequent monitoring of emerging market deficits. Their June 2020 assessment finds widening deficits through April, led by rising spending excluding interest, with Brazil and Hungary showing the largest deterioration.
Read the workThe paper examines how central-bank digital currencies and private digital-money initiatives could change banking intermediation and monetary-policy arrangements.
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