Marcello Estevão · Jonathan Fortun / Institute of International Finance
Looking back at 2025 reveals where familiar indicators obscured deeper change. Tariffs endured but reached prices unevenly, and strong emerging market debt returns complicated currency signals. Domestic reforms supported resilience, artificial intelligence gained wider macroeconomic importance, and divergent state labor markets challenged the picture of US stability suggested by national totals.
Jonathan Fortun / Institute of International Finance
Equity withdrawals tipped emerging market portfolio flows into negative territory in November. The December release estimates net outflows of $3.9 billion, as $15 billion of debt inflows could not offset $18.9 billion leaving equities. Gulf credit remained a relative bright spot, combining tight spreads with firm demand despite the broader reversal.
Marcello Estevão · Jonathan Fortun / Institute of International Finance
The December 2025 outlook projects global growth near 3.1 percent in 2026, sustained by shifts in activity across advanced and emerging economies. Nonresident capital flows ease from their peak but remain near $1.13 trillion. China’s savings, rising resident outflows and changing commodity balances reshape where capital moves. This edition also expands country coverage from 26 to 37.
Marcello Estevão · Jonathan Fortun / Institute of International Finance
Digital production is becoming a dividing line among emerging markets. Only a small group can export digital activity at scale, with technology services the most dynamic component. Foreign direct investment is already responding to this capacity, while portfolio flows remain more closely tied to liquidity and macroeconomic conditions. Digital export strength may increasingly influence where lasting investment goes.
Marcello Estevão · Jonathan Fortun / Institute of International Finance
A weaker exchange rate does not necessarily mean a weaker international role for the dollar. Better emerging market fundamentals and easier dollar funding support local currencies and returns, while gold reserve valuations can exaggerate apparent diversification. Meanwhile, stablecoins extend informal dollar use. The analysis argues that dollar dominance is adapting to new channels rather than simply receding.
Jonathan Fortun / Institute of International Finance
Equities played a larger role in October’s modest recovery in emerging market portfolio inflows. The November tracker puts the total at $26.9 billion, with $12.9 billion entering equities as debt inflows slowed to $14 billion. China showed a smaller version of that divergence: equity flows edged upward while debt flows weakened.
Marcello Estevão · Jonathan Fortun / Institute of International Finance
Growth across the United States, Europe and Japan rests on increasingly narrow sources of strength. US investment in artificial intelligence masks softer labor and demand conditions, Europe struggles with weak investment, and Japan normalizes policy cautiously. Lower US yields may help emerging markets, but sustained inflows depend on credible fiscal and macroeconomic frameworks rather than favorable financing alone.
Marcello Estevão · Jonathan Fortun · Ivan Burgara · Leila Hamilton · Anduin Li / Institute of International Finance
Artificial intelligence and digital payments are moving technological disruption into the center of macroeconomic analysis. Introducing a series on growth, trade and capital allocation, this overview examines early signals from US investment spending and international financial flows. AI investment is already contributing to activity, although its magnitude remains difficult to estimate, making consistent measurement essential.